Research Grants and School Ranking of PhD Granting Institutions: A Simultaneous Equations Model

Abstract

Using data for 143 PhD granting institutions in the US, this study tests the hypothesis that in addition to other variables, the amount of research grants given to an institution is a function of the level of the institution's academic ranking. However, the level of ranking depends upon the amount of research grants. We apply a simultaneous equation model in which there is an interdependence of grants and ranking. Data for this study pertain to the 1990–1991 academic year. Statistical results suggest that a simultaneous relationship exists among grants per full-time equivalent enrolment (FTE), ranking of the institution and graduate students as a percentage of total enrolment. In addition to the ranking, the grants are influenced by the percentage of total students who are of graduate rank, the amount of endowment money per FTE that the institution can spend, the percentage of faculty with a PhD degree and public versus private institutions.