Tuesday, February 27, 2007

Faculty at Cal State: UNITE!

By Bryan O'Keefe

Inside Higher Ed has a good story today about a possible strike looming in the California State system. For the most part, the dispute seems to center around normal labor relations issues – pay raises, benefits, etc. What the story doesn’t address however is the broader point of why some colleges and universities are unionized in the first place. Any time that some of us who are pressing for higher education reform couch things in economic terms, we are told that universities are different; they aren’t like regular businesses, etc. But it seems that some faculty members have no problem using the old industrial model of labor/management when it suits their fancy.

Beyond that, it seems to me that there should be some sort of no-strike clause in these contracts, much like we have for other public service employees. Yes, being a professor at a state college is not the same thing as being a police officer. But students are paying a lot of money in tuition to attend the ivory tower. I don’t think it’s possible to have “replacement professors” on hand to teach classes, meaning that if the faculty really does walk out, academic life at Cal State will pretty much come to a halt. For students who are looking to graduate on time or move on with their life’s work, this could pose huge problems. When we are asking students to foot the bills, they deserve to at least have professor show up for work, even if they are disgruntled about their pay or benefits.

There will be a lot more on this in the weeks and months to come. Stay tuned.

Rankings for On-Line Programs: A Good Idea Whose Time Has Come

By Richard Vedder

Jimmy Atkinson sent me an interesting email this morning, informing me about his group's new effort at doing rankings of on-line, non-traditional educational programs. He has taken eight objective criteria for which data are generally available, and accumulated them to form an index that allows evaluations of these rapidly growing programs. Go to http://oedb.org to see the ratings.

This is good. As on-line education expands, we need to start gathering information for consumers and policymakers that helps us assess these programs. It is better to use objective (e.g., fact-based) criteria than unscientific, anecdotal evidence. It would be desirable to have more information on true "value added" learning associated with these programs, of course, not to mention some other still unavailable factual information. The quality of these programs needs to be related to their cost. And the question needs to be asked: qualitatively, how do these programs compare with traditional residential college learning?

I return to an earlier expressed view: we need more objective evidence generally to help evaluate the efficacy of the university experience at all institutions. I love the idea of one institution that gathered, for each graduation class, earnings data from the Social Security Administration on graduates. To do this routinely would require probably some modest change in federal law, but at least one school has overcome this obstacle. Earnings are not everything, but they are important to those who look at college from a financial investment perspective.

Three cheers for Jimmy Atkinson and his new effort. Let us hope that he or competitors expand and improve this effort in the interest of furthering consumer protection, competition, and efficiency.

Friday, February 23, 2007

The Revolution of Falling Expectations Continues

By Richard Vedder

Yesterday the Department of Education reported the latest National Assessment of Educational Progress (NAEP)results for 12th graders. Bluntly, the findings were awful. The percent of students who are proficient or better (good mastery) of English declined from 40 to 35 percent -- a large majority of graduating high school seniors do not have a good command of the English language, having either basic skills (only partial mastery) or, in the case of more than one-fourth of the students, even less.

The math test is not strictly comparable to earlier exams, but it shows even lower levels of competency, with barely two percent of students showing advanced, in-depth knowledge, and a very sizable (39%) minority having less than basic level mastery. Bluntly, for every math whiz we produce, we have 19 students who are or approach illiteracy in math skills. Meanwhile, we are told, that the average high school grade has risen significantly since 1990. We demand less of the students, and -- surprise, surprise -- we get less.

Couple this with the notion that Charles Murray, Harry Stilles, Jackson Toby and others have expressed, namely that many students go to college ill prepared, or lack the cognitive skills necessary for higher order learning. I am edging in the direction of writing a second book on higher education, entitled something like "the Overschooled but Undereducated Americans." (don't expect it soon --I am in the midst of another book on an unrelated topic.)

We in higher education ask little of our students, but take in ones that are ill equipped to learn in the first place, wasting billions of dollars and shattering many lives (via students who drop out) so we can maintain our nice lifestyles, meanwhile keeping our customers happy by giving them fancy recreational facilities while turning our heads at their binge drinking, sex, and other hedonistic dimensions of youth in this age of moral relativism. We also give some of our Sugar Daddies, the alums, some fun by spending millions subsidizing ball games that arouse their spirits and passions. Meanwhile, during our hours at the office (embarrassingly few), many of us do mostly what we like (research that often is of marginal true value), rather than what others think we are doing -- teaching, advising, encouraging students. Am I being a little harsh? Perhaps, but what I just said is also largely true.

No wonder the regression results keep showing: the more public money spent on higher education, the lower the rate of economic growth. We are squandering our resources. Does this mean higher education is bad or an ignoble pursuit? No -- au contraire, universities can -- and sometimes do -- lift the human spirit, make us wiser and more productive, and help us advance our civilization and even our life expectancy. But unfortunately the system is broke, and broke badly.

Thursday, February 22, 2007

Coming Events and Bryan's Blog

By Richard Vedder

Great minds think alike, and both Bryan and I wanted to blog about the huge rise in private giving to universities (Bryan beat me to the punch, as I was on airplanes or driving a car most of the morning). Bryan's points are very well taken. I would add only that the loss of tax revenues associated with charitable giving to, say, Stanford, last year amounts to something like $300 million. If there are 10,000 students at Stanford, that is equal to something like $30,000 a student. By contrast, direct and indirect federal support to a typical community college probably rarely exceeds $1,000 a student. Wick Sloane's point is reinforced. By the way, USA Today had a nice story as well on this matter this morning, and no doubt other newspapers. Equality and fairness, concepts much stressed by most liberals and progressives, would call for a fair and less regressive federal policy of funding support. Should we phase out charitable contributions to rich schools?

