Reed College
Reed College

Economics 321

Economics of Reed College
Jeff Parker and Jon Rivenburg
Reading List
Fall 2011

Readings marked with an asterisk (*) are not required. They are included for those who wish to pursue selected topics in more detail. Some readings (as noted) will be assigned to individual class members (or groups) but not to the entire class. In addition to these "academic" readings, students will be provided with institutional reports and data on Reed and other colleges as the course proceeds. The instructors are also likely to send a barrage of incidental articles of relevance from the Chronicle of Higher Education and other sources your way.

Many of the readings in the list are available on the Internet. Most of these will have links directly to the reading. Note that most of these are available through online subscriptions that can be accessed only if you are connecting through the Reed network. It is possible that some of the links to/through various library collections may not be stable. If you encounter difficulty getting the link to work from this page, go to the ejournals link on the Reed Library home page and search for the journal title. You should be able to find an electronic copy of the paper that way.

Depending on the availability of guest speakers, some topics may change places on the reading list. Be sure to check this page before beginning the reading each week.

Week 1: August 31 and September 1
Introduction to the Economics of Reed College

A discussion of the class and of the basic economics of our college. In what markets does Reed participate and what is the extent of these markets? Where does Reed get its money and where is it spent? In what ways is Reed similar to and and in what ways is it different from other colleges?

  • No reading.

Assignment due Thursday, September 1: Complete ASQ form (handed out Wednesday evening)

Week 2: September 7 and 8
The Economics of Higher Education

Sources and uses of funds within liberal-arts colleges and other institutions of higher education. Trends in institutional finances.

All students read for Wednesday:

Read and summarized by subset of students for Wednesday:

All students read for Thursday:

  • Winston, Gordon C., and David J. Zimmerman, "Peer Effects in Higher Education," in C. Hoxby, ed., College Choices: The Economics of Where to Go, When to Go, and How to Pay for It, (Chicago: NBER and University of Chicago Press, 2004), Chapter 9. (Working paper version available online.)
  • Parker, Jeffrey, James Grant, Jan Crouter, and Jon Rivenburg. 2008. Classmate Peer Effects: Evidence from Core Courses at Three Colleges. Portland, Ore.: Reed College.

Read and summarized by subset of students for Thursday:

Week 3: September 14 and 15
College Productivity and Liberal-Arts Colleges

The "technology" of "production" and "productivity" in higher education. What is distinctive about liberal-arts colleges? What are the survival challenges faced by small colleges?

All read for Wednesday

  • Massy, William F. 1996. Resource Allocation in Higher Education. Ann Arbor, Mich.: University of Michigan Press.
    • Chapter 3: Productivity Issues in Higher Education
  • Breneman, David W. 1994. Liberal Arts Colleges: Thriving, Surviving, or Endangered? Washington D.C.: Brookings Institution Press.

Read and summarized by subset of students for Wednesday:

  • Vedder, Richard. 2004. Going Broke By Degree: Why College Costs So Much. Washington D.C.: American Enterprise Institute Press
    • Chapter 1: The Cost Explosion [Horváth, Anderson, Kachroo-Levine]
    • Chapter 2: Why Are Universities Inefficient and Costly? [Sutphin, Ku, Kincaid]
    • Chapter 3: Productivity Decline and Rent-Seeking [Chen, Iselin, Mirza]
  • Johnson, Nate. 2009. What Does a College Degree Cost? Comparing Approaches to Measuring 'Cost per Degree'. Delta Cost Project White Paper Series. Washington, D.C.: Delta Cost Project. [DeRosa, Mirza, Chen]

Thursday: Discussion of Staffing Reduction Assignment

Week 4: September 21 and 22
Human Capital and the Demand for Higher Education

The benefits of higher education and of elite higher education. Is it worth it? Does it matter what your major is?

All read for Wednesday:

  • Becker, William E. 1992. Why Go to College? The Value of an Investment in Higher Education. Chapter 4 in W.E. Becker and D.R. Lewis, eds., The Economics of American Higher Education. Boston: Kluwer Academic Publishers.
  • Goldin, Claudia, and Lawrence F. Katz. 2007. The Race between Education and Technology: The Evolution of U.S. Education Wage Differentials, 1890 to 2005. Cambridge, Mass.: National Bureau of Economic Research Working Paper No. 12984. (This is an earlier version of Chapter 8 from the authors' 2008 book, The Race between Education and Technology, Cambridge, Mass.: Harvard University Press.)
  • Cohn, Elchanan, and Terry G. Geske. 1992. Private Nonmonetary Returns to Investment in Higher Education. Chapter 7 in W.E. Becker and D.R. Lewis, eds., The Economics of American Higher Education. Boston: Kluwer Academic Publishers.

