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Pricing in the Not-for-Profit Sector: Can Wealth Growth at American Colleges Explain Chronic Tuition Increases?

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  • Pablo A. Peña

Abstract

In the period 1980-2005 tuition at American private colleges more than doubled in real terms, and these institutions grew much wealthier. I develop a model that establishes conditions under which increases in colleges' wealth cause higher tuition. The empirical analysis supports the hypothesis that growth in colleges' wealth is one of the reasons behind rapid tuition growth, although it does not provide accurate estimates of the elasticity of tuition to college wealth. The result is consistent with previous studies that find that part of the increase in colleges' expenditures over the 1980s and 1990s can be attributed to quality improvement.

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  • Pablo A. Peña, 2010. "Pricing in the Not-for-Profit Sector: Can Wealth Growth at American Colleges Explain Chronic Tuition Increases?," Journal of Human Capital, University of Chicago Press, vol. 4(3), pages 242-273.
    • Handle: RePEc:ucp:jhucap:doi:10.1086/657563
    DOI: 10.1086/657563
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    Cited by:

    1. Lynne Pepall & Dan Richard, 2014. "Competition, Selectivity and Innovation in the Higher Educational Market," Discussion Papers Series, Department of Economics, Tufts University 0782, Department of Economics, Tufts University.
    2. Ian Fillmore, 2021. "Price Discrimination and Public Policy in the U.S. College Market," Working Papers 2021-028, Human Capital and Economic Opportunity Working Group.

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