The Power of Information: How Do U.S. News Rankings Affect the Financial Resources of Public Colleges?
45 Pages Posted: 18 Feb 2007
There are 2 versions of this paper
The Power of Information: How Do U.S. News Rankings Affect the Financial Resources of Public Colleges?
The Power of Attention: Do Rankings Affeect the Financial Resources of Public Colleges?
Date Written: Feburary 16, 2007
Abstract
In 1990, the U.S. News & World Report (USNWR) extended the coverage of its college rankings from only the top 25 to all national universities and colleges. This paper utilizes this exogenous information shock to identify the impact of college quality information on the financial resources of public colleges. Using college level data from 1987 to 1995, we have three main findings: first, USNWR coverage causes colleges to increase educational and general expenditures per student. Second, these expenditure responses are funded by a 6.5% increase in state appropriations per student, but tuition revenue does not respond. Third, the state appropriation response to USNWR exposure is larger the larger the pre-college age population, voter turnout and USNWR newsstand sales are in a state. These heterogeneous responses are consistent with the USNWR rankings reducing the scope for political agency. Thus our results suggest that, in addition to a consumer response, the publication of quality rankings may influence the provision of quality through a political channel.
Keywords: information, quality ranking, political agency, higher education
JEL Classification: D80, I23, I22, L15
Suggested Citation: Suggested Citation
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