"Colleges That Have Shall Get"

Unequal Colleges in the Age of Disparity by Charles T. Clotfelter. Cambridge, MA: Belknap Press of Harvard University Press, 2017.

One feature of the extraordinary divergence in Americans’ eco­nomic fortunes is a widening gap in labor-market outcomes be­tween those with a college degree and those without. On average, those with college degrees suf­fer far less unemployment and, when employed, earn higher incomes. The literature on the economics of education is full of analyses that root a causal arrow in higher education and point to economic inequality as a conse­quence. Charles Clotfelter is well aware of this wide literature and gives thoughtful consideration to the question of the economic returns of higher education in the last and shortest part of his four-part book, Unequal Colleges in the Age of Disparity. But the bulk of the book deals with the inverse question. Given a context of widening economic inequality, what effect does the divergence in Americans’ economic fortunes have on colleges and universities as institutions?

As Clotfelter announces in his title, the central finding of his book is that these institutions are as wildly unequal as individuals are in early twenty-first-century America. Furthermore, he argues that the widening economic inequality within the US popu­lation at large has contributed to widening inequality among US colleges and universities. “If anything about American colleges and universities is true,” Clotfel­ter writes, “it is that they were not created equal. Nor have they tended to become more equal as they matured.”

Clotfelter arrives at this con­clusion through the extensive use of descriptive statistics. He offers no statistical analysis fireworks, or even workaday ordinary least squares regressions, just careful data collection and sorting. He sorts the data on three criteria: public versus private institutions, undergraduates’ average SAT score percentiles, and historically black colleges or universities versus all other institutions—all other institutions being in almost all cases historically white, with racial integration coming at various times and to varying degrees across institutions. He sorts data on SAT scores finely, especially among pri­vate historically white institutions at the top end of the spectrum, generating seventeen different insti­tutional categories.

Clotfelter is quick to point out that such fine sorting is not excessive. In analyses of income in the United States, we would miss something very important if we lumped those in the 99th percentile with those in the 90th percentile: even as the 90th percentile has pulled away from the median, the 99th percentile has pulled away from the 90th. The differences in wealth are even more glaring than the dif­ferences in income. By sorting incoming students’ SAT scores so finely, Clotfelter shows that a similar type of inequality charac­terizes colleges and universities. In 2012–13, institutions whose entering students scored between the 90th and 95th percentiles on their SATs made per-student educational expenditures more than 50 percent greater than those whose students were near the median, but institutions whose students scored in the 99th percentile made per-student edu­cational expenditures that were more than 60 percent greater than those between the 90th and 95th percentiles. (The spending levels round to $24,000, $37,000, and $61,000.) The differences in endowment are even more glaring. In 2012–13, institutions whose students scored in the 99th percentile on the SAT had per-student net assets of about $1.2 million, a different order of magnitude from all others. These super-elite institutions had more than twice as much in per-student assets as those whose students scored only in the 98th percentile, and more than six times as much as those whose students scored between the 90th and 95th per­centiles. And the median? Forget about it. As with income and with wealth, the farther up the college ranking ladder you climb, the more you have to crane your neck to see the next rung above you. Viewed from the middle, life at the top is the stuff of myth.

Inequality outside the higher education industry contributes mightily, Clotfelter argues, to inequality within it. Rich people have amassed fortunes. For rea­sons of prestige and preferential tax treatment, they have been will­ing to make large charitable donations. They especially like donating to already-wealthy and prestigious nonprofit institutions. This has been a windfall for the likes of Harvard University.

Also, top-tier college admis­sions have become intensely coveted, status-conferring prizes for members of the socioeconomic elite. Given the excess demand for degrees from the top-tier colleges and universities (admission rates for many are in the single digits), and given the very high median incomes of those who attend, economic supply and demand analysis says the already-high sticker price could go much, much higher. But instead of using price to ration enrollments, the elite institutions use arduous admis­sions standards (with a significant element of the arbitrary). The top colleges and universities pull away both in resources and in academic standing. Since they can’t buy admission outright, the affluent buy improved chances of admis­sion with private school tuitions or pricey housing in wealthy public school districts, with tutors and test prep and extracurricular activities, and with the ability to underwrite living expenses for their offspring doing unpaid internships and volunteer work that look good on a résumé. Many of their children buy into this project. The divergence in SAT scores between the most desired schools and the rest correlates with a divergence in the hours spent studying in high school. The children of the rich are no lon­ger exactly members of a leisure class. Instead, they are in a frenzy of high-stakes, labor-intensive self-cultivation.

