Your example from higher education is telling. I got my undergraduate degree from a decent state school, the U. of Wisconsin's Madison campus, and went on to Columbia for grad school. Wisconsin was downright _cheap_ for in-state students--it still is, though tuition has gone up quite a lot since I was there. I got through four years at Madison for well under what a single semester costs at Columbia. While at Columbia, I worked as a TA in exchange for my fellowship, and taught many undergraduates (in the "Plato to NATO" European history survey course). Were the Columbia students any smarter? Not really. Columbia and other places like it lop off more people on the lower half of the test-score bell curve in their admissions process, but students in the middling to exceptional range seemed entirely comparable in their abilities to those I had known at Madison. There were fewer marginal students at Columbia, though they were hardly unknown. On average, the Columbia students were more socially polished and self-confident, though this was by no means universally true. Was the undergraduate education any better? That's hard to say--each place has its particular advantages and disadvantages, and in any case a great many variables affect the experience of any individual student. I would call it pretty much of a toss-up. If Columbia was a better school, it wasn't better by much. Is a BA degree from Columbia worth more in the marketplace then one from Madison? It sure is--a hell of a lot more. So what is it that Stanford and Columbia undergraduates and their families are _really_ paying for?
Jacob Conrad