In the United States today, there are some 3,400 separately governed
colleges and universities, amounting to a higher education industry with
expenditures that constitute 2.8% of the gross national product. Yet
relatively little attention has been paid to the economic issues
affecting this industry. In this collection of eight essays, experts in
economics and education apply economic analysis to such underexamined
topics as the nature of competition in higher education, higher
education's use of resources, and who chooses to purchase what kind of
education and why. The first study in the volume looks at the higher
education market as a whole, including the ways in which colleges with
small endowments are able to compete successfully with institutions that
have much larger endowments for faculty, students, and financial
support. The chapter also examines why tuitions are nearly the same
among schools despite differences in prestige. Three other studies
analyze recent trends in college enrollment, focusing on the racial
composition of enrollments and the quality of students entering highly
ranked institutions. The authors seek to understand the variation in
enrollment between blacks and whites, for example, and they find that
more and more of the top students, regardless of race, are going to
elite private institutions. Another essay considers the choices among
colleges that young people from low-income backgrounds face, and argues
that economists must look at subjective variables, such as expectations
about schooling, when studying enrollment patterns. Rounding out the
volume, three chapters discuss student interest in pursuing an academic
career, the effect of changes in federallyfinanced fellowships on
universities, and the criteria universities use for deciding how to
invest their endowments. By addressing these issues, this volume fills a
large gap in studies of the economics of higher education and suggests
subjects for further study in this field.
