Don't Put All of Your Alums in One Basket: College Admissions Decisions as a Portfolio Choice Problem

Colorado College Working Paper 2016-02

7 Pages Posted: 12 Jul 2016

See all articles by Logan Dahl

Logan Dahl

Colorado College - Department of Economics and Business

Daniel K. N. Johnson

Colorado College - Department of Economics and Business; NAACP Legal Defense and Educational Fund

Date Written: July 9, 2016

Abstract

We consider philanthropy by college alums from an innovative and provocative perspective: what if prospective college students were considered members of assets classes with different risk-return combinations? Using forty years of merged admissions-philanthropy records on students at a highly selective liberal arts college, we estimate the simple financial model that this allegory implies. We find benefits to diversification, identify the slope of the market risk-return line, and point out the most (and least) attractive potential students in terms of their projected future donations.

Keywords: admissions, alum, portfolio, CAPM, philanthropy, college, university

JEL Classification: A2, G11, I22, I23

Suggested Citation

Dahl, Logan and Johnson, Daniel Kent Neil, Don't Put All of Your Alums in One Basket: College Admissions Decisions as a Portfolio Choice Problem (July 9, 2016). Colorado College Working Paper 2016-02, Available at SSRN: https://ssrn.com/abstract=2807474 or http://dx.doi.org/10.2139/ssrn.2807474

Logan Dahl

Colorado College - Department of Economics and Business ( email )

14 E Cache La Poudre Street
Colorado Springs, CO 80903
United States

Daniel Kent Neil Johnson (Contact Author)

Colorado College - Department of Economics and Business ( email )

14 E Cache La Poudre Street
Colorado Springs, CO 80903
United States
719-389-6654 (Phone)
719-389-6927 (Fax)

HOME PAGE: http://faculty1.coloradocollege.edu/~djohnson

NAACP Legal Defense and Educational Fund ( email )

40 Rector St.
5th Floor
New York, NY 10006
United States

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