This Washington Post article mentions former Professor of Economics Mike McPherson.

But such good feelings do not justify the financial damage from the merit-aid arms race, some educators have said. Michael McPherson, president of the Spencer Foundation in Minneapolis, has a slide-show scenario, based on research, in which four colleges battle for the same students. At the end, the schools have lost a total of $1.6 million that might have been used to improve teaching and learning and instead have improved their average verbal freshman SAT scores by one point — from 597 to 598.

We covered similar topics during our wildly successful experiment in creating a cross generational community of learning during Winter Study. Special thanks to Richard Dunn ’02 for leading our discussion on the day that we read a paper by McPherson and Morty Schapiro on a related topic.

But to really see the thickness of many writers (not McPherson!) on the issue of merit aid, you need only read the beginning and end of the article.

A father recently wrote to Dickinson College complaining that although the school admitted his daughter, it did not offer her any scholarship money, which two of its competitors had. The family’s income was $250,000 a year, but the father figured that the Carlisle, Pa., college would kick in some financial aid rather than risk losing a student with excellent grades and test scores.

Robert J. Massa, Dickinson’s vice president for enrollment and college relations, said the father’s request did not surprise him. It was typical of the rising tide of “merit” or “non-need-based” scholarships — a zero-sum game, Massa said, that is hurting the quality of undergraduate education.

Still, the competition continues. Massa admitted that he gave a $6,000 merit scholarship to the student whose affluent father suggested Dickinson might lose her if she didn’t get some money. That leveled the playing field in the still-not-settled contest for that student, he said, but “who really wins here?”

The father, you idiot! Every time a student wins an award for merit aid, that student and her family are better off. This may mean that Dickison is worse off, that it can’t pay Mussa as much as he might want to get paid, that it can’t build fancy new offices for its faculty. So it goes.

As Economics Professors at Williams like David Zimmerman and Mort Schapiro and Cappy Hill and Gordon Winston never tire of pointing out, students are both consumers of the higher education product and inputs to it. If Dickison or Williams want better students (read: better inputs), then they need to pay up. Otherwise, those students/inputs will go elsewhere. Such is life in a free society with tough anti-trust laws.

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