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Affirmative Action and Human Capital Investment: Evidence from a Randomized Field Experiment

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  • Christopher Cotton
  • Brent R. Hickman
  • Joseph P. Price

Abstract

Pre-College human capital investment occurs within a competitive environment and depends on market incentives created by Affirmative Action (AA) in college admissions. These policies affect mechanisms for rank-order allocation of college seats, and alter the relative competition between blacks and whites. We present a theory of AA in university admissions, showing how the effects of AA on human capital investment differ by student ability and demographic group. We then conduct a field experiment designed to mimic important aspects of competitive investment prior to the college market. We pay students based on relative performance on a mathematics exam in order to test the incentive effects of AA, and track study efforts on an online mathematics website. Consistent with theory, AA increases average human capital investment and exam performance for the majority of disadvantaged students targeted by the policy, by mitigating so-called "discouragement effects." The experimental evidence suggests that AA can promote greater equality of market outcomes and narrow achievement gaps at the same time.

Suggested Citation

  • Christopher Cotton & Brent R. Hickman & Joseph P. Price, 2014. "Affirmative Action and Human Capital Investment: Evidence from a Randomized Field Experiment," NBER Working Papers 20397, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:20397
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    References listed on IDEAS

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    1. Roland G. Fryer, 2011. "Financial Incentives and Student Achievement: Evidence from Randomized Trials," The Quarterly Journal of Economics, Oxford University Press, vol. 126(4), pages 1755-1798.
    2. Edwin Leuven & Hessel Oosterbeek & Bas van der Klaauw, 2010. "The Effect of Financial Rewards on Students' Achievement: Evidence from a Randomized Experiment," Journal of the European Economic Association, MIT Press, vol. 8(6), pages 1243-1265, December.
    3. Edwin Leuven & Hessel Oosterbeek & Bas van der Klaauw, 2010. "The Effect of Financial Rewards on Students' Achievement: Evidence from a Randomized Experiment," Journal of the European Economic Association, MIT Press, vol. 8(6), pages 1243-1265, December.
    4. Jessica S. Howell, 2010. "Assessing the Impact of Eliminating Affirmative Action in Higher Education," Journal of Labor Economics, University of Chicago Press, vol. 28(1), pages 113-166, January.
    5. Eric P. Bettinger, 2012. "Paying to Learn: The Effect of Financial Incentives on Elementary School Test Scores," The Review of Economics and Statistics, MIT Press, vol. 94(3), pages 686-698, August.
    6. Peter Arcidiacono, 2005. "Affirmative Action in Higher Education: How Do Admission and Financial Aid Rules Affect Future Earnings?," Econometrica, Econometric Society, vol. 73(5), pages 1477-1524, September.
    7. Calsamiglia, Caterina & Franke, Jörg & Rey-Biel, Pedro, 2013. "The incentive effects of affirmative action in a real-effort tournament," Journal of Public Economics, Elsevier, vol. 98(C), pages 15-31.
    8. Cotton, Christopher & McIntyre, Frank & Price, Joseph, 2013. "Gender differences in repeated competition: Evidence from school math contests," Journal of Economic Behavior & Organization, Elsevier, vol. 86(C), pages 52-66.
    9. Loury, Linda Datcher & Garman, David, 1995. "College Selectivity and Earnings," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 289-308, April.
    10. Jesse Rothstein & Albert H. Yoon, 2007. "Affirmative Action in Law School Admissions: What Do Racial Preferences Do?," Working Papers 20, Princeton University, Woodrow Wilson School of Public and International Affairs, Education Research Section..
    11. Roland G. Fryer, 2011. "Teacher Incentives and Student Achievement: Evidence from New York City Public Schools," NBER Working Papers 16850, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Fernanda Estevan & Thomas Gall & Louis-Philippe Morin, 2019. "Redistribution Without Distortion: Evidence from an Affirmative Action Programme at a Large Brazilian University," Economic Journal, Royal Economic Society, vol. 129(619), pages 1182-1220.
    2. Xiangting Hu & Xiangbo Liu & Chao He & Tiantian Dai, 2020. "Education policies, pre-college human capital investment and educated unemployment," Journal of Economics, Springer, vol. 129(3), pages 241-270, April.
    3. Akabayashi, Hideo & Naoi, Michio, 2019. "Subject variety and incentives to learn: Evidence from public high school admission policies in Japan," Japan and the World Economy, Elsevier, vol. 52(C).
    4. Fernando Botelho & Ricardo Madeira, Marcos A. Rangel, 2015. "Racial Discrimination in Grading: Evidence from Brazil," Working Papers, Department of Economics 2015_04, University of São Paulo (FEA-USP).
    5. Peter Arcidiacono & Michael Lovenheim, 2016. "Affirmative Action and the Quality-Fit Trade-Off," Journal of Economic Literature, American Economic Association, vol. 54(1), pages 3-51, March.
    6. Subhasish M. Chowdhury & Patricia Esteve-González & Anwesha Mukherjee, 2020. "Heterogeneity, Leveling the Playing Field, and Affirmative Action in Contests," Economics Series Working Papers 915, University of Oxford, Department of Economics.
    7. Grau, Nicolás, 2018. "The impact of college admissions policies on the academic effort of high school students," Economics of Education Review, Elsevier, vol. 65(C), pages 58-92.

    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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