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. Eric M. Jones. says:

    “…students WHOM the institution hopes to attract….”

    Be sure to study for the quiz tomorrow. Class dismissed.

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  2. jane says:

    High-achieving students are the ones who can afford the country-club amenities, because they will graduate and parlay their academic success into significant earnings. Or at least sufficient earnings to not worry about student debt. Or will cleverly restructure their loans and then get out of paying them.

    For these group of students having these amenities or not, and paying for these things or not, is a non-issue. Their decision criteria lies in a different area entirely – academic rigor, opportunities during and after college, exposure to people and ideas. Demand for top colleges is inelastic in regards to country-style offerings.

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  3. Gabe says:

    you mention increased demand, but not increased supply (all the federal money freely offered to students). I thought you guys were economists…

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  4. anonymous says:

    Well, *I* want to go to Hogwort’s!

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  5. Elizabeth Lewis Pardoe says:

    I wrote this before The study existed to prove my suspicions:

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