Papers to be read and summarized by subset of students for Wednesday:

All read for Thursday

Papers to be read and summarized by subset of students for Thursday:

Week 5: September 28 and 29
Minority Access and Diversity

What are the goals of affirmative action policies? What are the legal constraints? What is the track record of affirmative action?

All read for Wednesday:

  • Bowen, William G., and Derek Bok. 1998. The Shape of the River: Long-Term Consequences of Considering Race in College and University Admissions. Princeton, N.J.: Princeton University Press
    • Chapter 1: Historical Context
    • Chapter 2: The Admissions Process and "Race-Neutrality"
    • Chapter 3: Academic Outcomes
    • Chapter 9: Informing the Debate
    • Chapter 10: Summing Up

Papers to be read and summarized by a subset of students for Wednesday:

Thursday visitor: Crystal Williams, Dean of Institutional Diversity

Week 6: October 5 and 6
The Demand for Liberal-Arts Colleges

What determines where students apply and attend? How do economic factors such as tuition and financial aid affect enrollment decisions?

All students read these basic demand papers for Wednesday:

Papers to be read and summarized by a subset of students for Wednesday:

Thursday visitor: Keith Todd, Dean of Admission

Week 7: October 12 and 13
Institutional Admission and Financial-Aid Policies

How institutions design enrollment and financial-aid policies to attract the desired group of students within their budgets.

All read for Wednesday:

  • Wilkinson, Rupert. 2005. Aiding Students, Buying Students: Financial Aid in America. Nashville, Tenn.: Vanderbilt University Press.
    • Chapter 1: Setting the Record Straight
    • Chapter 2: Aid in History: Who Got It, What Shaped It
    • Chapter 7: Choosing the Best
    • Chapter 8: New Strategies
  • McPherson, Michael S., and Morton Owen Schapiro. 1998. The Student Aid Game: Meeting Need and Rewarding Merit in American Higher Education. Princeton, N.J.: Princeton University Press.
    • Chapter 9: Student Aid as a Competitive Weapon
    • Chapter 10: Merit Aid
    • Chapter 11: The Institutional Perspective
    • Chapter 12: The Student Perspective
    • Chapter 13: Conclusion: Merit Aid---Good or Bad?
  • Griffith, Amanda L. 2011. Keeping Up with the Joneses: Institutional Changes Following the Adoption of a Merit Aid Policy. Economics of Education Review 30 (5): 1022-33.
  • Golden, Daniel. 2006. The Price of Admission: How America's Ruling Class Buys Its Way into Elite Colleges---and Who Gets Left Outside the Gates. New York: Three Rivers Press.
    • Introduction

Papers to be read and summarized by a subset of students for Wednesday:

Thursday visitor: Leslie Limper, Director of Financial Aid

Week 8: October 26 and 27
College Fund-Raising

Who contributes to colleges like Reed?

All read for Wednesday:

To be read and summarized by a subset of students for Wednesday:

Thursday visitor: Hugh Porter, Vice President for College Relations

Week 9: November 2 and 3
College Endowment Management

What is the endowment and how is it managed? How does it contribute to Reed's revenue stream?

All read for Wednesday:

  • Ehrenberg, Ronald G. 2000. Tuition Rising: Why College Costs So Much. Cambridge, Mass.: Harvard University Press
    • Chapter 3: Endowment Policies, Development Policies, and the Color of Money
  • Massy, William F. 1996. Resource Allocation in Higher Education. Ann Arbor, Mich.: University of Michigan Press.
    • Chapter 4: Endowment

To be read and summarized by a subset of students for Wednesday:

  • Merton, Robert C. 1993. Optimal Investment Strategies for University Endowment Funds. Chapter 7 in C.J. Clotfelter and M. Rothschild, eds. Studies of Supply and Demand in Higher Education. Chicago: National Bureau of Economic Research and University of Chicago Press. Read pp. 211-218 only.
  • Lerner, Josh, Antoinette Schoar, and Jialan Wang. 2008. Secrets of the Academy: The Drivers of University Endowment Success. Journal of Economic Perspectives 22 (3):207-222.

