College as Country Club?

We’ve made periodic attempts to explain the massive spike in college tuition in recent decades.  There are many viable explanations: rising labor costs (more non-faculty staff and professors who cannot be cloned), shrinking federal and state funding, increased demand, etc.

On that last point — the demand side — we should especially consider “consumption amenities,” as Brian Jacob, Brian McCall, and Kevin M. Stange label them in a new working paper called “College as Country Club: Do Colleges Cater to Students’ Preferences for Consumption?” (abstract; pdf). I find the passage that I’ve bolded, below, to be especially fascinating:

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.

It would be great news if this meant that high-achieving students craving high academic quality will be rewarded with cheaper tuition in the future, but somehow I don’t see that happening. Do you?

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  1. Mike D says:

    Are not high-achieving students at most elite universities rewarded with cheaper tuition through scholarships? The largest non-athletic scholarships are almost entirely rewarded because of merit.

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    • Enter your name... says:

      It depends on the school. Some schools offer very little in the way of academic/non-need-based scholarships. Others choose to offer more “merit” scholarships and less need-based. And, of course, a sizeable proportion of “football schools” focus on sports scholarships.

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    • Diane says:

      Actually the top tier colleges provide only financially based aid and have no merit aid at all.

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      • Enter your name... says:

        I think that depends on your definition of “top”. Ivy League schools don’t, but Johns Hopkins, Duke, Pepperdine, and dozens of other top schools all offer merit aid. All schools accept merit-based scholarships from independent clubs and foundations, even if they don’t directly fund such things themselves.

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  2. Michael says:

    Comparing the university life of my students to what I had those many years ago, there has definitely been a move towards creating a more “country club” life. New residencies are rarely shared rooms, much less the teeny cinderblock things with bunk beds. The new paradigm at most schools are suites with individual bedrooms and in-suite bathrooms (not bathrooms and showers shared by a whole floor). There are more non-athletic pools, the kind meant for wading, relaxing, tanning, etc. Gyms are nicer, fancier, with more yoga and pilates classes. Students drop off dirty laundry with laundry services, and pick it up cleaned and folded later in the day. No more quarter-taking machines in the basement. There’s been a push to replace the gross cafeteria food with “real food.” It goes without saying the computer labs are nicer and there’s wifi everywhere (even poolside). The list goes on and on. They’re really lucky! It’s a pretty swank life. It’s also unbelievably expensive.

    We’re also talking about a school where undergrads drive Lamborghinis. They want pretty posh amenities. For many of their families, $55,000 a year is peanuts anyway. It’s the “normal” kids whose parents don’t make $10 million a year that get caught having to make the choice between a cheaper school with a lesser reputation, or shelling out for amenities they don’t really desire (at least at that price).

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    • Mike B says:

      Amenities are needed to attract both those that can pay “sticker price” tuition, which in turn subsidizes scholarships for those unable to pay, and the top talent students that have many schools to choose from. The college entry process resembles a sports entry draft where teams make bets on the future abilities of untested players. If a school can land someone who turned out to be the next Michael Bloomburg or Bill Gates that will be worth hundreds of millions in future donations.

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  3. Daniel says:

    I think the link to the paper is wrong. It opens the Romer paper on monetary transmission and the Great Depression.

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  4. Tim M says:

    Hey Stephen,
    It looks like your link to the paper goes to one titled “THE MISSING TRANSMISSION MECHANISM IN THE MONETARY EXPLANATION OF THE GREAT DEPRESSION” instead of the intended “College as a Country Club”.

    Thanks in Advance,
    -Tim

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  5. dragos says:

    I don’t believe that either. The point was that although I chose the university based on academic merits, I most certainly wasn’t going to accept lower amenities than my lower achieving colleagues. The low achievers at my former college practically financed the rest of us since they paid the full tax. High achievers had scholarships, offsetting some of the cost of tuition. In some countries (afaik Fr, Ro) for the top few% achievers the scholarship offsets the whole cost of tuition and makes for a positive balance sheet. This way everybody wins.
    I’ll give you that the entry barrier can be quite high: before applying to the “x” university you can’t know if you’re good enough to get and keep a scholarship, so potential high achievers might choose a lesser university because they lack the financial means to pay the tuition or lack the confidence that they’d get the bonus money . I took the gamble and nearly lost the first college year as my bank account was far negative by the time the scholarship came to the rescue.

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  6. Enter your name... says:

    I think that some of the change is cultural. We used to send primarily wealthy males to college. They grew up in luxury, and school was an opportunity for the parents to pay someone else to instill “values” in them, like living in more spartan circumstances. (Not that the wealthy young men really did live in spartan circumstances back then: those really old dorms offered multi-room suites that could be rented by a single man, he probably had his valet live with him to deal not only with laundry, but also to help him get dressed, run errands, or make sure his bar bills were settled, his horses (and later sports cars) were kept handy, there were frequent vacations, and running up major gambling debts was considered normal high spirits.)

    But back then, we wanted to make sure our young men weren’t “feminine”, so we pretended that they needed to live a “spartan” life at school. Now we don’t have that cultural idea, and we do have a cultural idea of thinking entertainment and comfort and convenience is very important. It’s not surprising that this change in values is reflected in our schools.

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    • JBP says:

      The PC mythology has returned. You know, you might just want to ask some of us old timers about your theories before you use them as an explanation.

      I don’t remember a singe student who had a valet.

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      • James says:

        I think he’s talking about Oxford & Cambridge, pre-WWI.

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      • Enter your name... says:

        JBP, I’ll bet that you don’t remember a single student who kept horses at school as a primary form of transportation, either.

        Yes, pre-WWI. No, not just at Oxford and Cambridge. This was true at American schools as well.

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      • JBP says:

        Enter your name…,

        If you think WWI happened in “recent decades,” then it’s worse than I thought.

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  7. Amanda says:

    I went to an undergraduate college where the current – all-inclusive – tuition is around $55,000 a year. We joked while we were there that it was like living at a country club. It was an extremely academically rigorous school, but our senior housing was a house with two fireplaces, hardwood floors, a huge kitchen, etc. It also had its own golf course and ski mountain, the dining halls featured mostly organic, local food prepared fresh, and the campus itself was stunningly beautiful. It was a great place to go to college, and I wouldn’t trade it for the world. Probably half of my fellow students were there on trust funds and didn’t bat an eye at the price tag; the rest of us were there for the academics and just enjoying the atmosphere. I have no doubt that the huge explosion in amenities in the last two decades are what have driven the cost of tuition so high; it’s increased $20k annually since my freshman year.

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  8. Kyrie says:

    My daughter’s college, High Point University, bases their price and amenities on a consumerist mentality. No price per credit hour and everyone lives on campus. The university president does not come from an academic background. They definitely explain their tuition, last year was 39K, as what you get for your yearly tuition. The rooms, grounds and classes are all amazing. My daughter coukd have gone to Johns Hopkins, but chose High Point. It has academic rigor and amenities.

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