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Build It and will They Come?: The Effect of Investing in Cultural Consumption Amenities in Higher Education on Student-Level Outcomes

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Abstract

Despite a climate of fiscal scarcity, higher education institutions are making big investments in campus consumption amenities while reducing instructional expenditures and growing increasingly reliant on tuition revenue. Few empirical studies exist exploring why universities increasingly invest in these amenities; however, one compelling explanation is that in an increasingly competitive market universities use amenities as a means of attracting students. Using resource dependency theory, this article examines these investments through the lens of marketization of public services. A unique dataset of HEI investments in cultural consumption amenities from 2000 to 2016 is used to estimate the effect of investing in cultural consumption amenities on various student-level outcomes. The evidence suggests that consumption amenities investments are associated with an increase in the yield rate (the proportion of admitted students who choose to enroll in the institution) and a decrease in the percentage of students paying in-state tuition. Also, higher-value investments are associated with a modest increase in out-of-state tuition, a decrease in in-state and out-of-state fees, and an increase in SAT scores. Taken together, the findings suggest that cultural consumption amenities investments may help attract more lucrative students and students who are strongly considering enrolling (as indicated by their application).

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Notes

  1. Jacob et al. (2018) include spending on student services and auxiliary enterprises in their measure of amenities spending, which overestimates amenities spending. This measure includes spending on items that are not amenities, such as student records. One contribution of this paper is the use of a precise measure of spending on a particular type of amenities.

  2. 18% at University of California campuses: Santa Barbara, Davis, Santa Cruz, Riverside and Merced. Four other campuses of Los Angeles (UCLA), Berkeley, Irvine and San Diego will be allowed to have more but are prevented from future increases (Alpert, 2017).

  3. Following DiMaggio (1982) we understand cultural capital to be knowledge and experience acquired through participation in the arts, music and literature of elite society.

  4. A thorough explanation of what constitutes a cultural amenity can be found in the “Data and Methods” section of this paper.

  5. Kadamus (2015) reports estimates based on a sample of 400 campuses in a proprietary dataset.

  6. In keeping with the literature, we use Carnegie classifications in the IPEDS data to identify 4-year institutions. The sample includes HEIs classified as offering a minimum of a mix of baccalaureate and associates degrees in each year the classification variables are available.

  7. The data have been consistently used by the Census Bureau since at least the early 1990s to estimate value of construction put in place in the U.S. For more information on these data, see the U.S. Census Bureau’s website (https://www.census.gov/construction/c30/methodology.html).

  8. As part of our analysis, we partition our sample by value of the construction project, which shows that our results hold in high-value projects for which the Dodge data has excellent coverage.

  9. Our models take into account differences in size among HEIs by including institutional fixed effects. While larger HEIs are more likely to have a project, it is likely not the case that there are economies of scale in maintaining these projects. Cultural organizations are labor-intensive and while the costs of operating these amenities increases with rising wages, production levels generally do not increase. Rising costs without associated increases in production is referred to as “Baumol’s cost disease” and has been widely applied to cultural organizations (e.g., Heilbrun & Gray, 2001).

  10. HEI level control variables are not included because doing so reduces the sample size dramatically. However, results from models including a HEI-level controls with small amounts of missing data are included in the “Appendix”.

  11. These data were provided to the authors by Robert Kelchen, Associate Professor in the Department of Education Leadership, Management and Policy at Seton Hall University.

  12. The survey questions used to gather this data can be found in the “Appendix” to this article.

  13. The noticeable kink in the average fees for institutions with cultural amenities investments is driven in part by a resetting in the tuition and fee structure by schools in the University of California system. Following Kelchen (2016), we repeated the analysis removing two types of institutions: (1) institutions that reset their tuition and fees structures by increasing one type of charge by $500 or more while reducing the other type of charge by $500 or more in a given year; and (2) institutions that favor changing one type of charge only while leaving the other type of charge constant for the time frame of the panel. The results of the analysis are consistent with the results of the analysis on the full sample reported here and are available upon request.

  14. This is because Eq. 1 calculates the average treatment effect across all post-treatment years.

  15. Regression results can be found in Table 6 in the Appendix.

  16. Due to space constraints, we do not include the event study results here. These results can be found in Table 7 and Fig. 8 in the Appendix.

  17. Regression results are available upon request.

  18. Regression results for these models are available upon request.

  19. Given that cultural amenities at HEIs are sometimes patronized by the broader community, HEIs may also be incentivized to invest in cultural amenities for the apparent “spillover” effects these projects can have on communities (Noonan et al., 2020), or to attract donative or other forms of earned revenue.

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Funding

Funding was provided by National Endowment for the Arts (Grant No. 17-3800-7015).

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Authors and Affiliations

  1. School of Public Affairs, Arizona State University, 411 N Central Ave, Phoenix, AZ, 85004, USA

    Siân Mughan

  2. O’Neill School of Public and Environmental Affairs, Indiana University Bloomington, 1315 E 10th St, Bloomington, IN, 47405, USA

    Jessica Sherrod Hale & Joanna Woronkowicz

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  1. Siân Mughan
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Appendix

Appendix

Survey Questions (Kelchen, 2016)

  1. 1.

    “Which of the entities (governor, legislature, statewide coordinating/governing agency for multiple systems, coordinating/governing board(s) for individual systems, local district governing board(s), and individual institutions)…has the primary authority for establishing tuition?”

  2. 2.

    “Has there been a curb, cap, freeze or other limit placed on tuition or fees at anytime in your state in the past three fiscal years? [Tuition and fees asked in separate questions]

See Tables 5, 6, 7, 8, 9 and 10 and Fig. 8.

Table 5 Robustness: The effect of cultural amenities projects on tuition and fees with HEI level controls
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Table 6 Event study estimates—tuition and fee variables
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Table 7 Event study estimates—non-financial variables
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Table 8 Event study—treatment intensity, the effect of cultural amenities projects on tuition and fee variables
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Table 9 Event study—treatment intensity, the effect of cultural amenities projects on non-financial variables
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Table 10 Event study—treatment intensity, the effect of cultural amenities projects on non-financial variables
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Mughan, S., Sherrod Hale, J. & Woronkowicz, J. Build It and will They Come?: The Effect of Investing in Cultural Consumption Amenities in Higher Education on Student-Level Outcomes. Res High Educ 63, 60–91 (2022). https://doi.org/10.1007/s11162-021-09640-0

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