Economics 286W
Honors Seminar
Spring 2006
Wednesdays, 2-4
Room 123 Arjona
R. N. Langlois
322 Monteith X63472
Office hours M 12:30-1-45; W 9:30-11:30.
Assignment 1
You’ve
all seen the commercial. A smiling young
man sits on a stool and plays a mean guitar while facts about UConn scroll
across the screen: more valedictorians and salutatorians; more students from
the top ten per cent of their high school classes; Honors students (i. e., you)
with high average SAT scores. When he
finishes playing, the young man blows on his pick like a gunfighter blowing on his six shooter, looks straight into the camera, and
says, “UConn. Great pick!”
Your
assignment is to think about the economics of what this ad represents. As you may know – perhaps first hand – UConn attempts
to attract high-quality students not only with cute ads but with price rebates
(scholarships) that are not based on financial need. Valedictorians and salutatorians from Connecticut
high schools automatically qualify for Presidential scholarships of half
tuition, and the very best and brightest can compete for full-tuition Nutmeg
scholarships. (See http://www.admissions.uconn.edu/scholarships/scholarships.php.) Why are schools like UConn so interested in
attracting high academic achievers, and why are they willing to bribe them to
come?
In a paper of five or so pages, attempt to answer this question in the
context of the economics of higher education. Explain the
economics of merit-based scholarships. Are
they a good idea? (Obviously, you will
have to be clear about the criteria you are using to decide whether they are a
good idea.)
You
may choose to focus on a related question in addition or instead. UConn’s tuition (especially for in-state
students) is well below that at comparable private institutions, which amounts
to a taxpayer subsidy to some college students.
Assuming such a subsidy is a good idea, is lowering tuition for all
students (regardless of ability to pay) the best way to use a taxpayer
subsidy? Compare the state-university
model of low-tuition-for-all with the private-university model of nominally
high tuition and near-perfect price discrimination, i. e., rebates based on
ability to pay. Why do you think state
legislatures prefer the current model?
To
help you get started, read Gordon C. Winston, "Subsidies,
Hierarchies, and Peers: The Awkward Economics of Higher Education," Journal of Economic
Perspectives 13(1): 13-36 (Winter
1999). But I would also like you to come
up with at least a couple of more sources on your own.
Due: February 1.
