NBER Reporter: Winter 2000/2001

Higher Education

The NBER's Working Group on Higher Education met in Cambridge on November 10. Charles T. Clotfelter, NBER and Duke University, organized the meeting at which the following papers were discussed:

Kelly Dugan, Charles Mullin, and John Siegfried, Vanderbilt University, "Undergraduate Financial Aid and Subsequent Alumni Giving Behavior"

Discussant: Bruce I. Sacerdote, NBER and Dartmouth College

Christopher Cornwell, David B. Mustard, and Deepa Sridhar, University of Georgia, "The Enrollment Effects of Merit Aid: Evidence from Georgia's HOPE Scholarship Program"

Discussant: Caroline M. Hoxby, NBER and Harvard University

Jerry G. Thursby, Purdue University, and Marie C. Thursby, NBER and Purdue University, "Who's Selling the Ivory Tower? Sources of Growth in University Licensing" (NBER Working Paper No. 7718)

Discussant: Paula E. Stephan, Georgia State University

Amy E. Schwartz, New York University, and Benjamin P. Scafidi, Georgia State University, "What's Happened to the Price of College? Quality Adjusted Price Indexes for Four-Year Colleges"

Discussant: A. Abigail Payne, University of Illinois

Todd R. Stinebrickner and Ralph Stinebrickner, University of Western Ontario, "The Importance of Nontuition Factors in Determining the Family Income-Schooling Relationship: Evidence from a Liberal Arts College with a Full Tuition Subsidy Program"

Discussant: Susan M. Dynarski, NBER and Harvard University

Michelle McLennan, Ursinus College, and Susan L. Averett, Lafayette College, "Black and White Women: Differences in College Attendance, Does the Rate of Return Matter?"

Discussant: Bridget T. Long, Harvard University

Dugan, Mullin, and Siegfried use data on 2,822 Vanderbilt University graduates to investigate alumni giving behavior during the eight years after graduation. They first estimate the likelihood of making a contribution and then the average gift size, conditional on contributing. They find that the type of financial aid received as an undergraduate has a greater influence on subsequent alumni generosity than the amount received. Adding some scholarship to a loan-only package, or eliminating all loans from a mixed loan-grant package, increases the likelihood of a subsequent contribution. Increasing the total size of the package, or altering the proportions of an already mixed package, appears to be inconsequential for future donations. The authors also find that students who receive small merit scholarships contribute more as alumni than students who receive either no merit scholarship or a large merit scholarship.

Georgia's lottery-funded HOPE Scholarship allows high-school students graduating with a "B" average to qualify for scholarships at degree-granting public or private colleges. Since HOPE's inception, more that $1 billion in scholarship funds have been disbursed to over a half million students. Exploiting HOPE as a natural experiment, Cornell, Mustard, and Sridhar contrast enrollment rates in Georgia with those in a set of control-group states from 1988-97. They find that HOPE has led to about an 8 percentage point increase, or an 11 percent rise, in the first-time-freshmen enrollment rate in Georgia. The 8 percentage point effect for all first-time freshmen is concentrated in four-year schools and roughly evenly split between public and private colleges. HOPE has induced increases of at least 10 and 20 percent, respectively, in the enrollment rates of four-year public and private schools. Finally, these results support the view that HOPE has served primarily to influence college choice, rather than to expand access.

Historically, the commercial use of university research has been viewed in terms of spillovers. But there has been a dramatic increase recently in technology transfer through licensing as universities attempt to appropriate the returns from faculty research. This change has prompted concerns regarding the source of the growth -- specifically, whether it suggests a change in the nature of university research. Thursby and Thursby examine the extent to which the growth in licensing is attributable to the productivity of observable inputs or driven by a change in the propensity of faculty and administrators to engage in commercializing university research. They use survey data from 65 universities to calculate total factor productivity (TFP) growth in each stage of research. They augment the productivity analysis with survey evidence from businesses who license in university inventions. Their results suggest that increased licensing is primarily attributable to an increased willingness by faculty and administrators to license and to an increased business reliance on external R and D rather than a shift in faculty research.

According to estimates from the consumer price index (CPI), the "sticker" or "list price" of a college education in the United States has risen significantly faster since the earlier 1980s than the overall rate of inflation. This has raised considerable concern among policymakers, parents, and students that college attendance was becoming less and less affordable even as it was becoming more and more important for economic success in the job market. For the CPI, the government does not adjust the sticker price of college (tuition and fees) for scholarships awarded, discounts given, or for changes in the quality or characteristics of the services provided, such as attributes of the faculty, course offerings, or facilities. Thus, the estimated price indexes reflect changes in quality and characteristics of college as well as changes in prices. Schwartz and Scafidi, by contrast, develop and explore the construction of aid- and quality-adjusted price indexes for U.S. colleges, based on the estimation of hedonic models of the consumer price of college. They find that adjusting for financial aid and quality of services results in a net price increase of college costs over this time period that is 45 percent below the price increase in the current "college tuition and fees" price index in the CPI.

Researchers have long sought to better understand why a strong relationship between family income and educational attainment exists at virtually all levels of schooling. In part because of a recent increase in the disparity between the wages of college graduates and the wages of individuals with less than a college degree, researchers now want to know exactly why individuals from low-income families are less likely to graduate from college. Using unique new data obtained directly from a liberal arts school that maintains a full tuition subsidy program, Stinebrickner and Stinebrickner show that non-tuition reasons are very important. Their findings have implications for expensive policy programs such as the full tuition subsidy program recently approved by California.

McLennan and Averett focus on the college attendance decisions of women by race, and specifically whether they respond to the rate of return. Their results suggest that both black and white women are likelier to attend college if they are faced with higher rates of return. Further, early childbearing reduces the probability of attending college for both white and black women, even after controlling for family and individual background characteristics.

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