In the last two decades, public universities in a growing number of states have stopped practicing race-based affirmative action in admissions because of several court rulings, voter initiatives and administrative decisions. In addition, many now believe that the United States Supreme Court will place further limits on affirmative action in higher education when it issues its ruling on Fisher v. Texas later this year. One concern about the removal of racial preferences is that its former beneficiaries will respond to the bans by reducing their investment in human capital prior to college entry. Since the removal of explicit racial preferences gives colleges and universities an incentive to place a greater weight on non-academic factors in determining admissions, they could lower student quality both by weakening students' incentives to invest in their academic qualifications prior to college entry.  This concern appears to be supported by the existing literature, which has used data from SAT takers and the NLSY to provide evidence that test scores of black and Hispanic students fell following bans in California and Texas.

This paper builds on previous studies by pulling together evidence from the College Board (CB), National Longitudinal Survey of Youth (NLSY), and the National Assessment of Educational Progress (NAEP). We examine the effects of California's ban of affirmative action – known as Prop 209, which went into effect in 1998 – by focusing on human capital investment prior to college entry, and we highlight the weaknesses of previous research that has attempted to do this. Our main innovations relative to previous literature are the inclusion of additional data, a focus on the performance of all Californians relative to the rest of the country, and adjusting standard errors to be appropriate for our data sources and study design.

Using more comprehensive data and methodological improvements, we find that, in contrast to previous studies, there is little evidence that under-represented minorities in California performed worse on any of our standardized test measures or self-reported high school grade point average after Prop 209 relative to the rest of the country. In addition, the performance of all Californians relative to the rest of the country appears to have remained stable after its affirmative action ban.  Finally, we note that our post-policy change period only goes until three years after the implementation of the ban, and the cumulative long-run effects on human capital investment could be larger.