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Monday, October 29, 2012

Unexpected College Football Victories Increase Donations, Applications, and SAT Scores

[U]nexpected regular season football victories by NCAA Division I-A schools increase alumni athletic donations by \$134,000. These victories also increase applications by 1%, and they improve a college's 25th percentile SAT score by 1.8 points.

Anderson uses data on bookmaker spreads to estimate the probability of winning each football game, and thus to identify unexpected success. He then estimates the effect of unexpected success on donations and applications. He suggests that his observed effects likely operate through one of two channels. First, a team that plays well may be more enjoyable to watch, and if alumni and prospective students spend more time watching a college's team, they may feel more connected to the school. Second, fans and alumni may enjoy winning itself.

Anderson notes that a simultaneous investment of \$1 million in every one of these teams probably would generate smaller effects on donations and applications than the surprise victories he studies, because team won/loss records are a zero sum game and improving the level of overall play would not create any more wins for a given team.

About 8% of the teams in Anderson's sample improve their season wins by five games over a one-year period. Improvements of that magnitude increase alumni athletic donations by \$682,000 (28%), applications by 677 (5%), and 25th percentile SAT scores by 9 points (1%).

Here is the abstract:

Spending on big-time college athletics is often justified on the grounds that athletic success attracts students and raises donations. Testing this claim has proven difficult because success is not randomly assigned. We exploit data on bookmaker spreads to estimate the probability of winning each game for college football teams. We then condition on these probabilities using a propensity score design to estimate the effects of winning on donations, applications, and enrollment. The resulting estimates represent causal effects under the assumption that, conditional on bookmaker spreads, winning is uncorrelated with potential outcomes. Two complications arise in our design. First, team wins evolve dynamically throughout the season. Second, winning a game early in the season reveals that a team is better than anticipated and thus increases expected season wins by more than one-for-one. We address these complications by combining an instrumental variables-type estimator with the propensity score design. We find that winning reduces acceptance rates and increases donations, applications, academic reputation, in-state enrollment, and incoming SAT scores.