relevant indicators of value-added learning outcomes and student engagement (Kuh et al., 2008). These take into account entering student ability as represented by pre-college achievement scores (ACT, SAT) and prior academic performance, other student characteristics such as enrollment status (full- or part-time), transfer status, and financial need (Wellman, 2010).

Popular proxies for institutional quality such as rankings are flawed for the purpose of estimating educational productivity. The major limitation of most rankings and especially that of U.S. News & World Report is they say almost nothing about what students do during college or what happens to them as a result of their attendance. As an illustration of the limitations of most ranking systems, only one number is needed to accurately predict where an institution ranks in U.S. News & World Report: the average SAT/ACT score of its enrolled students (Webster, 2001). The correlation between U.S. News & World Report’s rankings (1 = highest and 50 = lowest) and institutional average SAT/ACT score of the top 50 ranked national universities was –0.89 (Kuh and Pascarella, 2004). After taking into account the average SAT/ACT score, the other indices included in its algorithm have little meaningful influence on where an institution appears on the list.

This is not to say that selectivity is unrelated to college quality. Peers substantially influence students’ attitudes, values, and other dimensions of personal and social development. Being in the company of highly able people has salutary direct effects on how students spend their time and what they talk about. Hoxby (1997, 2000, 2009) has quantified the returns to education and shown that the setting of highly selective schools contributes to the undergraduate education of at least some subsets of students. More recently, Bowen, Chingos, and McPherson (2009) present evidence that institutional selectivity is strongly correlated with completion rates, controlling for differences in the quality and demographics of enrolled students as well as factors such as per student educational expenditures. The authors argue that students do best, in terms of completion rates, when they attend the most selective schools that will accept them, due in part to peer effects. A related point, also documented in Bowen, Chingos, and McPherson (2009:198ff), is that productivity is harmed greatly by “undermatching”—the frequent failure of well-prepared students, especially those from poor families, to go to institutions that will challenge them properly. Hoxby (1997, 2009) also shows that improved communications and other factors creating national markets for undergraduate education have improved the “matching” of students to institutions and thereby improved outcomes.31

At the same time, research shows that other factors are important to desired outcomes of college. These include working collaboratively with peers

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31López Turley, Santos, and Ceja (2007) have also studied “neighborhood effects,” such as the impact on education outcomes of low-income Hispanics locked into local areas due to family or work concerns.



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