Prospective Students Steer Clear of Schools Rocked by Scandal

 
 
Who says there is no such thing as bad publicity? When a college experiences a scandal, applications drop. Michael Luca explains what colleges and other businesses should learn when bad news dips the demand curve.
 
 
by Dina Gerdeman

Colleges and universities are learning what companies have known for a long time—when scandal breaks, business can take a significant hit.

New research from Harvard Business School concludes that high-profile scandals on college campuses—cheating, hazing, sexual assault, murder—lead to a drop-off in applications, although just how many students shy away from applying depends largely on how widely the incident is reported in the media.

The June research paper The Impact of Campus Scandals on College Applications shows that a college with a scandal splashed across national media can see about a 10 percent drop in applications the following year. That’s roughly the same impact a university would experience if it fell 10 spots on the U.S. News & World Report college rankings list.

“We’re hoping this will help (colleges) understand what coverage of incidents does to application decisions”

It’s not good news in other ways. “Having fewer applicants can impact rankings and prestige but may also make it difficult to craft the ideal class, whether it be falling short in enrollment and tuition revenue or enrolling relatively less desirable students,” write the authors, Michael Luca, an assistant professor at Harvard Business School; Patrick Rooney, an HBS research associate; and Jonathan Smith, a policy research scientist at The College Board.

“The effects we see for widely covered scandals are large, which speaks to the decision-making process of college applicants,” says Luca, who also conducted an earlier study with Smith on college rankings. “The fact that a single widely covered scandal might impact applications as much as a drop in rankings from, say, 6 to 15, sheds light on how students trade off the many factors they consider in choosing a school.”

Surely admissions staff at Dartmouth College must have cringed when Rolling Stone came out with a lengthy article in 2012 about a student who had been hazed and mistreated while pledging a fraternity at the school. The story delved into drinking issues on the campus and spared no details; it included, for instance, 20 references to vomit.

Luca and his fellow researchers were curious whether the article would impact the number of applications the school received after the news spread. After all, the same phenomenon is well documented in the business world. When golfer Tiger Woods experienced a sex scandal, the stock of his corporate sponsors dropped, as did sales of Nike golf balls.

A college’s well publicized scandal can open the eyes
of prospective students. Source: SIphotography

But Luca reasoned that many colleges wrestle with drinking and hazing issues, and it wasn’t as if Dartmouth’s problem was necessarily more extreme than at many other schools. Besides, students have access to all kinds of data when they are choosing colleges, so just how much weight would college-bound kids give to a well-publicized scandal like this one?

Evidently, quite a bit: Dartmouth’s 14 percent drop in admissions after the incident was well documented—but this is just one school. To get a feel for how bad publicity affects applications on a broader scale, the researchers studied 124 public scandals at the top 100 universities in the United States, as ranked by U.S. News & World Report, between 2001 and 2013. They collected application data using the US Department of Education’s Integrated Postsecondary Education Data System database, and when data for a particular college wasn’t available, they contacted the school’s admissions office for figures.

The researchers also pulled together media accounts of campus incidents by doing searches of college names and four different types of scandals: murders, sexual assaults, hazing, and cheating. Murders accounted for the largest category of media stories at 42 percent of incidents, followed by sexual assaults at 30 percent, hazing at 15 percent, and cheating at 13 percent.

None of the colleges saw more than four scandals during the sample period, yet 76 percent experienced at least one scandal during that time. Many of these scandals received little media attention, and in those cases, the impact on college applications was limited.

Yet when a scandal drifted under a larger cloud of national media coverage, applications took a much steeper dive. For instance, when an event received at least one mention in the New York Times—which is considered a benchmark for studying national media attention—the college saw a 5 percent drop in applications; a scandal generating more than five New York Times pieces in the month following news of the incident led to an 8.8 percent drop; and long-form coverage of a scandal was followed by a 10.4 percent decline.

“These long-form stories that go into great depth really do resonate with students in how they think about which college to attend,” Luca says. Rolling Stone has been responsible for three long-form articles about campus scandals in the past decade, including the Dartmouth incident; a 2006 case at Duke University in which three members of the men’s lacrosse team were accused of rape, although charges were later dropped; and a 2014 University of Virginia story of a group sexual assault on campus, although the veracity of the piece was later called into question, and the story retracted.

One bright spot in the wake of campus troubles is that media coverage tends to spur colleges into taking action that seems to deter subsequent scandals, at least in the short term. A college is 13 percent less likely to have a second incident one year later, relative to, say, a few years later.

Luca points to increasing awareness of sexual assaults on campuses—in part resulting from media coverage—which has led a number of colleges to take proactive steps that prevent future problems. Schools have made serious attempts to better understand the nature and extent of the problem, as well as to explore solutions ranging from additional safety precautions and changing campus policies to issuing harsher penalties for students proven to have committed sexual assault.

In that way, the media is serving the purpose of holding colleges accountable by deterring future scandals.

“These stories raise awareness and discussion at universities,” Luca says. “In the immediate aftermath of an incident, a lot gets done at the university, and it may be a safer place to be, at least for the next few years.”

Yet the sunny period following a scandal doesn’t necessarily last; five years later, the chance of another incident bounces right back up to the norm.

Luca hopes the research findings will spur college officials to consider more proactive approaches to preventing these episodes, knowing the fallout that comes with an unpleasant occurrence that gets trotted out in the press.

“We’re hoping this will help them understand what coverage of incidents does to application decisions,” he says.

College officials may be surprised at how much weight students place on these scandals when they decide where to apply. It’s a sign that a single piece of information—however relatively insignificant it may seem in terms of the overall attractiveness of a school—can tip the scales heavily against a college, says Luca.

He also hopes the research will be helpful for college-bound students.

“College choice is a fascinating behavioral economics puzzle, and this is one piece,” he says. “Despite the fact that the school will predictably get safer for the coming years, applicants are deterred. Research, including some of our prior work, has shown that students display a number of systematic biases in the college application process, so it could be the case that students are inferring too much about a school after a scandal. Students should take a broad view when picking a school.”

To this end, Luca coauthored an essay to help students think through the complicated decision about where to go to college.

Previous research has produced mixed results when it comes to the ripple effect of scandals. The Woods imbroglio may have hurt Brand Tiger, but there are plenty of examples where a critical review of a book boosted sales, presumably by drawing the attention of consumers.

Not so at colleges, where apparently bad news is not good for business.

“Even when it’s a decision as big as college choice, decision makers have a limited amount of information they look at. They’re not carefully weighing every piece of information,” Luca says. “There’s an old saying claiming that there is no such thing as bad publicity. It turns out there is.”

About the Author

Dina Gerdeman is a senior writer for Harvard Business School Working Knowledge

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