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The American Enterprise Institute, working with CCAP and the American Council of Trustees and Alumni, is planning a great conference on Higher Education After the Spellings Commission. It will be held on the afternoon of March 13 in Washington, D.C. at the American Enterprise Institute (AEI), and shortly AEI will be putting up information on the event on its web site. Suffice it to say now that Secretary of Education Margaret Spellings is coming and participating, and that two quite different perspectives on higher education funding will be provided by Ron Ehrenberg, a distinguished labor economist at Cornell and myself (helped by whiz kid Jonathan Leirer and my colleague Tony Caporale.)Other sessions will deal with things the Spellings Commission omitted to look at (e.g., curricular content, university governance), and will assess the work of the Spellings Commission. It should be informative and fun. The tuition fee for the event is zero (and there is a "free" lunch!!) --not all learning is costly these days. Stay tuned. Contact Bryan at (202) 375-7831 if you are interested in attending, or call the American Enterprise Institute directly at (202)862-5800.

The $911,163,132 questions

By Bryan O’Keefe

Our friends over at Inside Higher Ed have a very interesting story this morning on charitable contributions to the academy. According to the Council for Aid in Education, colleges and universities received an astounding $28 billion dollars in charitable contributions in 2006, up 9.4 percent from the year before and a new record high. Looking at individual schools, the usual suspects were at the top of the list – Stanford taking in $911,163,132, Harvard at $594,941,000, Yale at $433,461,932, and so forth and so on (Inside Higher Ed has the top 20).

This finding raises two important questions. First and foremost – when your contributions received are now nine-digit (and for Stanford approaching ten digit) figures, the question must be asked, what exactly are these colleges and universities doing with these funds? Why are any of the colleges on the top 20 list raising tuition at all? More importantly, should we continue to spend vast amounts of federal monetary resources when it appears that the colleges and universities are quite capable of providing greater financial aid themselves? When you see these types of figures thrown around, it makes the calls for greater funding of higher education appear more like corporate welfare than aid for struggling non-profits, at least for the top schools.

The second interesting question is one that Wick Sloane discussed a couple of months ago in one of our Perspectives pieces. Namely, is it the proper function of federal tax policy to subsidy these types of large gifts and fundraising campaigns? Or are these gifts and campaigns simply the “rich getting richer” at the expense of taxpayers? While I don’t think that the tax deductions for higher education gifts should be eliminated entirely, there should at least be some discussion about whether or not there is a better way of using tax policy to make higher education more affordable and accessible.

Wednesday, February 21, 2007

Reshaping Our College Delivery System

By Richard Vedder

After my sidekick Bryan and I spent some time yesterday talking to Sandy Baum and a colleague at the College Board about student financial aid, I started pondering what a more optimal system of post-secondary education in America would look like. In devising the "optimal" system, one has to deal with an inherent trade-off: the goal of maximizing educational "output" relative to spending, or the "efficiency" criterion, probably conflicts with an American egalitarian tradition of maximizing economic and educational opportunities for all, and maintaining the income mobility that has long characterized American life. We have a meritocracy, not aristocracy, and the education system needs to be considered within that tradition. Call this the "equity" criterion.

Resolving the efficiency-equity trade-off inevitably involves some compromises. Below I outline one possible way a more optimal system could evolve by, say, the year 2020.

1) In keeping with the goal of equal opportunity, any American with a high school education could enter a community college of relatively low cost. Poorer students would receive aid to help cover costs (see below).

2) Students who graduate from community colleges with associate degrees could proceed to 4 year institutions. Likewise, students whose credentials predict a high probability of success could directly enter 4 year colleges. Anyone foregoing governmental financial assistance, regardless of qualifications, could apply for admission to a 4 year school (it is a free country).

3) Since 4 year residential education is costly and attrition rates are high, the goal would be to limit government-subsidized enrollments collectively at these institutions to about 20 percent of the college age population, recognizing, of course, that some very bright younger or mature older students would also be admitted. The goal would be to educate persons with a high probability for success --kids that are both reasonably bright and motivated, as well as some non-traditional adult learners. Reducing attrition would become an explicit goal.

4) Adult learners and those denied admission to the expensive 4 year schools (either public or private) could demonstrate B.A. or B.S. degree equivalency as certified by groups like Underwriters Laboratories, the College Board, ACT, or CHEA (the umbrella accreditation group)and/or private for-profit companies set up for the purpose. The higher the standards of certification, the better the degree. Students could take tests like the CLEP examination for individual courses, broad area based exams testing broader competencies (some variant on current Graduate Record Exams), coursework formally taken in schools, AP credit, special designed exams done by ACT, College Board, ETS, etc., to get the certification.

