Term Paper on "Return on College Quality"

Term Paper 8 pages (3511 words) Sources: 5 Style: Chicago

[EXCERPT] . . . .

RETURN on COLLEGE QUALITY it's not just a perverse status-consciousness that makes higher education the only industry in which competitors are rated on the caliber of their customers rather than on their product - or that drives U.S. News & World Report to rank colleges on how well they recruit and graduate already successful high schoolers.

It's that we have no other discriminating way to measure collegiate quality. (Hersh 2005)

Measurements" Related to Collegiate Quality Other than the ratings colleges receive from their graduates, Hersh (2005) notes in this paper's introductory quote, no other astute way exists to "measure collegiate quality." Hersh (2005) argues, albeit, that: "if we don't know what makes a school good or bad, then the anxiety-driven college-application process is a terrible waste, the U.S. News & World Report rankings are a sham, and all the money lavished on vast library holdings, expensive computer labs, wireless classrooms, and famous faculty members is going for naught." In light of the dearth of effective measuring tools for colleges, Hersh (2005) proposes that variables such the value of SAT scores, graduation rates, class sizes, faculty salaries, and alumni giving surely matter to college-obsessed parents. Despite the noted dearth of measuring tools for collegiate quality, this paper, nevertheless, examines "measurements" by five researchers regarding the return students receive on college quality. The studies include:

College Quality and Future Earnings: Where Should You Send Your Child to College? (1989)

Does it Pay to Attend an Elite Private College? Cross-Cohort Evidence on the Effects of College Type on Earnings. (1999)

How Robust is the Evidence on the Effects of College Quality? Evidence from Matching?(2003)

Determinants of undergraduate GPAs: SAT scores, high-school GPA and high-school rank. (2004)

Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and un-observables, (1999)

1. College Quality and Future Earnings: Where Should You Send Your Child to College?

a. In BRIEF:

In their study, College Quality and Future Earnings: Where Should You Send Your Child to College?, James, Alsalam, Conaty, and to (1989, 247) consider graduating students' future earnings, as a function of all the jointly supplied inputs. Research questions include:

Does it matter which college you attend'?

If it matters, which college characteristics or other aspects of the college experience lead to a higher value-added?

While institutional characteristics do not explain a large proportion of the variance in earnings, other aspects of the higher educational experience such as choice of major, number of maths credits taken, GPA, and postgraduate degree matter a great deal." (James, Alsalam, Conaty, and to (1989, 251)

Some institutional characteristics as selectivity and Private-East exert positive effects on future earnings. Expenditures per student, albeit, do not have such an impact.

Attending Harvard appears to be a positive investment, however, attending a local state university to major in Engineering. To take massive amounts of mouth also constitutes a good investment.

A number of other outputs of higher education, other than future earnings and productivity matter. (James, Alsalam, Conaty, and to 1989, 249) b. MOTIVATION:

As a voluminous literature exists "on the returns to quantity of higher education...," these researchers note that little work has been done on the causes and consequences of college quality. "This paucity of research is due in part to the difficulty in obtaining detailed information about student and institutional characteristics." (James, Alsalam, Conaty, and to 1989, 247) This researcher agrees with the way the authors view the context of the issue.

c. BACKGROUND: No specific note is made regarding previous research efforts completed. These authors purport they explore the causes and consequences of college quality. No policy is examined during this study.

d. EVIDENCE: Potential biases include authors' choices of variables. The authors admit:

study of this sort cannot completely avoid the possibility of selection bias in estimating coefficients. Students with unobservable characteristic~ (such as motivation) may work harder, enter remunerative majors and occupations, and also self-select themselves into certain colleges, thereby creating the appearance of large college effects when in fact they may be small. We have tried to minimize this problem by controlling for numerous student characteristics and also by controlling, in some equations. For college experience variables such as major and GPA that may proxy the unobserved student characteristics. These equations may help to mitigate selection bias at the college level but the problem recurs at the curriculum level: Are the effects of GPA, math and major real effects, or are they, too, due to unobserved student characteristics that are correlated with these choices? (James, Alsalam, Conaty, and to 1989, 249)

