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Is the College Admissions Race Efficient?

Thanks to the positive effects of higher education on pay, the competition for entrance into the top colleges has increased sharply over the past three decades--particularly in the Northeast and California. But over the same period, the number of slots available at these schools has stayed largely unchanged, leading to a situation where demand far outstrips supply.

In response, high school students and their parents have devoted a greater share of their resources to improving their relative standing. The evidence:

  • Average scores on college entrance exams have gone up.
  • The percentage of students taking advancement placement courses has increased from under 5% in the early 1970's to 30% by the middle of this decade.
  • The percentage of high school seniors who volunteer has increased from 45% in the mid-80’s to 70% by 2000.
  • The number of students who apply to four or more schools has doubled since the 70’s.

These data points are from a new NBER paper by John Bound and Brad Hershbein of the University of Michigan and Bridget Terry Long of Harvard that questions the benefits of the college admissions rat race.

The researchers argue that instead of better preparing high school students for the rigors of higher ed, increased competition may actually be counterproductive. They find that increased competition is negatively correlated with college enrollment and earnings at age 25 for students in a subset of highly competitive states. 

In conjunction with the psychological and informational costs associated with competitive pressure … these results should raise doubts that the increased competition for college admission has had a net positive effect on what and how students learn.