Baumol Goes to College
I probably should have said this explicitly, but the background for yesterday’s post on college lecture courses needs to be that the education system as a whole is very threatened by Baumol’s cost disease. The general idea here is that over time average productivity goes up, and as average productivity goes up so do average wages. As a result of that fields of endeavor that don’t see their domain-specific productivity go up get harder and harder to afford. Baumol’s specific example was that it takes as many people to play Beethoven string quartet today as were needed in the 1800s. But wages for musicians, as for people generally, are way higher than they were in the 1800s. And, thus, live classical music has become a more expensive endeavor.
In the greater scheme of things, though, that’s fine — technology has given us lots of other entertainment options, including digital recordings of classical music on your iPod and so forth.
Education seems to have a lot in common with classical music in this regard. At all levels, we’ve got a basic model where there’s a room, some young people in the room, and then an older person who’s supervising. New technologies come into play, but they haven’t yet substantially altered the basic model. And if nothing changes, that means we need to keep spending more and more money just to tread water. So if we want to get better (which we do) and increase the quantity of people getting higher education (which we also do) we’re going to need to spend vastly more. Which as far as it goes is fine — there’s nothing wrong with spending more money when and where it’s warranted. But it also means that it’s important to look for opportunities to actually improve productivity, whether that means by incorporating new technologies or better management techniques or what have you. And when it comes to higher education, right now we’re doing basically nothing to actually measure quality (and, no, US News sending out surveys to ask about different schools’ reputations doesn’t count) which gives us no way of knowing whether or not changes could improve things.
35 Responses to “Baumol Goes to College”
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August 29th, 2008 at 9:06 am
Well, I think we’ve found our problem here. In a very basic way, education is not about a room and an instructor and a class. And the stuff that’s really costing millions and billions really isn’t about a room and a class.
Throw in a funding system relying heavily on winning football games for success, and you have a real Mulligan’s stew.
Considering the extent to which Matt’s post is a mix of tired bromides and unsupported assertions, I beg to differ with the commenter yesterday who said Matt was hanging out with edu-wonks. I think the correct term would be ‘edu-wankers’.
August 29th, 2008 at 9:07 am
What most people are paying for when they get a college education is not the lectures. The lectures are mostly available for free (see ocw.mit.edu). It’s the networking, in addition to it being another step in the “vetting” process for potential employees.
That said, there should be *some* way to do something with the networking aspect – put together virtual classrooms and provide a virtual college with little to no actual costs… in this way people can get a college education for little actual cost, arranged to fit their personal schedule.
August 29th, 2008 at 9:18 am
I’ve benefitted [sic] from my misspent education at Very Good School. I barely passed out, but to prospective employers it means that I am a name-brand item.
August 29th, 2008 at 9:25 am
Hmm. Well, from my experience in academia (ca. 26 years after getting my Ph.D., I’d have to observe that there have been some changes that have improved productivity: PowerPoint replacing slides, online syllabus distribution replacing photocopying, email replacing office hours. Now, lectures themselves are being streamed online, meaning that lecture hall space and attendant costs (heating, lighting, security, bathrooms, etc) don’t have to expand with class size.
The biggest change, of course, is the shift from full-time faculties to part-time and adjuncts.
August 29th, 2008 at 9:27 am
There’s a lot of commenters who seem to want to reduce the “collective learning” aspect to “networking” but I think this is a mistake. One of the values of a full-time course vs a distance learning course (I’ve done both kinds) is that you can learn from the insights and experiences of your fellow students when you’re in a position to chat and discuss topics with them in person, and work on p-sets in groups, etc.
But again, this doesn’t have to costs “millions and billions” either.
Two important strands that deserve more analysis:
1) A lot of “college funding” is spent on research, because that’s part of having good professors, but we often see figures with it all lumped in as costs of undergraduate education. Likewise, what part do living costs for college students contribute to “college costs” inflation?
2) I see a lot of comment about the costs of college sports, but I didn’t go to a college that was so invested in that arena, how much of an effect is it really?
August 29th, 2008 at 9:32 am
@Meh: I agree with you re: collective learning… I misphrased my thoughts
That said, there is still no reason that a group of people couldn’t get together and say: “let’s all take this course together” and get the collaborative learning aspect without ever setting foot on the same continent.
August 29th, 2008 at 9:36 am
We are and we aren’t. The issue is one of assessment. No one really knows how to assess education. We have pedagogical theories; people are working hard on this question. But we are still in the dark ages. When you assess the progress of the individual, how much is a result of the individual and how much is the a result of the teaching?
