There's no doubt in my mind that something like the Harvard effect you're describing is quite real. What I'm skeptical of is the proposition that it's so extreme that it outweighs a similar MIT effect (for example) even in the case where MIT is objectively the better fit for the student in question.
The nice thing about MIT as an example is that in that case, you can have your cake and eat it - MIT is close enough to Harvard you can take classes at both or transfer if you want. (IIRC, Richard Stallman did just that.)
I, and a lot of other people my age, are currently facing a pretty big life decision -- where to go to college. Since this is probably going to have a pretty big impact on my life, I'd like to get some more information on this.
Seeing as a lot of people here have probably made this choice already, gone through with some of the consequences of it, and are rational, I decided to ask here.
My current considerations are: