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Monday, July 09, 2007

Perception is reality? University donation edition

From today's Chronicle of Higher Education:
Closer Look at Alumni Giving Finds Ulterior Motives

What motivates alumni to get out their checkbooks and donate to their alma maters? Nostalgic attachment to the football team? Careful reflection on Russell Kirk’s arguments in Decadence and Renewal in the Higher Learning?

Those are both possibilities. Here’s another one, which donors might not be so willing to confess: a belief that their donations will increase their children’s odds of winning admission.

In a new working paper, two economists have examined the giving patterns of more than 32,000 people who graduated from an unnamed selective university between 1972 and 2005. The economists found that, among people whose children applied to the same university, donations increased significantly in both number and amount when the children were between the ages of 14 and 17. And when an alumnus’s child was rejected by the university, the alumnus's odds of donating declined sharply.

It seems clear that "some donations are made in the hope of a reciprocal benefit," write the authors, Jonathan Meer, a doctoral candidate in economics at Stanford University, and Harvey S. Rosen, a professor of economics at Princeton University.

In a column on Slate, Joel Waldfogel of the University of Pennsylvania suggests that selective universities subtly encourage the belief that donations will improve one’s childre's odds in the admissions lottery, "like a married woman who hides her wedding ring so that optimists will buy her drinks." —David Glenn
The premise is interesting and if the results are true (no reason to doubt them at this point) suggest that the perception on the part of parents is that prestigious schools do make a trade off between money and student quality. Whether the perception is true is not necessarily material to the problem - if parents think that a little dough will grease the wheels for Sally's 2.9 GPA in high school, then mom and dad will grease away. If the grease doesn't really change the odds of Sally's admission, is it in the best interest of the school to advertise as such? On one level, it would seem not.

This is my kind of paper and one of the reasons I find economics so interesting and, yes Virginia, so much fun.

I suspect that donations to a university actually do increase the likelihood of one's children being accepted. I would be interested in seeing further research into how donations affect acceptance (controlling for other variables). Specifically, I would be interested in the trade off between merit-based measures and donations. For example, how much does it cost to offset one grade point?

The data collected for this project would be a big step in answering this question.
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