Columns, Opinions

Bosis ’19: Economics in college admissions: A force for good (no, really)

By
Staff Columnist
Friday, April 12, 2019

Imagine a speaker at a college campus stepping out on stage, grasping the mic, and saying “Preferential treatment, real or suspected, for students based on wealth or privilege is corrosive to our community.” Everyone applauds. Then they add, “Did I say corrosive? Sorry, I meant ‘the core of.’”

While that first quote is attributed to President Christina Paxson P’19, public sentiment amongst the student body seems to align her more closely with the second (imagined) quote. A recent poll from The Herald showed that Christina Paxson’s popularity has declined by nearly 15 percentage points in the past two academic years. As a senior, by this time quite familiar with the Brown community, I would guess that her falling ratings reflect the administration’s recent failure to adequately address student concerns about the elitism inherent to elite universities.

But while recent exemplars of elitism capture the student body’s attention and elicit responses from the administration, these isolated events cloud broader systemic issues regarding access to higher education. The real problem, in my opinion, is not Granoff dinners, nor the relatively small portion of people scamming their way into the nation’s best schools, nor even, really, the lack of funding for financial aid. The problem is that a college education, which is a barrier to entry into the majority of today’s job market, costs so much to receive in the first place. So great is the magnitude of the cost problem in college admissions that it has become a rare point of consensus in today’s polarized political sphere. In fact, the only people for whom the current system works 100 percent of the time are those who can easily afford to spend $200,000 to $300,000 on a single child’s education. There are obviously a wide range of proposed solutions across that spectrum — from free public colleges to a less regulated market for private vocational schools — but there seems to me that there is a relatively simple possibility that no one is discussing: price discrimination.

Now, hear me out, as I’m sure that term raises plenty of skeptical eyebrows among liberals and conservatives alike. The basic idea involves determining the people more willing and/or able to pay for college and — wait for it — charging them more for college. “That sounds unfair!” you might say (or alternatively, “Good luck getting conservatives behind that!”). It is true that in general, only the most extreme of libertarians support the ability to charge different customers different prices. That’s because it is, in most cases, both impractical and unethical — but from the companies’ perspectives, it allows them to take advantage of consumer surplus. If you can raise prices for people more able to pay, you can make way more money than is possible from the price point that maximizes the number of sales. And as it turns out, there is precedent in current education policy to support price discrimination as an ethical choice as well.

Public schools across America are largely funded through a combination of state and local property taxes. Locally-based funding has its own set of problems that compound wealth inequality, but many states attempt to counter this by apportioning their tax revenue to the most underfunded districts. Critically, that means residents sometimes pay into school districts in which they do not live if they own more valuable property. While the amount of property tax that states collect can be a point of controversy, not everyone considers this funding mechanism to be fundamentally unfair. Though this system occurs in the public, rather than the private sector, another point to consider is that private schools already use what amounts to effective price discrimination in the form of financial aid. Through a system of tax and asset calculations, private universities have long been charging lower prices to those who could demonstrate their need.

This has caused, by our University’s own admission, something of a funding crisis. We have less funding for housing and Departmental Undergraduate Groups, are not able to provide need-blind admissions to international students and do not give particularly adequate aid to those in middle-income groups. Why not simplify the system by making the sticker price lower for currently-aided students, and compensate for (or even increase) the revenue by leveraging the low price elasticity among the wealthy? One obvious problem is that wealthy families could send their students elsewhere, which is why such a solution would require, in theory, a coordinated effort from a majority of the top schools. Since in this instance, price discrimination is both more ethical and more profitable than our current system, I hope we could find a way. Even more importantly, I highly doubt that members of society who largely maintain their privileged positions through education and connections would so quickly eschew their own institutions in the face of a price that they would ultimately be willing and able to pay.

Ben Bosis ’19 is not an economist, but plays one on TV. He can be reached at benjamin_bosis@brown.edu.  Please send responses to this opinion to letters@browndailyherald.com and other op-eds to opinions@browndailyherald.com.