5) Government subsidies would be directed to students, including grant funds. While universities could ask students what grants they had, the students would control the money. Tax breaks that promote conspicious consumption on college campuses would be removed, as well as subsidies to upper income persons. Pell Grants would become vouchers (student subsidies) that could be used at any institution, and would be increased for students finishing early and/or showing high performance, and reduced for those tardy in finishing or performing in a mediocre fashion. The government would get out of the student loan business. This plan would appeal to some on the left (given its highly egalitarian nature, and denying aid to the rich), but would appeal to most libertarians and conservatives because it reduces government's role in higher education. Vouchers would grow only at the rate of inflation (or, arguably, inflation plus perhaps one percent).

There is more to the plan, but this is a barebones outline. Surprisingly, some aspects of it are happening anyhow, as public support for state university appropriations erodes, for example. Stay tuned. We hope to be doing some more research into universities becoming more entrepreneurial, cost conscious, and effective.

Friday, February 16, 2007

MIT's OpenCourseWare: A Student’s Perspective

By: Jonathan Leirer

This past Fall I was enrolled in a course on Linear Algebra. It was one of my first experiences with abstract, proof-based math courses and the initial adjustment was difficult. I was unsatisfied with my own performance and competency in the material, so I started looking for outside sources to supplement my in-class experiences. Eventually I stumbled on to MIT’s OpenCourseWare. As luck would have it, OpenCourseWare had a Linear Algebra course complete with video lectures filmed in the Spring of 2005. Expectedly, the material from the MIT course did not perfectly correlate with the material from my course; however, the videos were broken down lecture by lecture with topic summaries, thereby allowing me to select the videos which covered the topics I wished to reinforce. I found this extremely helpful, especially since textbooks can often be unnecessarily terse and formal, while lectures tend to be more intuitive and informal. Once discovered, I used MIT’s OpenCourseWare on a semi-regular basis, not only to complement the courses I was currently enrolled in, but also to brush up on materials I haven’t seen in a few years, like Differential Equations.

For better or for worse, I am the type of student who likes to see material presented in more than one fashion. I feel as though my knowledge is more robust if I can understand the material from several different platforms rather than solely from the direction offered in class. As a result, it is not uncommon for me to go to the library and read other books on the same subject. I personally view it as a diversification of my knowledge and find that it leaves me with a greater degree of understanding. With the development of technology, I now have another arsenal of educational material to turn to – online lectures and lecture notes. Not only can I decide to crack open a book, but now I can watch a video lecture or download a lecture in PDF.

While the usefulness of the former has already been discussed, I have yet to praise the lecture PDFs. As loyal readers of this blog may know, I am preparing for a PhD in Economics. In doing so I have taken many math classes – in fact my other major is math- and while I find the material interesting, I often wonder how I will end up applying it to higher level economics. Again I turned to the internet and found my answers. Websites designed by and/or for perspective Economics PhDs are replete with online lecture notes from graduate courses in Microeconomics, Macroeconomics, Econometrics, and Mathematics, all written by economists. These resources fill a valuable niche that isn’t necessarily filled by textbooks. First they often tend to be more conversational than a textbook, lending themselves to readability without loss of rigor, much like the online lectures. Second the material is often specialized and adaptable. While textbooks can quickly become out of date, not to mention the time lag between the writing and the publication, PDFs are quick and easy to update and specifically tailored to that individual course. I know I have used lecture notes for material in Topology, Bounded Rationality, and Macroeconomic Theory, some for class and some for personal interests. My access to these PDFs helped give me a realistic idea of what will be expected from me mathematically in my graduate courses as well as inform my education today.

I think these resources are extremely valuable assets that can be made available with an attractively low marginal cost. In the case of video lectures, all you need is someone to man the camera every lecture for a term. Once you bear that sunk cost, the marginal cost of posting it on the internet is zero (assuming no one watches the video in lieu of attending MIT) while the marginal benefit is greater than zero. As for the lecture PDF’s, most, if not all, professors write out lecture notes already, maybe even already in PDF form (especially if they are used to writing in LaTex.) Again, the marginal cost is nearly zero (assuming no one reads the lecture notes in lieu of attending University X) while the marginal benefit it indeed greater than zero. I commend these efforts towards a more democratic approach to learning, and wonder what will be the effects on higher education.

The Missing Link

By Richard Vedder

One reason I hired Bryan O'Keefe to help me lead CCAP was that he thinks like I do. So last night, when I read the Wall Street Journal story on the increase in free instructional materials by leading universities via the Internet, I said to myself "I am going to blog about this tomorrow." The ever diligent Bryan beat me to it, saying what I was going to say, and saying it well.

The issue is important enough, however, for me to elaborate a tad on what Bryan said. M.I.T., Stanford, Notre Dame, Yale, etc. can put syllabuses, lecture notes, even video lectures on the Internet, and students get 80-90 percent of what the instructional component of universities are all about. They miss the opportunity to ask questions, to receive career and other advice, to be evaluated on their learning, and, most critically, to be credentialed. They also miss out on the socializaiton or country club dimensions of higher ed, and the networking that sometimes helps get jobs. But pretty much all of the core purpose of higher education is being provided free via the open source movement started by M.I.T., to whom we as a nation owe a hardy "thank you."

Yet I bet the use of the free materials is not yet overwhelming. Why? People realize that the economic value of college comes from the certification, not the knowledge obtained. Say you have a B.S. from M.I.T. and you can easily get a $45,000 job fresh out of school. Say that you have a high school diploma and studied and learned well everything that the B.S. student did via the Internet; you might get $25,000. The employer does not know that you know what you claim, or are as good as you claim. Information costs are high.

The missing link for a true revolution in higher education? Having someone go into the certification business --verifying that students have knowledge equivalent to a bachelor's degree. Possibilities of providers include the College Board, Education Testing Service, ACT, Underwriters Laboratories, a consortium of universities or states, CHEA (the Council on Higher Education Accreditation), the universities themselves, or a combination of all of the above. Maybe a Underwriter Laboratories certified degree would be considered the Harvard of certification of on-line learning, and the ACT certification would be, say, equivalent to a Michigan State or University of Oregon certification.The U.S. Department of Education, no doubt, would want to certify the certifiers (as they do now).

By the way, Harvard, Yale and M.I.T. will not die when the $1000 certification of the $150,000 Ivy League education learned on the Internet comes. College is where you meet your wife, make contacts that help vocationally, and have a heck of a lot of fun --carnal knowledge sometimes trumps book knowledge. People will go to residential colleges for the same reason they join clubs. But as Bryan says, this would be a great revolution in higher education.

Going to Yale for free?

By Bryan O'Keefe

The Wall Street Journal had an excellent story in yesterday’s edition about the growth of free online classes at elite universities. As the piece explains, all of the course lectures and materials are put online for free, essentially allowing anybody – student or not – to take the class. They also touched on how technology is also being employed in these classes, with students able to download lectures onto iPods and view digital videos of classroom instruction. It was particularly interesting to read several experiences from students actually using the course material – they universally described it in positive terms.

The story raises two interesting points in my mind. First, I generally think that the idea behind the concept is terrific. As Rich has written many times, universities have been slow to adapt to change. Reading about lectures being delivered on iPods shows that the academy is starting to finally realize that technology can be used to fundamentally change the college experience – in a good way. I am also sure that for many of the people using these online courses, they are getting an excellent experience at zero cost. Kudos to them for taking advantage of it.

The only problem however is that it makes me wonder why universities are charging tuition at all, if you can get more and more classes online for free. The most plausible explanation is that with many elite colleges, you really are just buying a college name to put next to your own. One would think that the intellectual foundations of a class or course are what students are paying for – that, in an abstract sense, you are forking over all of that tuition money so you can learn lots of informative things from talented professors. But by giving more things away for free, colleges are showing that their main product is not the intellectual material itself, but instead the ability to say that “I graduated from XYZ school.”

In fact, it’s plausible to think that if these online classes continue to grow in popularity, that many people will be able to take the equivalent of a whole degree program online. As the story points out, MIT is already offering over 1,500 classes in this manner. So, a diligent student can download all of the course material, listen to the lectures on an iPod or watch them through digital video, and even communicate with the professor through email. In many ways, he or she has already graduated with a degree from MIT. But in order to make that official, they would have to fork over $100,000 or more. (and also take the classes for a grade, but, presumably, many students would be able to pass these tests, especially if they were diligent about the work)

This story raises many interesting questions about the real value of a college education in the traditional setting – stay tuned.

Wednesday, February 14, 2007

Pell Grants (Broadly and Narrowly Defined) Revisited

By Richard Vedder

I read that George Miller and Buck McKeon, the chair and leading minority representative on the House Education and Labor Committee, are cosponsoring a bill that would allow students to receive full Pell Grants even if the stated tuition is less than the grant. The argument for this is that the current system encourages students to go to higher cost schools, since the government gives greater aid. By giving full Pells to students going to low cost community college, we encourage community college attendance, and lower per student total higher education costs by switching some students from the higher to lower priced alternatives. In general, that is a strategy I advocated in my tenure on the Spellings Commission.

But incentives cut both ways. If nearly everyone at low cost college X is on a Pell Grant, the college has enormous incentive under the Miller-McKeon plan to raise tuition fees to the full Pell Grant amount. Community colleges are the one relatively lean and mean segment of higher ed, and this gives them incentives to adopt the practices of their more affluent four year counterparts. Moreover, the proposal will cost taxpayers more money, and force reductions ultimately in either other forms of government spending or private expenditure (assuming, correctly I think, that government spending ultimtely crowds out private spending through some mechanism --tax increases, interest rate hikes, more inflation).
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Three cheers to Alex Davidson of Forbes. He asked me whether, in effect, students really gain little or nothing from federal student aid programs, since colleges, which administer the aid, merely adjust their own institutional support to take account of federal grants. I think that is by and large true. Although it is a complicated issue with several nuances I will not get into now, it is my suspicion that the practice of tuition discounting has been greatly accentuated by government grant programs growing rapidly after about 1980. As a student gets a Pell Grant, she gets less institutional aid --and the school may raise its tuition a bit more because a third party is picking up more of the bills. Indeed, I am beginning to think the big winners from the student financial aid explosion are not the students, but rather the institutions and their staffs --and falling teaching loads, rising non-faculty hires, and bigger salaries are all consistent with this view. Stay tuned.

Tuesday, February 13, 2007

The University of Phoenix

By Richard Vedder

I should start out by saying I have no stock in the University of Phoenix (Apollo). The New York Times had an unflattering profile of the school recently, and UOP has vigorously refuted it, saying the story is full of inaccuracies. I cannot assess that argument, although my own dealings with the reporter writing the story (Sam Dillon) have always been favorable with respect to accuracy.

UOP says 50-60 percent of their students graduate (typical of U.S. universities), while the Times says the figure is 16 percent. This is a factual matter that should be resolvable. But the graduation rates amongst non-traditional students or those attending two years institutions is generally much lower than for traditional four year schools in any case. Many of UOP's students are in graduate programs, which for mainline schools typically show high attrition rates similar to undergraduate instruction. At community colleges, if 30 percent of a new class has graduated with an Associate Degree within four years, they are pretty happy.

UOP is not perfect, and the profit imperative may lead them to do less than admirable things, but the same thing can be said about traditional universities that waste resources and aim more to satisfy the staff rather than meet social needs in a cost-effective manner. Moreover, it is interesting the UOP received accreditation. If the school is so deficient, why was it accredited? What do accreditors do, other than spend resources? Intel has decided not to support student employees attending UOP, which is its right and may even be appropriate. Intel, in effect, is engaging in a form of accreditation of its own. Perhaps private industry should form its own accrediting group to do meaningful evaluation of institutions -- a sort of Underwriters Laboratories for employers that evaluates universities, not electrical safety.

Having said that, UOP is filling a useful niche. Their enrollments are high precisely because they provide a need that traditional schools largely ignore; they pay attention to costs, and realize that for most students what is important is getting a job, so they have put resources into job placement of graduates. They teach courses where and when students want them, not when and where a spoiled tenured faculty member condescends to teach them. Now UOP and other for-profits are facing increased competition from the non-profits, who are taking a lesson out of the playbook of schools like UOP. And that is all to the good. Competition in higher education has the same positive effects that it has in nearly all human endeavors. And, UOP may be finding that there are limits to cost reductions that can be made without sacrificing quality in a way that drives too many customers away.

One issue: how many hours of instruction does one need to receive credit? Wick Sloane has bugged me about this, and he is right. Why is the 40-45 hour block of instruction that we typically use optimal --in all cases? Shouldn't we teach some things for 15 hours, others for 60? We do that some in higher education, but not enough. Is UOP's 20-25 hours of instruction per class a sign that they teach little, or a sign that they are more efficient in conveying knowledge? This is worth investigating.

Belated Happy Birthday, Abe

By Richard Vedder

Abe Lincoln was 198 years old yesterday, and has never looked better. In a world where we cancel classes for Martin Luther King's birthday but increasingly ignore Lincoln's and George Washington's, I thought I would put in a word for a man who once argued court cases less than a mile from my home in Illinois.

Lincoln's life is a lesson for modern higher education. Here is a man without much formal education, certainly nothing remotely equivalent to high school, much less college. Yet he showed an extraordinary command of the English language ("with malice toward none and charity toward all", etc.), masterful leadership qualities, courage, honesty, wisdom, vision, and integrity. He demonstrated in spades the qualities we claim that a college education will help inculcate.

Today, a very large part of the higher productivity of college graduates has nothing to do with what they learned in college. Bright, highly motivated, conscientious persons tend to go to college, while less bright, aimless, and irresponsible persons are unlikely to do so. As I have repeatedly said, in a world without colleges, the individuals who are today's college graduates would have earned substantially more than other persons anyhow. Charles Murray has demonstrated that repeatedly with his controversial but absolutely sound research relating to human intelligence.

I am not saying colleges are a waste of time and resources. But I am saying many of the claims made about the positive effects of education on our national economic development are overblown. And whiz kid Jonathan Leirer and I are rather consistently finding results that suggest that there are no positive correlations between incremental state government spending on universities and subsequent economic growth. We hope to present our results at a significant higher education conference that CCAP is helping the American Enterprise Institute put on in Washington on March 13.

There are no free lunches in this world. Resources used to fund colleges, including the human resources devoted to spending (increasingly) five or so productive years at them, could have been devoted to other tasks, making useful things. And the efficiency in the private sector where we make those "useful things" is much greater than in the relatively inefficient non-for-profit university sector. University spending is crowding out the production of many useful goods and services that may provide greater enhancement of our material prosperity than some of the resources we devote to higher education. This, coupled with more and more evidence that students are not even getting the traditional grounding in civic virtues that colleges historically have provided, makes me increasingly convinced that we are overinvested in higher education.

Friday, February 09, 2007

Paying for Research and Its Impact on Scholarship

By Richard Vedder

As I have said countless times before, a large percent of the very good research in some areas of human endeavor is done outside of universities. Think tanks have become an important source of information and scholarship, and I am proud of my affiliation with an absolutely first-rate research organization, the American Enterprise Institute (AEI).

A British newspaper (the Guardian) attacked AEI recently for some work it had published on climate change, arguing two things: first, AEI takes money from nefarious energy companies like Exxon Mobil, and, second, that it paid researchers to publish their views, some of them opposed to the alleged scientific consensus that members of the environmental left argue cannot be questioned on any scientific basis.

All of this is outrageous on many grounds. As AEI's Chris DeMuth is quoted as saying in an excellent Wall Street Journal editorial on the topic, "What the Guardian essentially characterizes as a bribe is the conventional practice of AEI -- and Brookings, Harvard, and the University of Manchaster--to pay individuals" for commissioned studies. Indeed, CCAP has recently requested money from a foundation for a book on entrepreneurship in universities that uses precisely the same model AEI uses, and I have written many commissioned pieces myself on a wide variety of subjects.

