EXHIBIT 22 Expert Report of Caroline M. Hoxby, Ph.D., Dated January 12

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EXHIBIT 22 Expert Report of Caroline M. Hoxby, Ph.D., Dated January 12 EXHIBIT 22 Expert Report of Caroline M. Hoxby, Ph.D., dated January 12, 2018 Case 1:14-cv-00954-LCB-JLW Document 154-22 Filed 01/18/19 Page 1 of 196 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA | STUDENTS FOR FAIR ADMISSIONS, INC., | Case 1:14-cv-00954-LCB-JLW Plaintiff, | v. | | UNIVERSITY OF NORTH CAROLINA, et al., | Defendants. | EXPERT REPORT OF CAROLINE M. HOXBY, PH.D. January 12, 2018 CONTAINS CONFIDENTIAL INFORMATION SUBJECT TO PROTECTIVE ORDER Case 1:14-cv-00954-LCB-JLW Document 154-22 Filed 01/18/19 Page 2 of 196 Table of Contents I. Introduction ......................................................................................................................... 2 A. Plaintiff’s Allegations ..............................................................................................2 B. Assignment and Summary of Opinions ...................................................................3 C. Qualifications ...........................................................................................................5 II. UNC’s Current Admissions Program ................................................................................. 6 A. Brief Background on UNC Undergraduate Population and Admissions ...........................................................................................................................6 B. Goals of UNC’s Admissions Program .....................................................................7 C. UNC’s Admissions Process ...................................................................................10 III. Empirical Analysis of UNC’s Admissions Process .......................................................... 13 A. Connect Carolina Data ...........................................................................................14 B. UNC Admissions Cannot Be Explained by a Formula ..........................................15 C. UNC Admissions Cannot Be Explained by Separate Formulas Within Ethnic or Racial Groups .........................................................................................25 D. School Group Review Does Not Appear to be Used to Implement Quotas or Racial Balancing .............................................................................25 E. UNC’s Admissions Process Does Not Use Quotas ...............................................28 IV. Considerations for Analysis of Race-Blind Alternatives .................................................. 34 A. Empirical Considerations in Analyzing Race-Blind Alternatives .........................36 B. A Framework for Considering the Effect of Race-Blind Alternatives ........................................................................................................................38 C. Measuring Losses to the University’s Mission ......................................................41 D. Baseline for All the Alternative Race-Blind Plans ................................................43 E. Two Issues that Affect All the Alternative Race-Blind Plans: Test-Retaking and Application/Matriculation Probabilities ..............................................44 V. Socioeconomic Status-Based Race-Blind Admissions Plans Would Not Achieve UNC’s Actual Level of Diversity and Academic Preparedness ................................................... 47 A. Effectiveness of Socioeconomic Proxies for Race or Ethnicity ............................47 B. Analysis of Socioeconomic Status-Based Admissions Plans ................................56 VI. Class Rank (Top X Percent) Admissions Plans Would Not Achieve UNC’s Actual Level of Diversity and Academic Preparedness ......................................................................... 77 VII. Geography-Based Admissions Plans Would Not Achieve UNC’s Actual Level of Diversity and Academic Preparedness.............................................................................. 83 A. Allen-Based Plan ...................................................................................................84 Case 1:14-cv-00954-LCB-JLW Document 154-22 Filed 01/18/19 Page 3 of 196 B. Plan Based on Admissions Model and Race Prediction ........................................90 VIII. Including Out-of-State, Private School, and Home-Schooled Students in Alternative Admissions Plans .............................................................................................................. 94 A. Out-of-State Students .............................................................................................95 B. Private School and Home-Schooled Students in North Carolina ..........................96 IX. The Magnitude of the Effect of Race-Blind Alternatives Would Likely Impact UNC .... 