The U.S. Supreme Court recently heard two cases challenging the use of Racial Preferences in college admissions—Students for Fair Admissions v. Harvard, No. 20-1199 and Students for Fair Admissions v. University of North Carolina, No. 21-707. Both cases were brought by Students for Fair Admissions (SFFA), a nonprofit organization led by Edward Blum, a conservative activist who has spearheaded efforts over the last decade to end affirmative action in higher education.

The court observers who were present noted the skepticism that was reflected in the questions posed by the conservative justices as providing some indication that the court is prepared to overturn precedent—origins of which date back to the Court’s 1978 Bakke decision—and rule that the use of racial preferences in college admissions is unconstitutional.

This would apparently be well-received by most Americans as nearly 75 percent of those surveyed said that they did not believe that race or ethnicity should be a factor in college admission decisions. This contrasts sharply with Justice Lewis Powell’s observation in Bakke that “the attainment of a diverse student body … is a constitutionally permissible goal for an institution of higher education.”

If you were to ask those opposed why they were opposed, most would probably say something like they believe the “best and the brightest” should be admitted into elite colleges and race should not be a factor in those decisions. The question then is whether more of the “best and brightest” would be admitted to Elite Universities if racial preferences were eliminated, and the surprising answer is “not necessarily.”

What elite universities value

To understand why, it is important to know what elite universities value. Their main objectives are to:

• Enhance their reputations for academic excellence
• Grow their financial endowments
• Increase diversity in the faculty and student ranks

There is some tension between these objectives—elite universities are invariably forced to make tradeoffs that can have unintended consequences.

Less diverse = More “wealthy and powerful”

Suppose the Supreme Court rules that universities are prohibited from using race as a factor (or a “tip” in Harvard’s words) in admission decisions. How would universities respond? The leading view is that universities would admit more of the “best and the brightest” to enhance their reputation for academic excellence, but they could also choose to admit more of the “wealthy and powerful” to increase their funding.

To understand why this is, it is important to note that racial preferences are only one category of preferences that universities employ in their admission choices. The other preferences are often referred to as ALDCs (Athletes, Legacies, on the Dean’s or Director’s interest list, or Children of faculty and staff). A diploma from an elite university is often a ticket to a comfortable life of professional success, social status and monetary rewards. As such, legacy preferences have something of the flavour of hereditary succession to them, but unlike racial preferences, they have received only limited scrutiny.

Yale law professor Peter Schuck noted in a 2004 Yale Law Review article, “A preference for legacies and athletes, for example, may maximize the alumni contributions and loyalty that in turn support the institution’s academic mission.” This underscores the fact that elite universities have objectives that transcend academic excellence.

Constitutional conundrum

The high court’s examination in the Harvard and University of North Carolina cases is limited to the use of racial preferences in college admissions because these are the only preferences that raise constitutional questions. None of the other types of preferences are in play, even though all of them weigh against objective qualifications in the same way that racial diversity does.

There is the distinct possibility that the court will find racial preferences to be unlawful, while preferences based on whether family members (generous benefactors) attended the university, or whether a student is the child of a faculty member, remain lawful. The price that is paid for these preferences is measured in terms of the merit-based applicants that are not admitted, but would have been otherwise (i.e., academic excellence foregone).

The opposite of what people expect?

In a paper published by Glen Robinson (a University of Virginia law professor) and me, we noted, “In a system in which other non-meritocratic elements other than race play an important role there is no reason to think that the slot filled by the race-preferred candidate will be filled by another candidate of higher ‘quality’.”

This means that if universities respond to the elimination of racial preferences with an increase in legacy admissions, the result may be the opposite of what is expected—a less able student body.

This outcome would not be surprising to those versed in economics. Eliminating one market distortion (racial preferences) while retaining other market distortions (athletic, faculty offspring and legacy preferences) does not necessarily lead to more efficient market outcomes.

Brown University economics professor and social commentator Glenn Loury noted that “selective institutions will naturally try to reject the least qualified of the otherwise admissible non-black applicants while admitting the most qualified of those black applicants who would otherwise have been rejected.”

This means that the difference in scholastic aptitude between the marginal (low-ranked) merit admission that is rejected and the high-ranked race-based admission that is accepted is likely to be small.

This doesn’t mean that the same small difference in scholastic aptitude would prevail if legacy admissions were to be substituted for race-based admissions. Why? An elite university may be willing to dig deep down into the ranks of the applicant pool if that admission would come with funding for a new library or football stadium, for example.

In other words, with a court-ordered prohibition on race-based preferences, an elite university could choose to replace more able race-based applicants with less able legacy applicants who are willing to contribute generously to university coffers.

It’s all about the money

The financial contributions would have to be high enough to compensate the university for the damage done to its reputation for academic excellence because of admitting less able legacy applicants.

The weaker the academic credentials of the legacy applicant, the higher the expected price of admission. This should not be all that surprising. In addition to classic books, world-renowned scholars and gothic buildings, elite universities have very large cash registers. The message is as clear as it is disconcerting: We are no longer able to trade in the currency of race, but your dollars are always welcome.

A number of elite universities have endowments that exceed the gross domestic product (GDP) of many small countries. Harvard and Yale top the list with endowments of $53 billion and $42 billion, respectively. The average endowment at the top 10 national universities with the largest endowments is estimated at approximately $28.4 billion. The symbiotic relationship between the scholastic arm and the financial arm at these elite universities has proven to be quite effective.

A Supreme Court decision prohibiting the use of racial preferences that most Americans reflexively believe would make the college admissions process more meritorious could well have the opposite effect. This is a victory for the Constitution perhaps, but for those looking in from the outside at the leverage of the wealthy elite, not so much. The irony is that in the court of public opinion this casts elite universities not as champions of wokeism, but of its evil twin, privilege.

Fairness in college admissions is a laudable goal and every reasonable effort should be made in the pursuit of that outcome. However, eliminating racial preferences while leaving other preferences in place will not necessarily solve the existing problem. In fact, it may well constitute a step in the wrong direction.

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