The attacks on AEI (not the first this year: I was tangentially involved a few months ago in an earlier similar smear for AEI work I have done regarding Wal-Mart) are invalid on many grounds (the researchers were not told what to say, some said things against the Exxon-Mobil view,Exxon-Mobil's contributions are small in AEI's budget, researchers did not know who was paying for the studies, etc. etc.). But to me it is striking how we do not hear similar attacks going something like this "Professor X of Harvard has done a study strongly supporting Congressional criticism of Y, although this works needs to be questioned because Harvard benefits heavily from Congressional research appropriations." Why is money from ExxonMobil "bad" but from the Government "good"? Why does one source of money allegedly corrupt researchers, while others do not?

I do not deny that it is human nature to try to please the people that sustain you, but the attacks on AEI are outrageous, since AEI goes the extra mile to separate fund raising from scholarly work, more so, I think, than is often the case within universities. Why is it that hardly any University researcher other than myself is questioning the conventional untested wisdom that public funding of universities prompts economic growth? Could it be that researchers don't want to bite the hand that feeds them? Why aren't the Guardian, New York Times and Washington Post talking about that? This asymmetric smear on AEI is absolutely despicable.

Thursday, February 08, 2007

The Scandal with Doctoral Education Revisited

By Richard Vedder

Arguably the biggest scandal in higher education is the incredibly long time it takes to get a Ph.D. degree - 10 years plus on average if NSF data are to be believed. To be sure, some of those years are relatively dormant years where PhD candidates are off teaching as adjunct professors at the University of Last Resort (hereafter, ULR). Nonetheless, huge amounts of talented resources are going to meet inane requirements, to go through unnecessary hoops, and in satisfying sadistic professors who want to make students do revisions in dissertations that make little sense on any rational cost-benefit calculus. This reduces the flow of talented people into graduate programs, costs huge amounts of money, and is just plain stupid.

I read two things in today's INSIDE HIGHER ED relating to this. First, the University of Chicago is going to pay its grad students in the social sciences and humanities a lot more -- tuition waivers, $19,000, summer research grants, health insurance, etc. All of this is designed to shorten student stays, which at UC average around 8 years or so, with no department less than five years. Unless strict time limits are put on these awards (I would suggest no more than four years), this initiative might lengthen student stays. For a history or English PhD. candidate, for example, the total graduate compensation package is not all that much less than what an assistant professor will make at ULR, and the academic milieu at UC is much nicer, with fewer nasty undergraduate students to deal with. Higher stipends might be justified for other reasons (e.g., in helping keeping out a graduate student union), but don't count on them to bring about dramatic changes in the average length of stay. What would work is if financial incentives were directed at departments who get their students graduated fast (the carrot approach), or financial penalties were directed at departments with higher average years to completion for Ph.D. candidates(the stick approach). Money rules in academia. My experience has been that faculty will whore themselves for unbelievably low amounts of money, so changing the incentive system to force a more expeditious path to degree completion seems wise.

Meanwhile, the sociologists are concerned that minorities are more likely to drop out of Ph.D. programs than others, despite the fact that affirmative action provides them with a strong earnings premium (translation: reverse discrimination) over whites. The question I would ask: are there differences in the predictability of success of minorities as they come into PhD programs? Are departments taking less qualified minority applicants to please the Diversity Tsars and the Affirmative Action Czarinas? If so, are we not just setting up some minorities to fail, using them to assuage white guilt and make our minority enrollment numbers look good? I don't know that this is the case, but I am honest enough to admit I think it is a possibility worthy of investigation. Certainly, if one believes the work of Stephen and Abigail Thernstrom, the scenario I outlined above has occurred with respect to undergraduate education.

Wednesday, February 07, 2007

Academic Trade-Offs: Two Recent Examples

By Richard Vedder

Reading Inside Higher Ed this morning got me thinking about two rather disparate issues, tenure at Yale, and whether Indiana State should drop its physics and philosophy majors. Both issues demonstrate that life is all about trade-offs --where doing A may cause another problem B. Another way of putting it is that all decisions have costs and benefits, and evaluating the relative magnitude of the costs and benefits is what decision-making in academia as well as life generally is all about. (One of my hormone-charged Whiz Kids who has been trying to date multiple girls found this out recently when girlfriend D found out about girlfriend C, with predictable adverse consequences; now he is wondering, will girlfriend B find out about girlfriend A? Ah, the problems of youth!!! What is the optimal number of girlfriends!! If we worked our students harder academically, many of these problems would disappear).

TENURE AT YALE

Yale is thinking about instituting tenure. It is one of a handful of prestigious schools that does not have it, and very rarely does it let junior professors become permanent faculty. It can be argued that this reduces the commitment of junior faculty to treat their students seriously, that it creates an undesirable caste system of senior faculty, junior faculty, and graduate assistants, and it keeps some top flight persons wanting some prospects of permanent employment from applying. But also the current policy reduces the inflexibility of resource usage, lowers true fixed costs, and enables the school to move resources between units a bit easier than if tenure existed. Tradeoffs. An interesting question: is academic freedom any different at schools like Harvard and Yale than at other schools with formal tenure programs? If Yale does begin tenure, it will grant two full years of leave with pay to promising tenure track faculty to increase their chances of making tenure. Are we overdoing the research expectations, raising costs unnecessarily?

