I had a huge attrition rate among my 1st year class in grad school as well. However I don't think that the story is as black and white as the article in the chronicle of higher education paints it. Saying that "half of those bright students -- many of whom have never tasted failure -- will drop out before they can claim their prize" makes it seem like all the students who chose to leave the program are forced out because they don't have what it takes. Granted this does happen to some, but I think that there are other factors that play a key roll (at least for those students who were in my program I think this is the case).
Some of the students in my program decided to work toward their PhD at another school.
Given that grad school involves finding an advisor with whom you can work its not too suprising that the student/school match is a bit more sensitive than choosing an undergraduate institution.
Others students came to a decision that they only wanted a get a masters degree.
One such student was one of my office mates and I would say that he definatly had "what it takes" to earn his PhD if he had truely wanted this. However, after a few years in the program he decided that a life in acadamia wasn't what he wanted, so he chose to just get a masters degree and enter "the real world" (scarry isn't it?).
There are two examples of sort of voluntary "no hard feelings" type exits. Of course in my class there was also at least one student who was "forced out" after not passing preliminary exams. However, as it turns out, this student did leave with a masters and then went to another school to get their PhD.
I think that in the end, a large part of actually earning your PhD and making it through has to do with perseverance more than just "smarts". I've heard stories of people who were actually "too smart" and wound up never getting their degree because they were not able to settle down and work on a single field.
In the end (at least for mathematics) I think a large part of getting your PhD is a matter of how many nights you are willing to go without sleep! ;)