Perhaps the greatest pedagogical advance we have made in the last century is the recognition of learning styles. This has allowed us to educate a large collection of people (which is what you are advocating here). But supporting this precludes a uniform instructional style, and thus education becomes even more expensive.
It is not like we do not know anything about education. Departments are very competitive with one another and they want majors; majors mean more headcount and more headcount means more faculty lines. They do internal studies all the time comparing the way classes are taught with success rates of students (in the classes, and in later classes that depend on this material). But nearly everything anyone finds flies in the face of what Matt is trying to advocate here, which is to make education less expensive. Because of the wide array of learning styles, all of the adjustments have been manpower intensive.
But university costs are not just about education. They have been rising for two reasons: (a) to offer services that have little to do with education and everything to do with providing life-style amenities and (b) adding man-power to improve education because large classes with uniform instructional styles are not successful.
Then there is one more dirty little secret that we are not even talking about. R1s like your beloved Harvard do not make their money off of tuition. They make a lot on their endowment, but they also make a lot of money on grant overhead. Every time a professor applies for a grant, the university tacks on 50% or more on top of that for “overhead” (electricity, admin support, janitorial support, etc.). Unlike a student, where the tuition actually has to have services returned for their money, this is a huge money maker for universities. Supporting it is also often add odds with their educational mission.
More than the rise in inflation? Are you sure? Of course, information technology has given rise to the superstar effect. The best of the best receive more than the best of old (who would simply be patronized by a wealthy individual). But the average musician makes more than the average musician of old adjusted for inflation? I am not saying you are wrong; I would just like to see that data.
August 29th, 2008 at 9:40 am
Considering the extent to which Matt’s post is a mix of tired bromides
Are there some other kind of bromides than tired. In the early days of pharmaceuticals, I think bromides were usually used to put people to sleep.
Aren’t they used in industrial cleaning now? (I’m not sure why I think that.) So, a sparkling bromide might be used to describe someone who works in the hotel service area. And, IIRC, bromides are found around petroleum deposits. So, there might be an oily bromide used to describe a oil baron or lobbyist for the industry.
August 29th, 2008 at 9:41 am
Other than start-up costs (which are essentially venture capital seed money provided by the university for new faculty), no money from the university goes to research. Everything is funded by external grants. This includes the infrastructure to support grants, which is supported by grant overhead (which I described above). Research is a money maker for the university, not a money loser.
The problem with research is that it is often at odds with education. A professor at an R1 will have a hard time at tenure if they are horrible at teaching, but such a professor will never improve their tenure chances by being a better teaching. MIT is famous for denying tenure to professors that win teaching awards.
August 29th, 2008 at 9:43 am
There are a few dinosaurs like myself left who believe that education happens within the context of the relationships between teacher, students and course material and that a larger community devoted to the quaint project of understanding more and better structures those relationships. Such a vision of education unfortunately does not lend itself to market analysis and the data molding efforts of economists. Perhaps when colleges are all reduced to the level of “knowledge for dummies” rather than “knowledge for its own sake” people will realize what they have lost in their devotion to such very dogmatic, indeed religious, adherence to market models for all experiences and activities. Or perhaps the people who publish and distribute the “knowledge for dummies” books will ensure that such understanding is ever beyond the capacity of their market.
August 29th, 2008 at 9:50 am
ROFLMAO. The big costs are stuff like linear colliders, nuclear reactors (betcha didn’t know your school had one of those), and genetic research. Med schools have to attract and retain professors who could make a half million a year in private practice. Damn straight it’s about networking- no university could afford to hire the people they need for money. They have to offer the possibility of doing meaningful work.
And that work isn’t cranking out cubicle-dwellers by the square mile. The big schools do that as a legacy task, and hope to get a few good fingerlings from the tens of thousands of eggs they hatch. But more and more of that is being done by community colleges, and more and more of what community colleges do is being done by distance-learning.
This ain’t your granddad’s little red schoolhouse anymore.
August 29th, 2008 at 10:06 am
Every single one of these was initial built using grant money, and is shut down the minute that funding disappears. Tuition money is never, never, never spent on this.
