Which countries provide their citizens with the best higher education?

Universities are vital for developing human capital. They are essential cogs in the global knowledge economy. Where once only available to few, higher education is now almost a requirement for entry to the middle class, and even more so to the ranks of the elite.

Competition among universities has given rise to rankings that try to ascertain which are the globally most competitive. These lists are typically based on metrics such as research output, prestige and accomplishments of alumni. Although the various measures produce different orderings, the global top schools are highly similar across the assessments.

The number of globally-ranked schools in a country is then invariably used to measure the quality of higher education there. However, this perspective overlooks the growing inequality of higher education.

Inequality is one of society’s biggest challenges. But much of that debate has centred on inequality of income and wealth; much less attention has been paid to inequality of opportunity for high-quality tertiary education. Yet, inequality of education is a driver of income inequality and a force behind assortative mating – privileged people tend to go to the same universities, marry one another, and this makes income inequality even worse.

An alternative perspective on the quality of education – with a lens on inequality – is to instead consider the portion of a country’s universities that are globally ranked. This gives a sense of what share of a nation’s population has access to high-quality tertiary education. In fact, the difference between a country’s performance in absolute number of competitive institutions versus share of schools in that country that are internationally ranked is one measure of the scope of inequality in education.

Educational inequality – especially pertaining to the lack of access by the deserving (but underprivileged) to elite schooling – is driving a wedge in society. Elites are cloistered at prestigious universities, while the masses are left to attend less-competitive schools. Not only do elite schools offer better environments for human capital accumulation, but they also act as a place to foster social networks and develop social capital – all the while excluding the less advantaged – that are paramount for life success.

So is the US – which regularly tops the list of top countries for universities – really delivering on providing quality education? Even though a majority of globally-ranked universities are there, only a fraction of Americans attend its elite universities. The majority of US universities are not globally ranked. In fact, just 3% of its universities are ranked in the global top 200; 5% are in the global top 500; and 8% are in the global top 1,000 (placing it 13th, 21st, and 22nd, respectively). That is, the average tertiary student in the USA is not attending a globally-competitive school. American higher education is delivering for the elite but not for the masses. How does this compare with other countries?

The charts below show the difference in performance between (i) absolute number of elite schools, and (ii) share of national institutions that are globally ranked. The arrows show the migration between ranks on these two metrics. (NB: The list of countries need not agree between the two.)

Hong Kong counts only four top 200 universities, but that represents 18% of its schools; moreover, over a quarter (27%) of its universities are ranked in the top 500.

The UK excels at both having a high absolute number of globally-ranked universities (2nd only to the USA), and a high share of universities that are globally ranked. It comes 2nd in the shares of its universities in the top 200 and top 500, and it is the global leader in the top 1,000.

A person randomly assigned to a university in Sweden would have a 1 in 4 (24%) chance of attending a globally-ranked school.

China has 43 universities in the top 1,000, but this is a mere 2% of institutions there. Japan and Korea – two other East Asian nations with a reputation for strong scholastic performance – also count a large number of globally-ranked universities (37 and 27, respectively), but perform much weaker when measuring their share of schools that are globally ranked (4% and 7%, respectively).

India – soon to be the world’s most populous nation – has just seven globally-ranked schools, representing less than 1% of its universities.

This begs the question: How relevant is elite higher education? Princeton economists Alan Krueger and researcher Stacy Dale Berg argue that capable students who attend less-selective schools are not handicapped in their lifetime earnings; however, economically disadvantaged students do see a gain from attending a selective college. Nevertheless, their study was restricted to elite schools and good but less selective ones.

Another perspective is to consider whether a higher share of elite universities in a country – a proxy for access to high-quality university education – leads to higher average academic performance. The below figure tests that relationship with average GMAT scores (by country) as a gauge of academic performance.

Although the correlation between share of globally-ranked schools and average GMAT score is not strong (ρ = 0.218), it is nevertheless positive and statistically different from zero. Moreover, if China and India were excluded from the sample, the relationship has a much tighter fit.

What matters to the average resident of a country is not whether it has schools like Stanford or Oxford, but rather the quality of the universities their children are likely to attend. Here policy-makers will need to remember to ensure that high-quality tertiary education is accessible to all, not just the elite. Inclusive higher education could bridge the social divides that separate society.