| Summary: | We present a public higher-education finance model in which demand for education can exceed supply because of indivisibilities in educational investment. In such situations, a screening mechanism—which may exhibit a selection system bias—is required for allocation. We show how changes in the education premium and the test score gap between the minority and the majority might affect political support for affirmative action. When the education premium is relatively low, the matching efficiency gains provided by affirmative action are high compared with the opportunity cost of not acquiring education, and the majority supports affirmative action. When the education premium is high, the opportunity cost of not getting educated is high relative to the matching efficiency gains provided by affirmative action policies, and the majority's support for affirmative action is weaker. In contrast, a higher test score bias has a generally ambigious effect on the majority's political support. If the test score bias is sufficiently large, however, the majority does support affirmative action. Reprinted by permission of the publisher.
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