The most convincing evidence the authors present in support of their arguments includes: "Regardless of which variables are in the model, measured college effects [sic] are small, explaining 1-2% of the variance in earnings. Interestingly, these effects are largely unchanged when controls for family background and prior academic background are added in equation 3, although they decline when major and even more so, when occupation, are added in equations 4, 5, and 6. To the extent that college characteristics matter selectivity and Private-East..., (characteristics that are not readily replicable, seem most important." (James, Alsalam, Conaty, and to 1989, 249) No weak argument could be determined by this researcher as it appears the authors covered even their potential weak points. Ultimately, in regard to future earnings, findings of this study suggest, "The main conclusion to be drawn is that research and graduate programs do not help undergraduates, nor does the choice between college vs. university affect future earnings. (James, Alsalam, Conaty, and to 1989, 250)

2. Does it Pay to Attend an Elite Private College? Cross-Cohort Evidence on the Effects of College Type on Earnings a. In BRIEF:

Brewer, Eide, and Ehrenberg (1999, 104) report that even though a substantial and rising labor market premium links with college attendance, not much research relates how this premium varies across various types of institutions and across time. These authors "explicitly model high school students' choice of college type (characterized by selectivity and control) based on individual and family characteristics (including ability and parental economic status) and an estimate of the net costs of attendance." b. MOTIVATION:

Previous research reveals the labor market return to college overall has fluctuated. "Between the mid-1970s and the mid-1980s the proportionate difference in mean wages between male college graduates and male high school graduates grew by 15 to 30 percentage points (Bound and Johnson 1992; Katz and Murphy 1992; Levy and Murnane 1992, cited by Brewer, Eide, and Ehrenberg (1999, 105) it has not been confirmed, however, whether this higher return applies equally to all types attendees of four-year college or merely to those at certain types of institutions. This researcher did not find any areas to disagree with in this study.

c. BACKGROUND:

Previous research by Bound and Johnson 1992; Katz and Murphy 1992; Levy and Murnane 1992 (cited by Brewer, Eide, and Ehrenberg 1999, 104) notes that, overall, the labor market return to college regularly fluctuates. Contrary to some previous studies, in this study Brewer, Eide, and Ehrenberg (1999, 119) utilize longitudinal data to examine "how the labor market return changes across time for a given cohort, and how the return changed for those early 1980s. In addition, unlike previous attempts to determine the impact of college quality type on labor market outcomes, we allow for the fact that students systematically select the college quality type they attend on the basis of the net costs they face." d. EVIDENCE: Utilizing data from both the National Longitudinal Study of the High School Class of 1972 and High School and Beyond, Brewer, Eide, and Ehrenberg (1999, 104) determine the effects of college quality on wages and earnings. They also explore how this effect fluctuates across time. Brewer, Eide, and Ehrenberg (1999, 105) apply the framework Lee (1983) developed to analyze polychotomous choice models with selectivity, to college selection. The approach, a generalization of the familiar model of Willis and Rosen (1979), consists of a choice equation and an estimated outcome equation for each choice. "Even after controlling for selection effects, strong evidence emerges of a significant economic return to attending an elite private institution, and some evidence suggests this premium has increased over time." (Brewer, Eide, and Ehrenberg 1999, 104)

3. Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and un-observables, (1999) a. In BRIEF:

According to Dale, and Krueger (1999), characteristics related to a student's earnings capacity may influence some decisions made by elite colleges regarding his/her admission. As some characteristics are unseen by researchers who ultimately estimate wage equations, albeit, parsing out the effect of attending a selective college from the students' pre-college characteristics proves challenging.

Dale, and Krueger (1999, 1) find that students who attended more selective colleges do not earn more than other students accepted and rejected by comparable schools, but who ultimately attended less selective colleges.

b. MOTIVATION:

In the past, literature has addressed the question, "Does the 'quality' of the college that students attend influence their… READ MORE

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