Association for Public Policy Analysis & Management

Universities compete for new cohorts of high school graduates each year, both through prices and through other characteristics---including the number and type of majors offered. As financial and competitive pressures have increased in the past decade, many universities have made or proposed changes to the number and type of undergraduate majors that they offer, seeking to gain a competitive edge by aligning their academic offerings to the changing preferences of high school graduates. Moves to restructure academic offerings may both reduce costs and dampen the price effects of competition between universities. In this analysis, I model the student and university sides of the four-year college market to study effects of policies that shape both sides of the higher education market.

In the first portion of the paper, I demonstrate that universities vary substantially in the number and type of majors that they offer, and that students' preferences over majors have evolved in the last decade. I then model the college choice process (including application, admissions and enrollment) and estimate the parameters of this model using state and institution-level data from College Board, ACT, and the National Center for Education Statistics. Using the estimated college choice model, I explore applications, admissions selectivity, and enrollment outcomes by student intended major and institution type, under three types of policies that affect college choice: 1) university-level reorganization of majors, 2) free tuition at public universities, and 3) nationwide mandatory college admission testing. I find that applications are highly sensitive to tuition changes and to mandatory admissions testing policies. I find mixed effects of the number of majors offered on student application and enrollment decisions, depending on the field.

Finally, I join the college choice model with a model of university behavior in which universities respond to levels of government funding and to the competitive environment by adjusting net prices and the majors that they offer. Combining this with the model of college choice enables me to compute the majors offered, net price levels, applications, and distribution of admissions standards under counterfactual levels of government and private funding, and to analyze the market response to a policy mandating free tuition at public universities. For each counterfactual scenario, I describe the implications for college attendance and graduation overall and by field of study.