At worse, research forces a university to increase its number of faculty lines, because the professors have to teach less to get the research done. But universities take this into account when they set their teaching load. If the university cannot make enough money on grants, then the professors have a higher load and it becomes a “teaching school”. Professors at a school with a 4/5 load often teach as much as a high school teacher, and get paid less (I saw that comparing colleges in Dallas to the high school teachers in the area).
Look everyone, universities are very complex businesses. If you do not know how the business is run, it behooves you to learn before you start making these pronouncements. For example, does everyone know what the “discount rate” is? This is the amount of money in tuition that is paid to financial aid (because there is not enough external funding for financial aid). At some schools this is as high as 65%. We could solve that by including “ability to pay” in the admissions process. But no one wants that, do they?
August 29th, 2008 at 10:15 am
Several things:
1) The U.S. still has the best system of higher education in the world, by almost any measure. Whatever we do, let’s not mess that up.
2) To cure Baumol’s disease you need to replace labor with capital. That means higher student/faculty ratios. There’s no way around that. (See point #1)
3) The institutions that these additional students are going to attend aren’t going to be the elite, research universities. They’re going to be state, community, and local private colleges by and large. These are places where people really don’t go for networking, they go for a credential that will help them get a better job. That may make certain kinds of automation (e.g. distance learning, software driven learning) more acceptable for at least some kinds of learning.
4) Maybe everyone _shouldn’t_ go to college. Everyone should get more education & training, but maybe a liberal arts degree isn’t in everyone’s best interest. The news has been full of stories (like this one: http://online.wsj.com/article/SB121910464115051361.html?mod=Letters) about how the skilled trades are suffering worker shortages. People there make $30+/hr without a college degree (that comes out to $60k+/yr). Maybe folks would be better off doing a 1-2 year technical program to become a welder or electrician rather than spending 4 years to get a liberal arts degree.
August 29th, 2008 at 10:27 am
And another thing: part of what’s going on with rising tuition is that schools are raising tuition and then rebating a lot of it with financial aid. In economics this is called “price discrimination.” Basically, people who can afford to pay more pay the full rate and other people get discounts. This way you can squeeze the maximum amount of money out of everyone without losing sales by charging more than poorer folks can afford. This is one reason why even for-profit schools offer financial aid.
So to the extent that the inflation figures are calculated based on the “official” tuition rate rather than the median tuition rate, they are over-stating the real rise in tuition for the typical student.
August 29th, 2008 at 10:32 am
The point about the wages of classical musicians is almost certainly wrong. Look into one of the excellent available books on the social background to the German literary renaissance (i.e., Goethe and Schiller) and you will see that the court musicians were a very big part of the costs of running a duchy or whatever and had higher salaries than almost anyone. Outside of a few big stars (who don’t usually play quartets) well-trained and excellent classical musicians,even in full time symphony orchestras, tend to make $20,000 to $40,000 a year, and usually kill themselves (in a tragic local case, literally) trying to supplement that income with teaching, free lancing, or other activities that are even less related to their jobs.
August 29th, 2008 at 10:33 am
Pudentilla, well said.
Walker, I work at one of those colleges around Dallas. Our pay is apparently tied to that in the Plano ISD…we get a lower salary. So you are very right about that.
DCreader, of course most folks go to College for the credential. All the important discussions about improving education concern what we do and they do as a part of the process leading to that credential. I’m with Pudentilla on the question of what we who teach should be doing, and therefore what the students ought to be doing, but then I have the odd, even ancient idea that I’m part of a process leading to the generation of citizens as opposed to mere employees.
August 29th, 2008 at 10:55 am
Cost disease is a great concept. But it’s not something that has to be cured. For example, let’s say 100 years ago you had 50 farmers and 50 teachers. Farm productivity has gone way up, so now we only need 5 farmers and 50 teachers. So you could say teaching has come to be 10 times as expensive. Which it is, but really, we’re just lots richer. Cost disease is the kind of problem you want to have. I wish it was called “Baumol effect” or something else instead.
That said, when you’ve got Professor Lewin online, there’s no reason for anyone to give a physics lecture ever again.
August 29th, 2008 at 11:28 am
I’d love to see you discuss what our money is actually going torwards when it comes to higher education. From my 8 years in undergraduate and graduate school, as well as my father’s decades as a professor, we both feel like most of it goes to things that do nothing to improve the quality of the education but rather make the University look better to prospective students and rankings organizations. These would be more and more facilities, which are largely unnecessary when you consider that most of what goes on is lecturing, as well as an ever growing administrative and support staff. Much of what is done by advisors and the like could be done by professors, especially in disciplines in which the professors aren’t expected to do much research. Instead, they just keep hiring more and more people who don’t really serve to improve the education of the students.