Thursday visitor: Edwin McFarlane, Vice-President and Treasurer.

Week 10: November 9 and 10
Making and Implementing College Budgets

How does the college make decisions and implement them through its budget policy?

All read for Wednesday:

  • Tuckman, Howard P., and Cyril F. Chang. 1990. Participant Goals, Institutional Goals, and University Resource Allocation Decisions. Chapter 3 in S.A. Hoenack and E.L. Collins, eds. The Economics of American Universities: Management, Operations, and Fiscal Environment. Albany, N.Y.: State University of New York Press.
  • James, Estelle. 1990. Decision Processes and Priorities in Higher Education. Chapter 4 in S.A. Hoenack and E.L. Collins, eds. The Economics of American Universities: Management, Operations, and Fiscal Environment. Albany, N.Y.: State University of New York Press.
  • Meisinger, Richard J. 1995. College and University Budgeting: An Introduction for Faculty and Academic Administrators, 2nd ed. Washington, D.C.: National Association of College and University Budget Officers
    • Chapter 1: Introduction
    • Chapter 3: The Budget Process, pp. 49-77
    • Chapter 4: Allocating Resources and Increasing Flexibility (omit pp. 135-143)
    • Chapter 5: Retrenchment and Reallocation: Fiscal Issues
    • Appendix: Approaches to Budgeting
  • Curry, John R. 2004. Budgeting. In Managerial Analysis and Decision Support: A Guidebook and Case Studies. Washington, D.C.: National Association of College and University Budget Officers. (Pp. 29-83)
  • Anthony, Robert N., and Regina E. Herzlinger. 1980. Management Controls in Nonprofit Organizations. Homewood, Ill.: Richard Irwin.
    • Chapter 8: Budget Preparation

Thursday visitor: Edwin McFarlane, Vice President and Treasurer

Week 11: November 16 and 17
Faculty Salaries and Tenure

What determines the structure of faculty salaries across and within institutions and fields? What economic issues are raised by academic tenure?

All read for Wednesday:

  • Ehrenberg, Ronald G. 2000. Tuition Rising: Why College Costs So Much. Cambridge, Mass.: Harvard University Press.
    • Chapter 8: Salaries.
  • Epstein, David. 2005. "Watch Out for the New Guy," Inside Higher Education, July 27.
  • Chait, Richard P. 2002. Why Tenure? Why Now? In R.P. Chait, ed., The Questions of Tenure. Cambridge, Mass.: Harvard University Press.
  • McPherson, Michael S., and Gordon Winston. 1993. The Economics of Academic Tenure. Chapter 5 in M. S. McPherson, M. O. Schapiro, and G. C. Winston, eds., Paying the Piper: Productivity, Incentives, and Financing in U.S. Higher Education. Ann Arbor, Mich.: University of Michigan Press.

To be read and summarized by a subset of students for Wednesday:

Thursday visitor: Pat McDougal, Dean of the Faculty

Week 12: November 30 and December 1
Accountability, Assessment, and Accreditation

Who assures that colleges are doing their job? Who should? How is college quality measured? What is the role of rankings in helping prospective students make their decisions?

To be read and discussed by all students:

  • Ehrenberg, Ronald G. 2000. Tuition Rising: Why College Costs So Much. Cambridge, Mass.: Harvard University Press.
    • Chapter 4: Undergraduate and Graduate Program Rankings
  • Reed College Accreditation Reports. 2009.
    • Dean of Faculty's Overview of the Faculty and Academic Planning (pp. 17-37, not the appendices)
    • Economics Department report (pp. 158-162)
    • Mathematics Department report (pp. 245-249)
    • Humanities 110 report (pp. 315-322)
    • Accreditation Standards: One and Two
  • Monks, James, and Ronald G. Ehrenberg. 1999. U.S. News and World Report's College Rankings: Why They Do Matter. Change 31 (6):42-51.
  • Diver, Colin. 2005. Is There Life after Rankings? Atlantic Monthly 296 (4):136-139.

To be read and summarized by a subset of students:

Week 13: December 7 and 6
Coping with Financial Crises

What factors cause crises in liberal-arts college? What policies are implemented? What determines if the college will survive?

Tuesday visitor: Colin Diver, President