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

87 Pages Posted: 26 Jan 2013

See all articles by Brian A. Jacob

Brian A. Jacob

University of Michigan at Ann Arbor

Brian P. McCall

University of Michigan at Ann Arbor, School of Education; University of Michigan at Ann Arbor, College of Literature, Science & the Arts, Department of Economics

Kevin Stange

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy

Date Written: January 2013

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.

Suggested Citation

Jacob, Brian A. and McCall, Brian P. and Stange, Kevin, College as Country Club: Do Colleges Cater to Students' Preferences for Consumption? (January 2013). NBER Working Paper No. w18745, Available at SSRN: https://ssrn.com/abstract=2207279

Brian A. Jacob (Contact Author)

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

Brian P. McCall

University of Michigan at Ann Arbor, School of Education ( email )

610 East University Avenue
Ann Arbor, MI 48109-1259
United States

HOME PAGE: http://www-personal.umich.edu/~bpmccall/

University of Michigan at Ann Arbor, College of Literature, Science & the Arts, Department of Economics ( email )

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Ann Arbor, MI 48109-1220
United States

Kevin Stange

University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy ( email )

735 South State Street, Weill Hall
Ann Arbor, MI 48109
United States

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