Higher Education as an Associative Good

The essential characteristic of an associative good is that, when choosing which producer to patronize, a consumer is interested not just in the quality and price of the firm's products, but also in the personal characteristics of the firm's other customers. And so it is with education. When choosing among undergraduate colleges, for example, a student is interested not just—or even primarily—in the colleges' faculty, curriculum, and facilities, but also in the intellectual aptitude, previous accomplishments, sociability, athletic prowess, wealth, and family connections of the colleges' other students. The reason is obvious: these and other attributes of a student's classmates have a strong influence on the quality of the student's educational and social experience, the relationships (including marriage) that the student will have later in life, and the student's personal and professional reputation. In short, the thing that a college or university is selling to its students is, in large part, its other students. Harvard College would be nowhere near so attractive to a prospective applicant if Harvard's faculty, curriculum, and facilities were to remain as they are, but its other students— past, present, and future—were no different from those of an undistinguished state institution with open enrollment. Chapter One