Pretty much varies by person. Ask 10 people; get 10 different answers. I prefer the tips of my levers to be 1/2" above the plane the bar flats create. Typically I aim the ends of the drops at the rear axle, maybe a bit higher. I ride the hoods and bar tops 90% of the time, the way I set it up is comfortable for that.
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My bikes: '81 Trek 957, '83 Trek 720, '84 Trek 770, '85 Centurion Cinelli