Don¡¯t Put All of Your Alums in One Basket: College Admissions Decisions as a Portfolio Choice Problem

Logan Dahl and Daniel K.N. Johnson

International Journal of Financial Research, 2016, vol. 7, issue 4, 175-179

Abstract: We consider philanthropy by college alums from an innovative and provocative perspective: what if prospective college students were considered members of asset classes with different risk-return combinations? Using forty years of merged admissions-philanthropy records on students at a highly selective liberal arts college, we estimate the simple financial model that this allegory implies. We find benefits to diversification, identify the slope of the market risk-return line, and point out the most (and least) attractive potential students in terms of their projected future donations.

Keywords: admissions; alum; portfolio; CAPM (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:jfr:ijfr11:v:7:y:2016:i:4:p:175-179

DOI: 10.5430/ijfr.v7n4p175

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