97 A. What Is Required of a World-Class Research University .....................................97 B. Universities Must Compete for Students, Faculty, and Funding ...........................98 X. Changing UNC’s Recruiting Efforts Could Not Realistically Substitute for Considering Race in Admissions......................................................................................................... 100 Case 1:14-cv-00954-LCB-JLW Document 154-22 Filed 01/18/19 Page 4 of 196 I. Introduction 1. I have been retained by counsel for Defendants in the litigation Students For Fair Admissions, Inc. v. University of North Carolina, et al., No. 14-cv-954-LCB-JLW (M.D.N.C.). Among other things, I have been retained to consider so-called “race-neutral alternatives.” A race-neutral (or, as I prefer, race-blind) admissions plan is an admissions plan that does not consider the race or ethnicity of an applicant in making admissions decisions. Counsel has asked me to consider against the backdrop of Plaintiff’s allegations and the applicable governing framework whether there are workable race-neutral alternatives available to UNC that would allow UNC to maintain the diversity achieved through its current admissions program without sacrificing its current academic standards. A. Plaintiff’s Allegations 2. I begin by framing the allegations that Students for Fair Admissions (“Plaintiff” or “SFFA”) makes in the Complaint. Although not my exclusive frame of reference, I consider these allegations throughout this report. Plaintiff alleges that Defendants “have employed and are employing racially and ethnically discriminatory policies and procedures in administering the undergraduate admissions program at the University of North Carolina at Chapel Hill” (“UNC” or “the University”) in violation of the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution.”1 Among these allegations, Plaintiff claims that UNC “is using race in admissions decisions when race-neutral alternatives can achieve diversity.”2 Plaintiff also alleges that “[t]here is now overwhelming evidence that race-neutral alternatives render reliance on racial preferences unnecessary.”3 3. Further, SFFA claims that UNC does not use race as part of a holistic evaluation but instead that race is “a dominant factor” in admissions decisions.4 SFFA also contends that the use of race by UNC to pursue a critical mass of underrepresented minorities (“URMs”) “is nothing more than racial balancing in that it necessarily seeks to ensure a proportional number of 1 Students for Fair Admissions, Inc. v. University of North Carolina, Case No. 1:14-cv-954, The Middle District of North Carolina, dated November 17, 2014, (“Complaint,”), p. 1. 2 Complaint, ¶ 5. 3 Complaint, ¶ 5. 4 Complaint ¶ 51. Confidential – Subject to Protective Order 2 Case 1:14-cv-00954-LCB-JLW Document 154-22 Filed 01/18/19 Page 5 of 196 students of certain races or ethnicities in the entering class.”5 On such an account, this claimed use of race in admissions would amount to UNC targeting certain quotas for URMs in its matriculating class. 4. Plaintiff makes several more specific allegations with respect to race-neutral alternatives that it claims are available to UNC. i. First, Plaintiff alleges that a top-ten percent plan similar to the plan of the University of Texas at Austin would increase the percentage of nonwhite and underrepresented students and would increase the average high-school GPA of UNC’s admitted students.6 ii. Second, Plaintiff alleges that “[g]iven this strong correlation between socioeconomic status and race in UNC-Chapel Hill’s applicant pool, UNC- Chapel Hill could easily maintain or increase its racial diversity by emphasizing socioeconomic indicators instead of race” and that “an admissions plan emphasizing additional socioeconomic factors would have no impact on academic quality of the student body.”7 iii. Third, Plaintiff claims that “UNC-Chapel Hill can achieve student body diversity by bringing more highly qualified, socioeconomically disadvantaged minorities into its applicant pool.”8 iv. Fourth, Plaintiff alleges that UNC can achieve student body diversity without using racial preferences by eliminating certain aspects of its admissions process, such as (i) awareness of a student’s having a parent who is a UNC alumnus or alumna or (ii) its Early Action program.9 B. Assignment and Summary of Opinions 5. Counsel for UNC has asked me to address Plaintiff’s allegations regarding UNC’s current use of race in its holistic evaluation of applicants to UNC (including the allegation that race is used as a dominant factor) as well as to evaluate potential race-neutral alternatives. 6. My opinions may be summarized as follows: i. Empirical analysis establishes that UNC admissions decisions cannot be explained using
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