PHILOSOPHY AND PHYSICS AT INDIANA STATE

Yale is one of America's elite institutions, while Indiana State, a school of roughly the same size (11,000 students) is decidedly more down-scale, not even considered one of the top three universities (Notre Dame, Indiana University and Purdue) in the state of Indiana. Yet it wants to get rid of its physics and philosophy majors. On the negative side, this is another example of deemphasizing core liberal arts and science programs, at a time when there is rising national concern that we are neglecting the hard sciences. It tends to add to the growing impression that colleges are mainly upscale vocational schools. It downplays disciplines with rigor and academic substance, in favor of subject areas which are, should we say, less rigorous, such as business, communication studies, and education (this ought to bring a comment or two). But there is the other side of the coin --ISU tries to offer over 200 programs for 11,000 students, some, including physics and philosophy, with fewer than 20 majors. The accreditor, the North Central Association, says it should reduce the number of programs ---you cannot be all things to all people given your resources. My instincts are that is correct. Besides, some instruction in physics and philosophy would be maintained. So again, a trade-off: do we sacrifice the core disciplines that are integral to the development of Western Civilization in order to improve the quality and depth of other programs? Too often, institutions try to avoid making these decisions, ending up (as ISU probably has) with too many programs of mediocre quality. Sometimes we have to cut and prune in order to have a more vibrant tree of knowledge.

Tuesday, February 06, 2007

The President's Budget

By Richard Vedder

The first and most important thing that can be said about the President's budget is that it is not terribly important. Whenever you have divided government, the official budget is usually "dead on arrival" on Capitol Hill, and the House and Senate mandarins fashion together their own list of priorities. So the prospects that the actual funding levels will be what the budget proposes are near zero in most cases.

Still, the budget is not irrelevant. The President must sign the final results, and spending wildly out of line with Administration priorities invites a veto. I say "invites", because the reality is that President Bush's aversion to vetoing bills is as well demonstrated as it is incomprehensible. However, with a Democratic Congress and having no political future, the President may start acting Presidential in this respect (actually vetoing some spending bills) so the budget in reality becomes the starting point for negotiations.

The budget is not particularly kind to higher education, which I think is about right. Higher ed is rich and fat and arrogant and needs to be brought down a peg. As to the students, student aid has grown by leaps and bounds and needs to be controlled as part of a strategy to slow down the third party payment growth that is at the heart of the higher education cost explosion. I am impressed that the Administration paid some attention to the Spellings Commission, not only by increasing Pell Grants but by moving to try to squash some of the other programs that make student aid so complex and puzzling. Moving to one or two financial aid programs is desirable administratively and in terms of simplicity. The Bush budget is a small step in that direction, but only a small one. A bold move would have been to get rid of several programs, re-jigger Pell Grants into a true voucher program, and increase their magnitude significantly. But the Bush Administration rejected that approach, maybe because they viewed it politically infeasible (but their current budget suffers from the same problem).

The research spending is fairly flat, which will cause anger among some of my Spellings Commission colleagues (Jim Duderstadt and Chuck Vest come immediately to mind). NSF gets a big increase, but NIH gets a less than inflation adjustment. The Energy Department research programs (particularly atomic energy) do fine, but the Agricultural Department research programs takes some hits, which may be good as the relative importance of agriculture continues to decline. All in all, a mixed bag showing little overall real increase in R and D. This is a case where runaway spending in other areas is beginning to hit basic research efforts. I have often wondered if a majority of the research funded by NSF and NIH would take place anyhow in a world without these agencies, and whether at the margin these agencies provide research that justifies public (as opposed to private) funding. So I do not have the same negative views on this flat funding that many of my academic friends do. The evidence as I read it hints that a good bit of federal research monies have gone to provide economic rent (compensation beyond necessary levels) to researchers.

Monday, February 05, 2007

A Better Approach to Student Loans

By Richard Vedder

Michael Dannenberg and Philip Longman (hereafter D and L) of the New America Foundation have an excellent opinion piece in today's Washington Post. Current federal policy fixes the remuneration of private businesses that fund and administer federal guaranteed student loan programs. Democrats argue, with some justification, that providers like Sallie Mae are earning monopoly profits from these programs, while Republicans argue that the Dem's ideas of sharply reducing allowable fees, etc., are likely to stifle student lending and it also interferes with market forces. I have lamented that the proposed 3.4 interest rate on student loans that Dems want to mandate is an inappropriate way of subsidizing students.

D and L say let markets determine what the conditions of student loans should be. Let us allow competitive bids for the right to engage in this business, with the lowest fee provider given preference. This would give students the best deal possible, improving access and making liberals happy, while conservatives would applaud the move away from government mandated pricing and towards a competitive market solution. D and L are absolutely right.

Longer term, I do not know why the federal government needs to be in the loan business at all. An expenditure neutral approach: the federal government completely gets out of the student lending business and allow markets to operate as they do for home equity and car loans, and, less perfectly (given government involvement) with home mortgages. Take the federal money spent on these loan programs and use it to expand Pell Grants significantly. And, finally, make Pell Grants portable gifts directly to students, not to institutions. You would have a system that would increase access by helping the truly poor, would increase efficiency and empower students, and increase competition for students in a healthy way. Let us “voucherize” higher education federal assistance, and get out of the federal loan business. D and L are proposing a nice first step towards that sensible solution.

