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The Changing Selectivity of American Colleges

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  • Caroline M. Hoxby

Abstract

This paper shows that although the top ten percent of colleges are substantially more selective now than they were 5 decades ago, most colleges are not more selective. Moreover, at least 50 percent of colleges are substantially less selective now than they were then. This paper demonstrates that competition for space--the number of students who wish to attend college growing faster than the number of spaces available--does not explain changing selectivity. The explanation is, instead, that the elasticity of a student's preference for a college with respect to its proximity to his home has fallen substantially over time and there has been a corresponding increase in the elasticity of his preference for a college with respect to its resources and peers. In other words, students used to attend a local college regardless of their abilities and its characteristics. Now, their choices are driven far less by distance and far more by a college's resources and student body. It is the consequent re-sorting of students among colleges that has, at once, caused selectivity to rise in a small number of colleges while simultaneously causing it to fall in other colleges. I show that the integration of the market for college education has had profound implications on the peers whom college students experience, the resources invested in their education, the tuition they pay, and the subsidies they enjoy. An important finding is that, even though tuition has been rising rapidly at the most selective schools, the deal students get there has arguably improved greatly. The result is that the "stakes" associated with admission to these colleges are much higher now than in the past.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15446.

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Date of creation: Oct 2009
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Publication status: published as Caroline M. Hoxby, 2009. "The Changing Selectivity of American Colleges," Journal of Economic Perspectives, American Economic Association, vol. 23(4), pages 95-118, Fall.
Handle: RePEc:nbr:nberwo:15446

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  1. Stacy Berg Dale & Alan Krueger, 1998. "Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables," Working Papers 788, Princeton University, Department of Economics, Industrial Relations Section..
  2. Dennis Epple & Richard Romano & Holger Sieg, 2006. "Admission, Tuition, and Financial Aid Policies in the Market for Higher Education," Econometrica, Econometric Society, vol. 74(4), pages 885-928, 07.
  3. Dominic J. Brewer & Eric Eide & Ronald G. Ehrenberg, 1996. "Does It Pay To Attend An Elite Private College? Cross Cohort Evidence on the Effects of College Quality on Earnings," NBER Working Papers 5613, National Bureau of Economic Research, Inc.
  4. Michael Rothschild & Lawrence J. White, 1991. "The University in the Marketplace: Some Insights and Some Puzzles," NBER Working Papers 3853, National Bureau of Economic Research, Inc.
  5. Gordon C. Winston, 1999. "Subsidies, Hierarchy and Peers: The Awkward Economics of Higher Education," Journal of Economic Perspectives, American Economic Association, vol. 13(1), pages 13-36, Winter.
  6. Caroline M. Hoxby & Bridget Terry, 1999. "Explaining Rising Income and wage Inequality Among the College Educated," NBER Working Papers 6873, National Bureau of Economic Research, Inc.
  7. Rothschild, Michael & White, Lawrence J, 1995. "The Analytics of the Pricing of Higher Education and Other Services in Which the Customers Are Inputs," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 573-86, June.
  8. Sallee James M & Resch Alexandra M & Courant Paul N, 2008. "On the Optimal Allocation of Students and Resources in a System of Higher Education," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-26, June.
  9. Caroline M. Hoxby, 1997. "How the Changing Market Structure of U.S. Higher Education Explains College Tuition," NBER Working Papers 6323, National Bureau of Economic Research, Inc.
  10. Monks, James, 2000. "The returns to individual and college characteristics: Evidence from the National Longitudinal Survey of Youth," Economics of Education Review, Elsevier, vol. 19(3), pages 279-289, June.
  11. Charles T. Clotfelter, 1996. "Buying the Best: Cost Escalation in Elite Higher Education," NBER Books, National Bureau of Economic Research, Inc, number clot96-1.
  12. Dan A. Black & Jeffrey A. Smith, 2006. "Estimating the Returns to College Quality with Multiple Proxies for Quality," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 701-728, July.
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  1. The changing selectivity of US colleges
    by Economic Logician in Economic Logic on 2009-12-08 00:55:00
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