How Often Do Billionaires Attend Elite Schools?

Tech, finance, and investment billionaires increasingly come from elite schools.

Posted Aug 15, 2019

In her book Pedigree: How Elite Students Get Elite Jobs, sociologist Lauren A. Rivera documents mechanisms through which the top investment banks, management consulting firms, and law firms often hire students primarily from elite schools. This means that the people who are hired to make money from money are often selected from these schools.

In 2017, billionaire Mark Cuban declared that “the world’s first trillionaires are going to come from somebody who masters AI [artificial intelligence] and all its derivatives and applies it in ways we never thought of.” This suggests that Cuban viewed the technology sector—and specifically AI—as being ripe for attaining enormous wealth.

Cuban himself attended Indiana University, but there are others like Jeff Bezos (Princeton), Mark Zuckerberg and Bill Gates (Harvard), or Jamie Dimon (Tufts, Harvard) who are tech and investment sector billionaires who attended famously elite schools. This raises the question about the importance of the industry in which one chooses to make their money—and the extent to which attending an elite school might matter for the development of enormous wealth.

My co-author Tomoe Kanaya and I just published a new paper in the Journal of Expertise titled “Wealth generation as a form of expertise: An examination from 2002-2016 of elite education, cognitive ability, and the gender gap among billionaires.”

In our research, which examined the education and cognitive ability levels of 14,246 global billionaires, we took a look at the technology as well as the finance and investments sectors and the degree to which billionaires who earned their money in these sectors attended an elite school. Elite school was defined in our study as one of the top schools based on standardized test scores that typically appear at the top of the U.S. News & World Report yearly rankings.

Within the U.S., we discovered that from 2002-2016, the billionaires who earned their money in the technology—and especially the finance and investments—sectors have increasingly attended elite schools. In 2002, 62 percent of the finance and investments sector were elite educated, whereas in 2016, a full 73.5 percent were elite educated. For technology, the numbers were 50 percent and 63 percent, respectively.

Wai and Kanaya, Journal of Expertise
Source: Wai and Kanaya, Journal of Expertise

The increasing percentage of elite educated billionaires earning their money in the technology, finance, and investments sectors shows that elite school attendance, for whatever reason, may be needed to have a chance of entering these sectors to begin with.

The elite schools in our study were chosen based on the average SAT or ACT scores of students who attended that school, and though not widely advertised or understood, the SAT and ACT essentially are general reasoning ability tests. This means that elite educated and cognitively able people have increasingly chosen to pursue areas of occupational expertise—specifically technology, finance, and investments—which have likely amplified their ability to generate wealth.

With elite education being such a crucial entry point to entering the technology, finance, and investments sectors, this data should provide pause for concern, given that talented students from lower-income and disadvantaged backgrounds are typically less likely to attend elite schools. And with the recent college bribery scandal, the role of elite schools have prominently come into question: Why exactly did these parents want their kids to attend an elite school so badly?

Given that most people do not attend elite schools and it is uncertain whether attending such schools really matters for things like long-run income, some wonder whether who attends these schools still matter. Building on what Rivera showed in her book on how elite schools serve as crucial filters for elite jobs, we illustrate that elite schools may increasingly be important to becoming a billionaire in the technology, finance, and investment sectors.

Sectors that rely on technology or the ability to use money to make money may have been very rewarding for people with exceptional analytical skills, and as we show here, people who attended elite schools. One of the potential explanations for increases in wealth and other forms of inequality in the U.S. may be linked to our findings.

As the economist Greg Mankiw stated, “changes in technology have allowed a small number of highly educated and exceptionally talented individuals to command superstar incomes in ways that were not possible a generation ago.”