As I recall, haven't we linked and discussed before studies showing that lifetime earnings of those who turned down Ivies for top-but-cheaper schools were comparable to those who went? By that standard, prestige is inefficient. (And I've seen advice to this effect, too, in college guide materials.)

I have also heard that an increasingly common strategy among undergraduates in California is to go to one of the feeder community colleges and only go to the prestigious schools like UCLA or Berkeley for the last 2 years. (Although I read this in Steve Sailer who was busy mixing it up with his theories about canny Asian parents maximizing the bang for their buck, so reader beware.)

These 3 points suggest to me that it is known that prestige is not identical to quality. There are a few possible explanations that occur to me.

Perhaps the target demographics of the 3 points are people who cannot take advantage of the financial aid offered by prestigious universities but perhaps not by the higher-quality but less prestigious institutions. (Prestige attracts donations, which enables things like Harvard's attend-free-if-you're-poor. Obviously qualified poor kids will much prefer Harvard to, say, Cornell, even if Cornell is more quality; it's basic math. But for a middle-class kid who doesn't qualify?)

Perhaps the lifetime earnings are similar or higher elsewhere but one is compensated for the poorer education/higher-expense with intangibles like being part of a tradition, everyone knowing of where you went, or...

Having more power thanks to the prestigious institution & networking. I think of John Kerry; leaving aside the marrying-into-wealth, he has exercised a great deal of power of the years, so you certainly couldn't call him a failure, but I suspect his lifetime earnings are vastly less than if he had gone to a higher-quality-but-lesser-prestige school which funneled him into private law. (Kerry first really got into politics at Yale, but if you don't think his example works, how about Barack Obama? Without the prestige of Harvard, would he have gone into local politics/community-organizing & thereby forfeiting the lucrative lawyering career one could expect? But notice how much power he got in exchange.)

So that's 3 or 4 ways in which prestige could be very closely aligned to quality and yet remain permanently different.