The Demand for Higher Education: A Survey of Recent Studies

18 THE DEMAND FOR HIGHER EDUCATION A SURVEY OF RECENT STUDIES Elchanan Cohn Professor of Economics University of South Carolina J. Assistant Western Michael Morgan Professor of Economics Kentucky University Introduction Our society is probably facing one of the most difficult time periods in American education in recent years. The effects of inflation, recession, and declining enrollments have created an economic crunch in public higher edu­ cation which is unparalleled in recent history. It becomes ever more im­ portant, therefore, to focus on the determinants of enrollment demand for higher education in order that we may be able to predict future trends of en­ rollments more accurately and devise plans which would best meet future con­ ditions. Not to do so could result in very serious ramifications for the American collegiate system. Empirical studies on the determinants of enrollment in institutions of higher education (IHE's) have increased in number and in degree of sophisti­ cation. Whereas only few serious studies can be traced to the 1940's and 1950's, a substantial number of studies have appeared in the 1960's and the first half of the 1970's. Moreover, the methodology employed by recent au­ thors is far more sophisticated than employed by earlier writers, thus in­ creasing the reliability and policy relevance of the statistical results. We find two pervasive approaches to demand analysis of enrollment in IHE's: the sociological approach and the economic approach. In the socio­ logical approach, the underlying hypothesis seems to be that enrollments in IHE's are influenced by an individual's social and economic station. There­ fore, individual, familial, peer group, and other socio-demographic and eco­ nomic characteristics are presumed to affect one’s decision whether to enroll or not. Studies of this type have accumulated considerable quantities of da­ ta pertaining to a large number of variables that appear to represent one’s social and economic environment. Of the total maze of variables, a subset of "significant" variables is typically identified. These significant variables become policy instruments, some of a short-run nature (such as tuition), oth­ ers of a more long-run nature (such as education of parents, family income, or college accessibility). The economic approach presumes rationality in college choice. Individu­ als "invest" in a college education much like investing in a blue-chip stock or in other forms of equity and entrepreneurship; hence the decision to at­ tend college is long-run oriented. It follows that a student will invest a college education to the extent that doing so is more profitable than doing something else. We must, therefore, investigate not only the potential pay­ off from college education but also the non-college alternatives. The cost of attending college is not merely those out of pocket costs, such as fees, tuition, room and board, or commuting costs, but also the costs of foregone earnings and leisure (if any). One's station in life relative to social and economic class is not relevant per se, except as it affects the costs of or benefits from a given college investment.! It turns out that the two approaches can be reconciled, primarily be­ cause the socio-demographic factors typically employed in the sociological analyses do influence either or both the costs of or benefits from college attendance. For example, studies of the economic value of education have " ' ' F o r a discussion of the economic approach consult Becker (1964) or Cohn (1975), especially chapters 4-7. 19 shown that race, sex, and age, among other factors, influence the profitabil­ ity of education (though not necessarily in the same manner as sociological analysis would suggest). Moreover, it would be naive to assume that the col­ lege-going decision is based purely on expectations of monetary rewards since clearly there is a consumption (i.e ., immediate satisfaction) element in at­ tending an IHE. Given that much of the return from investment in education is in the form of nonpecuniary benefits (such as satisfaction derived from the learning process or campus life; one's ability to choose an occupation associated with less job "disutility," and the future satisfactions individu­ als derive from their education in the form of appreciation of...