January 27, 2013
Competition for Top Colleges
Competition to Get Into the Best Colleges—Posner
It makes sense, as Becker points out, that increased earnings of graduates of top colleges will attract more applicants to those colleges, enabling the colleges to be more selective. Furthermore, as colleges stopped discriminating against Jews and Asians, who tend to be the best students, the quality of the applicant pool rose. In addition, colleges want to have wealthy alumni, and if the financial return to IQ rises because of the increased complexity and sophistication of the economy, high IQ students become increasingly attractive as future alumni and therefore potential donors.
Another causal factor may be the correlation between parental income and kids' IQs. Obviously not all wealthy people are smart and have smart children, but in general there is a positive correlation between income and IQ and between parental IQ and children's IQ. As the advantages of attending a top college became more apparent, well-to-do parents began investing more in tutoring for their kids and in sending their kids to top (and very expensive) private schools, and this further increased the quality of the college applicant pool.
But this does not explain the relation between having attended a top college and having a higher income than students with similar intellectual promise who attended a lower-ranked college. The possibility explored by Becker, and by Caroline Hoxby, whose study he cites, is that a student benefits from the company of very bright students. One can learn from one's fellow students as well as from one's teachers, and moreover the presence of very bright students may stimulate the teacher to greater exertion in teaching. But at least three alternative possibilities should also be considered. The first is that potential employers consider graduation from a top college a certification of the graduate's ability. The second is that what students mainly learn from their fellow students is social rather than intellectual—the students at these schools tend to come from prosperous, sophisticated households, which equips them to succeed in fields in which social sophistication (charm, poise, self-confidence, articulateness, etc.) is an employment asset, as it is in many fields. And third is that students at the top schools make valuable contacts—with their classmates who are marked for success. These contacts are business assets.
Becker makes the interesting point that insofar as a student's future earnings are bolstered by reason of his attending a college that has many bright students, the future earnings of those students are reduced because the students face more competition than they would if less-bright students were not admitted. But this effect could be offset by the external benefits generated by those students. The student whose employment prospects are enhanced from what he learns from his fellow students may turn out to be a highly successful entrepreneur who business activities generate lucrative employment or investment opportunities for other top-college graduates.
Even though the greater selectivity of the top colleges increases the earnings of their graduates, and so, prima facie, their contribution to aggregate economic welfare, a question remains whether some alternative method of sorting applicants to colleges would be more productive. I am dubious. Suppose high-school graduates who passed a test designed to determine whether a student would benefit from a college education were assigned to colleges randomly. Parents would invest less in tutoring and other forms of college preparation for their children. Colleges would employ tracking to segregate the brighter students from the less bright ones, which would reduce the opportunities for the less bright students to learn from the brighter ones. Colleges would compete less vigorously for top-flight faculty, as better faculty would not attract better students.
Moreover, if the benefits (for example in higher lifetime earnings) of association between bright students are multiplicative rather than additive, random assortment will reduce those benefits. (Becker has made a similar point with respect to assortative mating, in his work on the economics of the family.) Suppose that A is a 4 in intelligence or other attributes and B a 3, while C is a 2 and D a 1.5. If B studies, works, or converses with A, their total productivity will be 12 (3 x 4); then D will be assigned to C and their total productivity will be 3 (1.5 x 2). The grand total will thus be 15 (12 + 3). If instead D were assigned to A and C to B, the grand total would be only 12 (1.5 x 4 + 2 × 3). I think this is likely to be the case in the sorting of students. When there is a significant disparity in ability, communication will be difficult and neither will learn much from the other.
I conclude that the current system is superior to one that would try to homogenize the quality of students accepted to different colleges.
Why Has Competition to Get into Top Colleges Become Much Tougher? Becker
Children in the better secondary schools in Korea, Japan, China, Turkey, and other countries work very hard not only because of considerable school homework, but also through their parents spending considerable sums on private tutoring. In these countries, spending on tutoring is a sizable fraction of total spending on high school students; indeed, in Korea, spending on after-class tutoring has been estimated to be almost as large as spending by public high schools. The aim of the spending by parents on tutoring is to improve their children's chances of getting into the top schools, such as Tokyo and Keio Universities in Japan, and Seoul National University in Korea.