But Clotfelter rightly insists that we should not focus solely on the top-tier colleges and universi­ties. They account for only a sliver of the higher education industry. As the top institutions have entered an era of unprecedented abundance, the rest have been scrambling. Without the ample endowments enjoyed at the top, most private colleges and universi­ties depend on tuition revenues to keep themselves afloat year to year. A bad admissions season can set off a crippling, maybe fatal, downward spiral. Public colleges and universities have some state funding to complement tuition, but almost all states have been scaling back their investments in public higher education, leaving tuition revenues to cover a larger and larger share of operating expenses. And most colleges and universities do not operate in the setting of excess demand that the elite institutions enjoy.

An institution that is not the aspirational destination for more than enough qualified high-income applicants has to depend instead on desperate multifaceted market­ing strategies to get enough paying students to enroll. Such institu­tions can attract students with an intensive investment in product differentiation—or salesmanship that creates the illusion of differ­ence—or with price discounts. In general, they do both. They engage in an intensive sales effort coax­ing students along at every step of the path from indication of interest to application to (assum­ing acceptance—and acceptance rates at most colleges and universi­ties are high) enrollment. Much of this activity, he notes, is zero-sum competition—given the resources consumed, it could be consid­ered negative-sum. Institutions of higher education can and do engage in a marketing arms race, but no matter how much they spend collectively on the admis­sions effort, a student will enroll in a maximum of one college come fall.

Along with the sales push that emphasizes whatever aspects of college life the sales team expects to be most persuasive to prospec­tive students (for many of them, nonacademic considerations out­weigh academic ones), colleges and universities also employ a com­plex discount-pricing strategy. To maintain rankings and credibility as institutions of higher learning, they need to have some reasonably high-achieving students. Most have to scramble for those left over after the elite institutions have skimmed the academic cream. Enter merit-based scholarships. A rising share of total financial aid is in the form of such need-blind scholarships, which are used to lure in the high achieving. The use of merit-based scholarships very often means offer­ing more aid to those who could best afford to pay.

Clearly, this is a system of glar­ing inequality. Is it also, Clotfelter asks briefly at the end of the book, inefficient? That is, if the resources lavished on elite institutions and their students at the top were redis­tributed to those further down the academic rankings, would the gains for the masses outweigh the losses at the top? Or is concentrating our educational resources on the academically most able the best use we could make of those resources? Clotfelter cites Caroline Hoxby’s conclusion that the inequality of US higher education actually is efficient, but he points to a variety of confounding factors, starting with the fundamental issue of what outcome we want to measure and how exactly we can measure it. So, the evidence is suggestive but not conclusive.

Clotfelter’s book is primarily about the market for higher educa­tion and hence about colleges and universities as sellers of a service and students (and their families) as buyers. This means that there are some very relevant questions that he does not tackle. Of particular interest to readers of Academe are questions about working condi­tions in colleges and universities. He offers a comparison of full professors’ salaries at different types of institutions but makes only brief, unsatisfying mention of the increase in precarious labor con­tracts for faculty. The heterogeneity of the students who enter the higher education market as buyers and the heterogeneity of the institu­tions peddling their wares are entwined with enormous variety in the working lives of college faculty and staff, and this book speaks only indirectly to that question. Instead, Clotfelter’s valuable book forms a connective tissue between research on students’ experiences of college education and research on faculty and staff’s experiences of their work lives.

Zoe Sherman is assistant professor of eco­nomics at Merrimack College. She is a member of the Dollars & Sense editorial collective and writes regularly for that magazine. Her email address is [email protected].