College attendance,: the respective roles of family background (income and wealth) and academic ability (grades and tests).

New research from Todd Schoellman of the Minneapolis Fed’s Opportunity & Inclusive Growth Institute, with Lutz Hendricks and Chris Herrington. In “A Long Run View on College Access and Attendance Patterns,” a forthcoming Institute working paper from the Minneapolis Fed, begins by documenting patterns of 20th century college attendance, highlighting the respective roles of family background (income and wealth) and academic ability (grades and tests). The economists collect, harmonize and analyze data from 42 studies of high school graduates from 1919 to 1980.

Graduating classes in 1933 and 1960 illustrate the transition. For the first, academic ability was one-third as important as family background in explaining college attendance. By 1960, ability was more important than family. “By the mid-1950s there is growing evidence of a complete reversal,” write Hendricks, Herrington and Schoellman.

The economists then construct a model to show how rising attendance and standardized admissions tests can explain this reversal. The key moving parts are, logically, students and colleges.

Students vary by academic ability and family background. Ability affects how much they learn in college, while background determines ease of financing college. High school grads decide whether to work, go to the local college or attend the best college nationwide that will have them. They weigh short-run pain of financing college against long-run gain of higher earnings.

Colleges vary by quality, which depends in part on the students they admit; each college has limited capacity. They set admissions criteria to get the highest-ability students possible, without overadmitting.

The rising value of college and widespread adoption of college testing generated the reversal in ability/family sorting patterns. College became more attractive for high-ability students. But for affluent, low-ability students, college options grew worse.

 

Two variables change over time: the value of college and the adoption of college testing. These forces generate the reversal in ability/family sorting patterns seen in the data for the 1933 and 1960 cohorts, as well as other relevant facts.

The rising demand for college “sets off a chain reaction,” conclude the economists. It led more students to apply. Better colleges received more applications than they had spots and began to practice selective admissions. Their quality rose, making them more attractive. At the same time, the widespread availability of test scores made it easier for high-ability students to show they deserved a spot at top colleges. College became a much more attractive option for high-ability students. But for affluent, low-ability students, college options grew worse.

Higher education became more broadly accessible, if still beyond the economic reach of many.