With the worldwide boom in higher education and in the demand by business and governments for college graduates, the Korean and Japanese emphasis on hard work in secondary school has spread to other nations. For example, since enrollments in Chinese universities have increased manifold since 1995, the competition to get into the top schools, such as Beijing University, is fierce, even though the number of Chinese universities has also expanded rapidly. As a result, many Chinese parents are spending increasing amounts on the secondary education of their children, including private schooling and extra tutoring.
Although secondary school students work very hard in Japan, Korea, and many other countries, they tend to relax and take it much easier at universities. They often need a few years to recover their energies. So even at the best universities there, homework is not that extensive and much time is left for play.
The American education system had traditionally followed an approach that is the opposite of the Japan-Korean approach to education. High schools, even the better ones, did not give much homework, and relatively little money was spent on private tutoring. Of course, much learning occurred in the better high schools, but at a leisurely pace, with considerable time for athletics, theatre, school newspapers, and other school activities, and also for parties, watching television programs, listening to music, and other out of school pursuits. But once at a good university students had to buckle down to hard work, or at least much harder work than in high school.
This American approach to education is radically changing at the better public and private high schools because during the past couple of decades it has become much more difficult to get into the top colleges and universities. Teachers are giving greater amounts of homework, and families are also spending a lot more on private tutoring. The tutoring is partly in math and other subjects, and partly in direct preparation for the SAT exams that in good measure determine whether students get accepted into the better colleges and universities.
Presumably, parents, high school teachers, and students perceive that the students gain enough from attending the top colleges to justify the additional time, money, and energy put into trying to gain acceptance to these schools. It has long been known that graduates from top colleges and universities get better jobs and earn more than do graduates from lesser schools. What has been much less certain is whether these graduates do better because they are abler, and hence would have done better even if they had attended lower level schools. Recent econometric studies have more successfully separated out the performance of colleges from the selection of students. These studies examine the earnings of students who were rejected from and accepted into the top American schools when they have comparable SAT scores, high school grades, and other characteristics.
The studies find that students who attend harder to get into schools earn considerably more over their lifetimes than comparable students who attend schools that spend less per student and where average SAT scores are lower (a good summary is by Caroline Hoxby in "College Choices Have Consequences", SIEPR Policy Brief, December, 2012). Most of the difference in earnings is apparently due not to the amount that schools spend per student, but to the quality of the other students attending the same schools.
Earnings of college graduates depend on how much their schools spent on their education, the various abilities and skills of the graduates, and the characteristics of the other students at the schools they attended. Hoxby shows that spending per student has grown much more rapidly since the 1960s at the top colleges than at lesser colleges, while at the same time tuition per student at the top schools has grown much more slowly than spending per student. It is also documented that earnings of college students per dollar spent on their education has risen substantially since 1980. As a result, the economic gains to graduates from the top schools have risen greatly during the past 40 years.
These three facts, that returns to college education have risen rapidly during the past several decades, that spending per student at the top colleges has also increased rapidly, and that the cost of attending these schools has grown much more slowly, can readily explain why students at the better high schools face a much more rigorous workload than in the past. They also explain why their parents spend a lot more on private tutoring. The gains from having better grades, higher SAT scores, and more extracurricular activities have risen considerably because that helps students get into the top schools.
These results do not answer the basic question of whether the extra effort by high school students is socially productive, or whether it is partly a social waste (an "arms race") because efforts by different students partly just offset each other without producing socially valuable knowledge. The evidence I have discussed has a mixed message about this. On the one hand, the fact that the better colleges and universities ration entry rather than by raising tuition to the more marginal applicants suggests that these students fight it out for the limited and rationed slots at the top schools by becoming better "armed" with higher SAT scores and more extracurricular activities.
On the other hand, the fact that the quality of other students at the same university positively affects the subsequent earnings of all the graduates from that university suggests that too little is spent on higher scores and better preparation. The reason is that higher scores by any student improve the subsequent performance of other students at the same college. A further issue not fully resolved is how much of the benefits from attending universities like Harvard, Stanford, Chicago, Tokyo, Seoul National, and Beijing come from the reputation of these schools rather than from the valuable knowledge and skills (including networks) possessed by graduates from these schools.
Although the net result on the "arms race" aspect of the improved student preparation for college admission is not clear from the available evidence, the evidence cited explains why students in the better American high schools are working so much harder than they did several decades ago. I suspect that the greater earnings and other gains from attending top universities also applies, perhaps even more strongly, to Japan, Korea, and the other countries where the better high schools require so much work.