August 29th, 2008 at 12:45 pm
I think you need to separate out the different kinds of schools — national universities vice liberals arts colleges (some of which have few PhD programs) vice heavy duty engineering schools vice professional graduate programs in medicine, law and business.
Plus there’s the US News separation by level of academic quality — which seems partially driven by wealth (does a $35 Billion endowment really make Harvard professors smarter?) and partially driven by qualifications of freshman class (SAT scores,etc).
Then there’s the separation by private (endowment) vice public (state government funded) vice amount of funding received from government research grants. And of research grants , what portion is from the huge medical research pot for medical schools, what part is the Pentagon defense pot for some favored engineering schools, what part is the science research and what part comes from the National Endowment for the Humanities.
August 29th, 2008 at 12:54 pm
There is education and there is certification. Very few 18 year old people want to learn, they just want to be certified. But 35-50 year old people want to learn, sometimes even more than they want to be certified. If we had a cheap method of certification that employers would accept — then the colleges and universities would scramble to figure out how to educate better and more cheaply, and other institutions would spring up to educate. But, because the certification process requires accreditation, and accreditation requires a ton of inefficiencies, bundling the education with the certification makes for this problem.
Of course, if we do this, then we have to consider how we’re going to pay for small scale research, which is currently supported by undergraduate’s paying a lot for their education, with the research adding to the prestige of their degree. If we unbundle the certification from the education, then research will get a lot harder to come by.
This is like how when we unbundle classified advertisements from news reporting, there isn’t enough money to do news reporting.
August 29th, 2008 at 12:55 pm
An interesting question is the extent to which schools’ reputations are driven by their Professional schools. E.g, If you took away Harvard’s Professional Schools of Law, Business, and Medicine, what would be left?
Yet what do such Professional schools have to do with the education an undergraduate receives? In some cases, there’s obviously a pulling effect — you tend to see good Departments of Biology in Schools which also have Medical Schools. Plus there’s obviously some connection at some universities between their Engineering programs and Departments of Science and Math in the university’s Liberal Arts program. Undergrad business quality seems to be helped by a co-located MBA Program.
August 29th, 2008 at 1:16 pm
Re Frank Fujita’s comment “If we had a cheap method of certification that employers would accept — then the colleges and universities would scramble to figure out how to educate better and more cheaply, and other institutions would spring up to educate. But, because the certification process requires accreditation, and accreditation requires a ton of inefficiencies, bundling the education with the certification makes for this problem.”
————
Which raises the fascinating question — WHY do corporations want bachelor’s degrees?
There are some obvious attractions — you get a docile slave who has be programmed to work his ass off for 4 years for little reward. It’s useful to have a mass of such grayhounds generating profits for you in the course of chasing a mechanical rabbit titled Promotion around the race track.
It nice if some of the grayhounds are Smart –smart enough to know its a mechanical rabbit but still run flat out because they have big educational loans to pay off. Those are your future managers. ANd you already OWN them because they have invested so much into their “career”. Which they lose if they don’t run on your racetrack.
Also, a LOT of the requirement for Bachelor degrees is driven by the FEDERAL GOVERNMENT — which accounts for a large part of our GDP spending and which imposes –with no stated reasons or justifications — a requirement that work on government contracts be carried out by private sector employees with college degrees.
A federal government which also sets the unquestioned CERTICATION requirements for many fields of business (like pharmacy workers, Wall Street financial advisors,etc.)
So I think our hugely expensive educational system (which doesn’t really educate) is really designed more as a covert social regimentation system — and any education its inmates receive is more by happenstance than intent.
Plus our Business CEOs are happy. They NEED to capture and enslave the million or so college graduates every May — else the little fuckers might create startups that would be competing with and destroying established businesses within a few years. Just look at what happened when IBM didn’t hire Bill Gates and make him wear a white shirt/tie.
August 29th, 2008 at 5:15 pm
If you’re looking to manage costs, how about a long list of free online courses from top universities.
http://www.oculture.com/2007/07/freeonlinecourses.html
August 30th, 2008 at 2:53 pm
Sorry if someone else clarified this and I missed it, but what campus is that in the photograph? Quite nice …. Or is it a CAD mock-up of a to-be-built building?
August 31st, 2008 at 8:33 am
Keble College, Oxford UK
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