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

Brian Jacob, Brian McCall and Kevin Stange

No 18745, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: I20 I21 I23 J01 J18 (search for similar items in EconPapers)
Date: 2013-01
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Published as Brian Jacob, Brian McCall, and Kevin Stange, "College as Country Club: Do Colleges Cater to Students’ Preferences for Consumption?," Journal of Labor Economics 36, no. 2 (April 2018): 309-348.
Published as Brian Jacob & Brian McCall & Kevin Stange, 2018. "College as Country Club: Do Colleges Cater to Students’ Preferences for Consumption?," Journal of Labor Economics, vol 36(2), pages 309-348.

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