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The Positional Arms Race in Higher Education

Author

Listed:
  • Winston, G.C.
Abstract
The market for undergraduate education has many similarities to an arms race. A school's position - relative to other schools - determines its success in attracting students and student quality. Its position, in turn, is largely determined by the size of its student subsidies, the difference between its educational spending and the net tuition it charges its students (or, much the same thing, how much their students have to pay for a dollar's worth of educational spending). High-subsidy schools spend the most per dollar of tuition so that 'bargain' attracts the highest quality students. To change its position, a school must spend more or charge less - and find the resources to support it. The positional arms race suggests why competition from a school further down in the hierarchy forces a response more effectively than competition from above and why it's been typical of higher education that costs rise to reposition, but prices don't fall.

Suggested Citation

  • Winston, G.C., 2000. "The Positional Arms Race in Higher Education," Williams Project on the Economics of Higher Education DP-54, Department of Economics, Williams College.
    • Handle: RePEc:wil:wilehe:54
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    File URL: http://sites.williams.edu/wpehe/files/2011/06/DP-54.pdf
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    Citations

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    Cited by:

    1. Adam Hoffer & Brad R. Humphreys & Donald J. Lacombe & Jane E. Ruseski, 2014. "The NCAA Athletics Arms Race: Theory and Evidence," Working Papers 14-29, Department of Economics, West Virginia University.
    2. Cunningham, Brendan M., 2009. "Faculty: Thy administrator's keeper? Some evidence," Economics of Education Review, Elsevier, vol. 28(4), pages 444-453, August.
    3. Karsten Mause, 2009. "Too Much Competition in Higher Education? Some Conceptual Remarks on the Excessive‐Signaling Hypothesis," American Journal of Economics and Sociology, Wiley Blackwell, vol. 68(5), pages 1107-1133, November.
    4. Yann Rébillé & Lionel Richefort, 2015. "Influence and Social Tragedy in Networks," Revue d'économie politique, Dalloz, vol. 125(6), pages 811-833.
    5. Jeongeun Kim, 2018. "The Functions and Dysfunctions of College Rankings: An Analysis of Institutional Expenditure," Research in Higher Education, Springer;Association for Institutional Research, vol. 59(1), pages 54-87, February.
    6. Winston, G.C., 2000. "Economic Stratification and Hierarchy Among U.S. Colleges and Universities," Williams Project on the Economics of Higher Education DP-58, Department of Economics, Williams College.
    7. Adam Hoffer & Brad R. Humphreys & Donald J. Lacombe & Jane E. Ruseski, 2015. "Trends in NCAA Athletic Spending," Journal of Sports Economics, , vol. 16(6), pages 576-596, August.
    8. Kim, Matthew, 2010. "Early decision and financial aid competition among need-blind colleges and universities," Journal of Public Economics, Elsevier, vol. 94(5-6), pages 410-420, June.
    9. Siân Mughan & Jessica Sherrod Hale & Joanna Woronkowicz, 2022. "Build It and will They Come?: The Effect of Investing in Cultural Consumption Amenities in Higher Education on Student-Level Outcomes," Research in Higher Education, Springer;Association for Institutional Research, vol. 63(1), pages 60-91, February.
    10. Pavlov, Oleg V. & Katsamakas, Evangelos, 2023. "Tuition too high? Blame competition," Journal of Economic Behavior & Organization, Elsevier, vol. 213(C), pages 409-431.

    More about this item

    Keywords

    EDUCATION;

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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