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Don¡¯t Put All of Your Alums in One Basket: College Admissions Decisions as a Portfolio Choice Problem

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  • Logan Dahl
  • Daniel K.N. Johnson

Abstract

We consider philanthropy by college alums from an innovative and provocative perspective: what if prospective college students were considered members of asset classes with different risk-return combinations? Using forty years of merged admissions-philanthropy records on students at a highly selective liberal arts college, we estimate the simple financial model that this allegory implies. We find benefits to diversification, identify the slope of the market risk-return line, and point out the most (and least) attractive potential students in terms of their projected future donations.

Suggested Citation

  • Logan Dahl & Daniel K.N. Johnson, 2016. "Don¡¯t Put All of Your Alums in One Basket: College Admissions Decisions as a Portfolio Choice Problem," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 7(4), pages 175-179, July.
    • Handle: RePEc:jfr:ijfr11:v:7:y:2016:i:4:p:175-179
    DOI: 10.5430/ijfr.v7n4p175
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    Keywords

    admissions; alum; portfolio; CAPM;
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