Merit Aid, College Quality and College Completion: Massachusetts’ Adams Scholarship as an In-Kind Subsidy

58 Pages Posted: 23 Aug 2012 Last revised: 2 Apr 2013

See all articles by Sarah Cohodes

Sarah Cohodes

Harvard University - Harvard Kennedy School (HKS)

Joshua Goodman

Harvard University - Harvard Kennedy School (HKS)

Date Written: March 21, 2013

Abstract

We analyze a Massachusetts merit aid program in which high-scoring students received tuition waivers at in-state public colleges with lower graduation rates than available alternative colleges. A regression discontinuity design comparing students just above and below the eligibility threshold finds that students are remarkably willing to forgo college quality for relatively little money and that marginal students lowered their college completion rates by using the scholarship. These results imply that college quality has a substantial impact on college completion rates and that students likely do not understand this fact well. The theoretical prediction that in-kind subsidies of public institutions can reduce consumption of the subsidized good is shown to be empirically important.

Keywords: education, higher education

JEL Classification: I23, I24

Suggested Citation

Cohodes, Sarah and Goodman, Joshua, Merit Aid, College Quality and College Completion: Massachusetts’ Adams Scholarship as an In-Kind Subsidy (March 21, 2013). HKS Working Paper No. RWP13-005. Available at SSRN: https://ssrn.com/abstract=2128786 or http://dx.doi.org/10.2139/ssrn.2128786

Sarah Cohodes (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Joshua Goodman

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

HOME PAGE: http://www.hks.harvard.edu/about/faculty-staff-directory/joshua-goodman/

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