College Admissions Talk and Other Stuff

Happy August to my august readers! The dog days of summer are here, and with them has come a long lull in news I care a ton about and have a lot to talk about. I’m also firmly in the middle of year one rearing an infant, and boy does it get harder as it goes on. I’m going with some slightly different fare today. I've written a bit about some topics I’ve read about over the last month, but for which I do not have thousands of words worth of comments. Away we go.

Last week the NYT published an article looking at the role of wealth in admissions to the Ivy-Plus schools, which include the Ivy League schools as well as Stanford, Duke, Chicago, and MIT. I’m sure you’re unsurprised to learn that, all else equal, wealth makes it much more likely that you’ll get into these schools. Notably, the wealth does not need to be “one of my parents has a building named after them” wealth, the effect is most pronounced in the top 1%. What I think the article buries is the mechanism that drives this difference, and I think it’s best illustrated by this chart in the article.

This chart shows the percentage of students from each wealth decile and the top percentiles who are recruited athletes. What this chart is really showing us is how much private school and private club sports play a role in which students get into these schools. My public high school did not offer sports like fencing and squash in any meaningful way. Parents pay for private schools and sports clubs where their kids have access to those kinds of activities that the average American student does not have access to so they can bolster their resume for these kinds of schools. Parents pay for private education for a number of reasons, but one of the core reasons is that these schools have relationships and pipelines to the most elite institutions. If we correct for the impact of certain extracurricular activities on admissions, they will find other avenues to bolster college resumes, and these private schools and clubs with strong ties to Ivy-Plus universities will work with the schools to make sure they deeply understand how to mold these resumes. Other charts in the article about non-academic measures applied to admissions already show this to be true.

It’s not really worth time or effort playing whack-a-mole with these admissions criteria, every one that gets corrected will result in a new activity that gets highlighted, and the armies of counselors at private schools contacting admissions offices will always overwhelm the efforts of public school counselors. Notably, the article highlights that flagship public schools, great schools like UCLA and UVA, do not have this problem. I suppose I think a laser-eyed focus on where high school students with 1500 SATs are getting in massively misses the forest for the trees.

But if we must solve it, the real target is, and should be, legacy admissions. From the article, “M.I.T., which stands out among elite private schools as displaying almost no preference for rich students, has long had a practice of not giving a preference to legacy applicants, said its dean of admissions, Stuart Schmill.” Sure seems like the answer is hiding in plain sight here. I’m not holding my breath that Harvard will follow suit.

Elsewhere, Elon Musk, who seems hell bent on destroying the fairly sterling reputation he had about five years ago, has rebranded Twitter to X. Elon still has a lot of fans that will support whatever he does for some reason, but if Alphabet decided to rebrand Google search, I think we’d all be scratching our heads. I’d say that if your brand becomes or inspires word(s) that are used positively in everyday speech, you probably shouldn’t go through a rebrand (see: Xerox, Kleenex, etc).

Elon’s obsession with the letter X appears to be decades old, starting back when he started X.com which was acquired by the company that owned PayPal, whose board then ousted Elon in favor of Peter Thiel. So perhaps this is all a long game ego trip, but to me it’s another bad decision, just like his monetization decisions before this.Twitter’s value, at least as of the last earnings cycle, is plummeting and I can’t imagine that purging a well-known brand for something that probably can’t even be copyrighted is going to turn that around. I still may be proven wrong, but I’m skeptical that these decisions under his Linda Yaccarino’s leadership (it still remains to be seen just how in charge she is) will ever make much sense. It’s hard to see what the vision is here. Elon claims he’s trying to build something like WeChat in China which incorporates a lot of fintech, but that company was built in an environment where most of the population was unbanked, and where the regulatory environment is, let's just say, favorable to them. Perhaps it’s a fool's errand to make much sense of what Elon says anyway.  

Jerome Powell continued hiking interest rates despite the fact that inflation is falling rapidly. His signal is that there is still work to be done, although the Fed is no longer forecasting a recession. If that is true, my recession forecast will be wrong, although the reason we’d avoid recession is exactly the scenario I said would avoid recession. It’s hard to suss out just why inflation fell so fast. Certainly interest rates play a role, but it really does look like supply chains have finally loosened enough to match demand. I suppose that means inflation was mostly a transient supply-side problem after all, depending on how much elapsed time you consider to be transient.

Finally, for the sports fans, the MLB trade deadline passed. I haven’t read much analysis on it, but it felt like this year the activity was a bit lower than normal. I think that’s a good thing. Rob Manfred, the MLB commissioner, has been hated by hardcore fans for a really long time. However, one decision he nailed was the decision to expand the playoffs. For those that don’t know, the playoffs for most of my life included four teams from each league, three division winners and one “wild card”. That’s 8/30 teams that qualify for the playoffs. Now the playoffs include two more wildcard teams, meaning 12/30 teams qualify for the playoffs. That drastically changes calculus of team managers and owners when it comes to making trades. When the playoffs were much smaller, a small number of competitive teams would “buy” players from a large number of teams with little or no shot at the playoffs by farming their young talent for these teams best players. That market was heavily swayed to the buyers, with many teams looking for young talent and few willing to sell. Playoff expansion has flipped that on its head, and that was no more evident than during this trade deadline. Sure, some big trades happened, but a lot of teams that historically would have had a fire sale, like this years Red Sox, have held onto their players because they have an outside shot at one of those playoff spots. This is good for the game, the more teams that are actively trying to win, the better. Sure it makes for a less splashy mid-season trade deadline, but it makes for a more interesting season overall.

And that’s all for this post. Let me know what you think about admissions for rich kids or Twitter’s rebrand or the economy or game theory in sports!