Given the intense competition that I witness around me in Singapore, I do think that Deresiewicz' argument has some value. Will going to Harvard or Yale really make you a happier person in the long run? In many ways, the answer is probably no. These brand name schools will give you definite advantages when it comes to status, networks, and getting your foot in the door. But happiness...? I'm not so sure.
As parents, there is a real danger in telling a kid that he or she "must" get into a "top school." Defining success in very narrow terms is dangerous for so many reasons: it gives kids all the wrong messages. It tells them that success is conditional, love and approval are conditional, and if the kid doesn't get in to one of these "top schools," she will feel as though she has failed terribly and let her parents down. So right from the start, this obsession with certain "brand name schools" can lead kids to depression.
As for Deresiewicz' assertion that kids become "sheep" in this process -- there is probably some truth there too. Every kid needs to hug a tree, save a poor village, and rebuild houses in a disaster area -- not because he cares about the environment or poverty or natural disasters, but because he feels as though it looks good on a resume. That's just plain wrong.
And when you've graduated from Harvard, you feel as though you've got to do something spectacular -- you've got to make a lot of money and live a certain lifestyle. And that pressure and burden doesn't necessarily lead to happiness. And it doesn't free the imagination. It is, if anything, limiting. (Not that I feel sorry for Harvard grads. I don't. They're a privileged and entitled bunch. But, a Harvard degree is not a key to happiness, by any means.)
My thoughts on the ivy league frenzy -- it's a game, and it doesn't make a whole lot of sense. As a parent and teacher, I'd rather my own kids and my students learn because they love learning and serve because they believe in the cause they're serving. I'd rather they apply to colleges that will be a good fit for them, regardless of brand names. I want them to have a broad sense of possibility and a deep love of learning. And most of all, I want them to be physically and mentally healthy and happy.