Sunday, August 06, 2006

The U.S. News & World Report Rankings

By Richard Vedder

Some university presidents are gloating a bit or giving a bit of a sigh of relief because the price of for-profit higher education stocks is down a good bit this year. Apollo Corp., for example, is down more than 30 percent. But what has happened to the University of Michigan or Colorado College? Are they up or down? Who knows? There is no clear "bottom line" in most of higher education, with the conspicious exception of athletics.

US News & World Report (hereafter, USNWR) knows the American desire to compete, to be the best, to excel. So they have created a bottom line, their annual college rankings. They are to be commended for offering the consumers a much desired service.

Yet the USNWR rankings are based in considerable part on inputs -- the quality of incoming students, the proportion of alumni giving money, the amount of faculty hired, class sizes, etc., and not on outcomes. When Consumer Reports rates cars, they drive them; USNWR does the equivalent of measuring the amount of steel used in cars, rather than their performance.

Colleges in their zeal for USNWR recognition thus have a bias to turn down deserving but only "good" as opposed to "outstanding" students, therey reducing access and restricting supply; similarly, they have incentives to spend rather than conserve resources.

We need some new "bottom lines" that are outcomes based-- what did the kids learn in college? The Higher Education Commission;s draft report comes down pretty strong in pushing to provide consumers new outcome-based measures and other easy-to-understand indicators of performance. This is good, and in large part for that reason, I will be voting to adopt the report (as a member of that commission). Let us give USNWR some real competition in the rating business.

3 comments:

Ryan D Bond said...

Dr. Vedder,

Nice to read your current thoughts on the issues of competition in higher education and the lack of and need for a meaningful bottom line.

Having read some of your earlier writing on the subjects since graduating from Ohio University, I have quickly become sensitive to the cost of higher education as my adopted daughter begins her own higher education program this fall. The annual increases in cost of higher education are alarming, as you have discussed at length.

Indeed, my daughter expressed interest in attenting my alma mater, which I am very fond of and have in retrospect deemed an institution that successfully educates many thousand students each year across a very diverse base of programs. However, when I quickly investigated the "Out of state" tuition and companion expenses, I determined (rather conservatively) that my wife & I would be paying $25K+ per year. Such fees (in spite of my sentimental notions) were an absolute deal breaker versus the numerous higher education institutions available within our home state of Pennsylvania.

In-state versus out-of-state comparisons are common, and often easy to resolve, for most parents and students paying for a service. However, more alarming to me was the comparison of out-of-state costs when I attended my alma mater during the early 1990's versus those same costs today - 150% increase in 10 years!

As Charlie Munger has said in recent years with specific regards to business schools - (paraphrasing) they are one of the few businesses where demand increases as prices increase.

Keep up the great work!
Ryan D. Bond

superhiker said...

Ryan, here are 3 reasons out of state tuition is so high at Ohio University:

1) Ohio has cut back on subsidies for public higher education, expecting the students to pick up more of the tab.

2) Public universities all over the country are charging what the market will bear for out of state students.

3) As Richard Vedder says, too many "research professors" heading up "research centers". A good example of this is Professor Richard Vedder, Distinguished Professor and head of the Washington-based Center for College Affordability and Productivity!

Lady Justice said...

I'm not a huge fan of the rankings, but I'm pleased to see that The University of Chicago has moved back up top where it belongs.

For a superb undergraduate education, U of C is easily up there due to the strong focus on "The Life of the Mind" rather than how fab the football team is performing.

At least the rankings made an iota more sense this year with the stellar jump of U of C to where it belongs.