It’s an old, old story but always worth hearing again, this time from Kevin Carey:
The drumbeat of higher education price increases has become so steady in recent years that it barely merits attention. But the cumulative effect is enormous: the average price of attending a public university more than doubled over the last two decades, even after adjusting for inflation. The steepest increases came in the last five years.
For years colleges have insisted that rapidly rising prices are unavoidable because higher education is a labor-intensive business that cannot become more efficient. . . . In fact, this premise is false. Colleges are perfectly capable of becoming more efficient and productive, in the same way that countless other industries have: through technology. And increasingly, they are. One of the untold stories in higher education is that the cost of teaching is starting to decline, but virtually none of those savings are being passed along to students and parents in the form of lower prices. Instead, colleges are pocketing the difference, even as they continue to jack up tuition bills.
This is a classic unsustainable trend. Higher education prices cannot grow faster than inflation and family income forever. If colleges use productivity gains from technology to restrain prices, they’ll continue to thrive in a world that values their product more than ever. If they don’t, they’ll be hammered simultaneously by a frustrated public and new competitors eager to steal their customers. To avoid that fate, colleges will need to do more than just teach better for less. They’ll also need to compete in a whole new way. . . .
This makes sense to me. I have no economics expertise to offer here, just my own thirty years of experience as a student and teacher in the U.S. higher education system.
My impression is that universities charge a lot because students are willing to pay. It’s also probably true that what universities are worst at is teaching introductory courses, whether in math or foreign languages or whatever.
I don’t see that costs have much of a relation to tuition. No matter what the tuition, universities feel budget constraints.
I agree with most of what Carey writes in his article. But I don’t know about this:
And in some cases, the money is used for virtuous purposes. The modern university is a conglomerate, housing a host of disparate scholars and functions under one roof. Some university components, like philosophy departments, historical archives, and graduate programs, have limited up-front economic value but provide great benefits to society at large.
This is the first and probably the last time I’ll ever see “philosophy departments” and “great benefits to society at large” in the same sentence. In all seriousness, I thought the justification for philosophy departments was that students want to take classes in philosophy!
College is expensive because education loans are very easy to get. Federal education loan backing is yet another place where the government intervenes with good intentions but ends up throwing everyone in deeper into debt.
My father was quite taken with a comment from one of his physics teacher: "Maybe philosophers sometimes make progress, but you have to look at how little they get done per philosopher-man-hour."
One reason tuition continues to rise is student aid from the government in the form of loans and grants. The universities will charge what the market can bear. Increase what it can bear with financial aid, and the price goes up.
According to Wikipedia Harvard has 6,715 undergraduates and 12,424 post graduates. Last year Harvard earned nearly $6 billion last year on its endowment for a staggering $313k per student. Even little Dartmouth earned $171k per student last year. Clearly many universities don't have to even charge tuition, and Harvard has forgiven all fees and charges to the families of students earning less than $60,000 per year.
The college business is big business at some if not many schools. If we taxed Harvard's endowment income at the corporate rate of 35% it would return $2.1 billion to the US Treasury. Add to that state and local taxes (including property tax) and we get approximately a tax subsidy of $3 billion per year. Is Harvard worth $3 billion a year to society? I doubt it, but others may differ. In my opinion only a tiny elite benefit and I don't think society should subsidize them at all as there are far cheaper ways to impart knowledge.
Sorry to say this anonymously, but let's be frank. Universities are public research facilities (even when they are privately owned) that are supported by the government so that society can acquire knowledge that doesn't necessarily have immediate payoff. Teaching is just another way of raising money to do this. In the US at least there is a fair amount of flexibility about how much the students want to pay if they are good enough, xor where they can go if they aren't. Admittedly there are fewer opportunities for people who are both not very good and don't have money, but it's not clear we need 100% of our population to have four year degrees.
A good philosophy department actually can help an entire university think better, if only because a smattering of undergraduates learn how to properly process and debate but carry those skills into other classrooms. Also, if you are lucky enough to have some good philosophers studying your field and how it works, you may get a better perspective on the process by which you conduct research and be able to improve it. Personally, I've even found them useful for pointing out related studies to my work which I had missed — in fact, more useful at this than colleagues from my own department. Philosophers read a lot and think a lot, and that benefits society at large.
since philosophy at least played a role in the development of bayesianism, i take it what you just said applies to bayesian statistics too, no?
but I take it that the point has nothing to do with philosophy per se. it's that there are various social goods (like historical archives) that universities provide, that wouldn't be provided without universities spending lots of money. unless you think that what's studied in the humanities is a complete waste, you should agree it seems to me.
"This is the first and probably the last time I'll ever see "philosophy departments" and "great benefits to society at large" in the same sentence. In all seriousness, I thought the justification for philosophy departments was that students want to take classes in philosophy!"
I work in a research lab and we have several philosophy graduates. They are all amongst the smartest people we have. I think it's to do with the fact that university-level philosophy places a premium on critical thinking. Of course, a degree course in any subject increases one's critical thinking but philosophy uses it more than most subjects.
Large universities are multi-faceted institutions, and the classic exchange of $x for 4 years of undergraduate education probably describes few of their exchanges.
For one thing, $x is highly variable due to price discrimination mechanisms. Graduating in exactly 4 years from 1 school is probably a minority pattern.
Undergraduate education as a whole is only a minor, not particularly important part of what the university's reputation is.
Have you seen the salaries that university administrators command? And how they have increased over the past three decades? You gotta pay for that.
"Of course, a degree course in any subject increases one's critical thinking". Wrong! A degree in critical theory, queer studies, cultural anthropology, and any of the other fields deep in postmodernist muck will worsen one's critical thinking skills.
Regarding the economics of higher education: I agree with the above comments. And, for that matter, I enjoy teaching, but if my job were 100% teaching and 0% research, I'd probably switch to another job.
Regarding philosophy: Yes, I agree that Popper and Keynes (among others) have made philosophical contributions that have affected the work of many statisticians (including myself) who do applied work. It's hard for me to judge whether an investment in philosophy programs (beyond what is necessary to teach undergraduate classes) is worth it in terms of the useful results produced, but I'm open to the possibility that it's worth it.
Regarding the question of humanities departments more generally: I think it would make sense to consider these on a case by case basis. For example, my impression is that the fit between foreign language instruction and graduate programs in foreign languages is not so great.
I don't see that doing research in German literature will make someone much of a better teacher of university German, at least at the introductory level. In contrast, it does make sense to me that doing research in biology could make someone a better biology teacher.
Here's a demand side argument for high tuition costs at elite universities (see the section entitled Educational Arms Race). I'd say that some of the cost pays for access to a high achieving peer group.
This post doesn't live up to its billing; it's got nothing about why you would call education "predictable."