The Changing Selectivity of American Colleges

36 Pages Posted: 27 Oct 2009  

Caroline M. Hoxby

Stanford University; National Bureau of Economic Research (NBER); Hoover Institution; Stanford University

Date Written: October 2009

Abstract

This paper shows that although the top ten percent of colleges are substantially more selective now than they were 5 decades ago, most colleges are not more selective. Moreover, at least 50 percent of colleges are substantially less selective now than they were then. This paper demonstrates that competition for space--the number of students who wish to attend college growing faster than the number of spaces available--does not explain changing selectivity. The explanation is, instead, that the elasticity of a student's preference for a college with respect to its proximity to his home has fallen substantially over time and there has been a corresponding increase in the elasticity of his preference for a college with respect to its resources and peers. In other words, students used to attend a local college regardless of their abilities and its characteristics. Now, their choices are driven far less by distance and far more by a college's resources and student body. It is the consequent re-sorting of students among colleges that has, at once, caused selectivity to rise in a small number of colleges while simultaneously causing it to fall in other colleges. I show that the integration of the market for college education has had profound implications on the peers whom college students experience, the resources invested in their education, the tuition they pay, and the subsidies they enjoy. An important finding is that, even though tuition has been rising rapidly at the most selective schools, the deal students get there has arguably improved greatly. The result is that the "stakes" associated with admission to these colleges are much higher now than in the past.

Suggested Citation

Hoxby, Caroline M., The Changing Selectivity of American Colleges (October 2009). NBER Working Paper No. w15446. Available at SSRN: https://ssrn.com/abstract=1494824

Caroline M. Hoxby (Contact Author)

Stanford University ( email )

Landau Economics Building
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United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
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Hoover Institution ( email )

Stanford, CA 94305-6010
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Stanford University ( email )

Department of Economics
Stanford University
Stanford, CA 94305
United States
650-725-8719 (Phone)
650-725-5702 (Fax)

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