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College as Country Club: Do Colleges Cater to Students' Preferences for Consumption?

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  • Brian Jacob
  • Brian McCall
  • Kevin M. Stange

Abstract

This paper investigates whether demand-side market pressure explains colleges' decisions to provide consumption amenities to their students. We estimate a discrete choice model of college demand using micro data from the high school classes of 1992 and 2004, matched to extensive information on all four-year colleges in the U.S. We find that most students do appear to value college consumption amenities, including spending on student activities, sports, and dormitories. While this taste for amenities is broad-based, the taste for academic quality is confined to high-achieving students. The heterogeneity in student preferences implies that colleges face very different incentives depending on their current student body and the students who the institution hopes to attract. We estimate that the elasticities implied by our demand model can account for 16 percent of the total variation across colleges in the ratio of amenity to academic spending, and including them on top of key observable characteristics (sector, state, size, selectivity) increases the explained variation by twenty percent.

Suggested Citation

  • Brian Jacob & Brian McCall & Kevin M. Stange, 2013. "College as Country Club: Do Colleges Cater to Students' Preferences for Consumption?," NBER Working Papers 18745, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:18745
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Most US students do not care about the academic quality of their college
      by Economic Logician in Economic Logic on 2013-02-13 21:03:00
    2. Is education really an investment?
      by jamesz in TVHE on 2013-02-15 15:43:54

    Citations

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    Cited by:

    1. Celeste K. Carruthers & Jilleah G. Welch, 2015. "Not Whether, but Where? Pell Grants and College Choices," Working Papers 2015-04, University of Tennessee, Department of Economics, revised 28 Sep 2015.
    2. Amanda L. Griffith & Kevin N. Rask, 2016. "The Effect Of Institutional Expenditures On Employment Outcomes And Earnings," Economic Inquiry, Western Economic Association International, vol. 54(4), pages 1931-1945, October.
    3. Goodman, Joshua & Hurwitz, Michael & Smith, Jonathan & Fox, Julia, 2015. "The relationship between siblings’ college choices: Evidence from one million SAT-taking families," Economics of Education Review, Elsevier, vol. 48(C), pages 75-85.
    4. Rodney Andrews & Kevin Stange, 2016. "Price Regulation, Price Discrimination, and Equality of Opportunity in Higher Education: Evidence from Texas," NBER Working Papers 22901, National Bureau of Economic Research, Inc.
    5. Justine S. Hastings & Christopher A. Neilson & Seth D. Zimmerman, 2013. "Are Some Degrees Worth More than Others? Evidence from college admission cutoffs in Chile," NBER Working Papers 19241, National Bureau of Economic Research, Inc.
    6. Smith, Jonathan, 2013. "Ova and out: Using twins to estimate the educational returns to attending a selective college," Economics of Education Review, Elsevier, vol. 36(C), pages 166-180.
    7. Goodman, Joshua & Hurwitz, Michael & Smith, Jonathan & Fox, Julia, 2016. "Reprint of “The relationship between siblings’ college choices: Evidence from one million SAT-taking families”," Economics of Education Review, Elsevier, vol. 51(C), pages 125-135.
    8. Chris Belfield & Teodora Boneva & Christopher Rauh & Jonathan Shaw, 2016. "Money or fun? Why students want to pursue further education," IFS Working Papers W16/13, Institute for Fiscal Studies.
    9. Brad J. Hershbein & Kevin Hollenbeck, 2013. "The Distribution of College Graduate Debt, 1990 to 2008: A Decomposition Approach," Upjohn Working Papers and Journal Articles 14-204, W.E. Upjohn Institute for Employment Research.
    10. repec:spr:reihed:v:59:y:2018:i:1:d:10.1007_s11162-017-9455-1 is not listed on IDEAS
    11. Steven W. Hemelt & Kevin M. Stange, 2014. "Marginal Pricing and Student Investment in Higher Education," NBER Working Papers 20779, National Bureau of Economic Research, Inc.
    12. David L. Sjoquist & John V. Winters, 2016. "The Effects of State Merit Aid Programs on Attendance at Elite Colleges," Southern Economic Journal, Southern Economic Association, vol. 83(2), pages 527-549, October.
    13. Angela Boatman & Bridget Terry Long, 2016. "Does Financial Aid Impact College Student Engagement?," Research in Higher Education, Springer;Association for Institutional Research, vol. 57(6), pages 653-681, September.
    14. Ozan Jaquette & Edna Parra, 2016. "The Problem with the Delta Cost Project Database," Research in Higher Education, Springer;Association for Institutional Research, vol. 57(5), pages 630-651, August.
    15. Jeffrey T. Denning & Benjamin M. Marx & Lesley J. Turner, 2017. "ProPelled: The Effects of Grants on Graduation, Earnings, and Welfare," Upjohn Working Papers and Journal Articles 17-280, W.E. Upjohn Institute for Employment Research.
    16. Jeffrey T. Denning, 2017. "Born Under a Lucky Star: Financial Aid, College Completion, Labor Supply, and Credit Constraints," Upjohn Working Papers and Journal Articles 17-267, W.E. Upjohn Institute for Employment Research.

    More about this item

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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