So the best predictor of future success in a good environment probably does include a correction for past adversity.
2) There is the assumption that the environment in which you grew up in does not permanently affect the way you learn, while many studies have proven this to be untrue. The most critical years shaping the way you learn is in the younger years. Once you're past that, there is no way you can "make up" for it just by going to a better college.
A radical solution I believe is to completely subsidize all education and child rearing costs, such that every child will at least have the necessary basic conditions needed for them to excel. Of course, parents are always going to try and give their kids an edge, but at some point there'll be diminishing marginal returns. To relieve pressure on governmental funding, another radical idea is to couple this with an upper limit on the number of children you can have, so people will not "overburden" the system by having too many children.
2) Sure. Environment has both short-term and long-term effects. So a fraction of the environmental effects wear off. I dunno what the fraction is, but when you do the regression to find the weighting of SAT test score and adversity score that best predicts college achievement, it should find the right balance.
The same gaps that appear on these undergrad tests show up on the grad school tests such as the LSAT, GMAT, GRE etc.
I'm trying to say that if you're trying to predict performance in a new environment (college) you can improve the prediction by correcting for factors (bad home environment during high school) that affect current test scores but won't be active in the future.
How large the correction should be can only be answered by large population studies.
And that's the key. You're positing that the disadvantage magically stops in university.
I work in law school admissions prep, and you see these disadvantages all the way down the line: SAT, college grades, LSAT, law school grades, Bar exam passage rate
There are some cases where it stops. Maybe the college board can identify which variables may indicate a poor correlation. There might be some factors that indicate transient issues and some that indicate worse lifelong expectations.
But I'd be cautious about too readily assuming that a cause of a lower SAT will vanish in later life.