Tuesday, January 5, 2010

College fraternities and the labor market

I have always considered college fraternities to be a nuisance. They appear to be mostly about drinking and making a mess on campus, although they also organize some activities for the public good. As any social club, there may also be some value of being a member beyond the socializing.

Sergey Popov and Dan Bernhardt build a model of two-sided selection of fraternities and its members. Candidates may differ by ability, and membership in a fraternity may be viewed as a signal of ability by employers. The paper shows that anything can happen in terms of equilibrium: informative, uninformative, good students, bad students or no students in fraternities. But using data about student grades at the University of Illinois, Popov and Bernhardt show that the following equilibrium is most likely: The best students shy away from fraternities while the worst ones do not get in. Fraternities only have students with medium abilities. But would these students have better grades if they did not spend significant time in fraternity activities?

5 comments:

Sergey said...

Thank you.

Anonymous said...

This makes no sense. It is proven that the Greek community in general has a better overall average GPA at the majority of schools in comparison to the overall general student population's GPA. The reason fraternities do have better grades is because of their ability to have a social life as well as an academic life.

Sergey said...

2 Anonymous: That's right, that's what our model predicts: fraternities' members a lot of times look on average better than non-members. The point of the paper is that we don't need the reason you're giving, or any networking externalities, or any club goods in usual sense, or any other connection of fraternity's valued characteristics and job related characteristics. Information asymmetry is sufficient to make average fraternity student better than non-fraternity student --- even assuming people in fraternities do nothing related to their future jobs.

werewolf said...

It isn't that they are better or worse students. Its that the fraternities are more selective with who they accept than the colleges they are a part of. Each fraternity has a minimum GPA, and each college has students that don't make that GPA. This causes fraternity's GPAs to be higher than that of the university system.

Sergey said...

2 werewolf: You're right, fraternity is selective, and that might lead fraternities GPA to be higher than non-fraternities. The point of our paper is to study how distribution of GPA inside fraternities is different from distribution of GPA outside fraternities. What we find is not only cutting off the right tail by fraternities being selective (the point that you're making) but also that the left tail seems to choose to not participate in fraternities.