College Competitiveness Reconsidered

Scott Jaschik:

Everybody knows that college is harder to get into today than ever before, right? That’s why students flock to test-prep courses, and spend countless hours trying to transform themselves into what they imagine admissions deans want.
Admissions deans have tried to play down the hype, and just last week the National Association for College Admission Counseling released data showing that the acceptance rate at four-year colleges has declined from 71.3 percent in 2001 to 66.8 percent in 2007 — hardly an impossible bar to get over. So why are so many people convinced that the story in higher education admissions is about increased competitiveness?
The problem — according to a major research project released Monday by a leading scholar of higher education — is that there are two trends at play.
A small number of colleges have become much more competitive over recent decades, according to Caroline M. Hoxby, an economist at Stanford University. But her study — published by the National Bureau of Economic Research — finds that as many as half of colleges have become substantially less competitive over time.
The key shift in college admissions isn’t increased competitiveness, Hoxby writes. Rather, both trends are explained by an increased willingness by students generally, and especially the best students, to attend colleges that aren’t near where they grew up. This shift increased the applicant pool for some colleges but cut it for others.
“Typical college-going students in the U.S. should be unconcerned about rising selectivity. If anything, they should be concerned about falling selectivity, the phenomenon they will actually experience,” Hoxby writes.

Hoxby’s paper:

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.