A Theory of Affirmative Action in College Admissions

Abstract

To address the issue of when minority and nonminority candidates compete for admissions to a college, we show that an academic quality–oriented college maximizes the test score of its incoming class by adopting an admissions rule that favors the minority. Such a “handicapping” rule increases competition and induces candidates to invest more in educational attainment. These results reconcile the often‐assumed conflicts between diversity and academic quality. However, we also show that the non‐minority responds to the affirmative action admissions more aggressively, which tends to widen the racial test score gap. (JEL H0, J7)

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