Expanding the Kalamazoo Promise

By Richard Vedder

In November 2005, the Kalamazoo, Michigan, Public Schools made a dramatic announcement. It said that henceforth every successful graduate of a Kalamazoo public high school (there are three) who had been in the district since kindergarten would receive 100 percent payment of tuition fees at any Michigan public community college or university as long as the student was making satisfactory progress (taking 12 hours of classes with an overall average of at least a "C"). Students who had begun school in Kalamazoo for between four and 12 years would receive smaller reimbursement, but not less than 65 percent. The project was funded by massive private gifts --probably at least $200 million in endowment money.

My friends at the Mackinac Center in Michigan tell me that Governor Jennifer Granholm in her forthcoming "State of the State" address plans to propose expanding the Kalamazoo Promise idea to more areas, financed it appears by a combination of public and private monies. On the surface, this sounds like a nice idea, taking a giant step towards making college more affordability to the citizens of Michigan. No doubt the governor will argue that this will promote long-term economic growth.

However, the unintended consequences of this well intended effort are many, and mostly very bad. Here are three of my concerns:

1) When third parties (private donors, governments) pay the bills, the student pays little or no attention to tuition fees (the demand for higher education is nearly perfectly inelastic, us economists would say), and this enormously increases the incentives for colleges to increase tuition fees.

2) The lack of strict performance limits and penalties for poor academic performance creates incentives for mediocre students to go to college for an extended period of time -- 5 or 6 years.

3) Many of the students receiving assistance are perfectly capable of paying for college, so public or charitable funds are partly being redistributed to relatively well-to-do persons; dollar for dollar, this does far less to promote equal educational opportunity than programs that are restricted to lower income persons.

There are some indications that the Granholm proposal may deal in part with the third point, not providing assistance for students from affluent Detroit suburbs like Gross Pointe. But on the whole the proposal will enhance inefficiencies and waste, stimulate academic mediocrity, etc.

Moreover, Jonathan Leirer and I have been running regression after regression, trying to see if the provision of state resources to colleges has any impact on growth, as is often alleged. We continually find either no significant relationship or, more often, a negative one --appropriations are associated with lower growth rates in per capita income. If as Charles Murray, Harry Stille, and Jackson Toby (among others) have been telling me, that too many kids go to college, efforts like these will take scarce resources and use them to try to train some kids to go to college who would be better off attending a trade or vocational school than a college.

If, despite all of the above, someone wants to increase support for higher education, a better way to do this is to give vouchers to students (not to institutions) usable at any public or private school, with a finite dollar amount on the voucher --$3000, $1,500, etc. The voucher size can be made progressive -- diminish as family income rises. A scheme like this is, dollar for dollar, likely to be less tuition enhancing, empowers students more relative to university administrations, and enhances competition.

Sunday, February 04, 2007

Equity and Efficiency Revisited

By Richard Vedder

It has been probably forever true that kids from rich families are more likely to get college degrees than children coming from poor ones. But the gap has actually widened over time, as Tom Mortenson's Postsecondary Education Opportunity points out in the December 2006 issue of their newsletter. In 1970, about 40 percent of high school graduates from the top quartile of the income distribution graduated from college by age 24; by 2005, that had risen to well over 72 percent, over a 32 percentage point gain. By contrast, the attainment rate in the bottom income quartile rose from about 6 to about 12 percent, a 6 percentage point gain. Put differently, in 1970, about 60 percent of the "rich" kids (from the top quartile)with high school diplomas graduated from college in a timely fashion (4 year degree), compared with less than 28 percent today. In 1970, 94 percent of the low income students did not graduate, compared with 88 percent today.

The rising income-related gap with regards to college success has been blamed for some slowdown in the rate of income mobility in the U.S., and this critique may well be justified. What is less clear, however, are the reasons for the rising gap. Mortenson loves to single in on falling real Pell Grants. The problem seems to be far less that poor kids fail to enter college than that they fail to graduate once there. It is a dropout problem. Most rich kids who enter college graduate, while most poor kids do not. Yet the poor completion rate relative to the rich was relatively high in the era before Pell Grants, and also the rate has risen somewhat in the early part of this decade despite a decline in the ratio of Pell awards to college costs.

If Pell Grants do not explain the trend, what does? Several factors may be at work. One that is highly politically incorrect to mention but is real is that kids from poor families, on average, are less capable of doing college level work, having less good course preparation but also less cognitive and other skill sets highly correlated with academic success (this point was made recently very well by Charles Murray). Beyond that, the rising costs of college and the shift in emphasis from need to merit based aid has raised financial pressures, especially on kids from lower income homes.

The side of me that sympathizes with American egalitarian principles of equal opportunity laments these developments, but the side of me that says "too many unqualified kids are going to college" says that the changes occurring are at least partly the consequence of the excessive promotion of college education over alternative ways of augmenting skills, such as vocational schools, on-the-job training programs, etc. I am moving more and more to the point of view that the access problem may be less a real problem than we think in that many kids who do not enter or complete college probably should not have been there in the first place.

Friday, February 02, 2007

Groundhog Day In Academia

By Richard Vedder

I seldom talk about the university at which I teach, Ohio University, but I attended an event today there that reminded me of many of the problems of higher education. Today is Groundhog Day for most Americans, but at Ohio U., it is Founders Day, the 203rd anniversary of the institution's creation as the first university in the Midwest. We had a little academic convocation, at which the President of the University, Roderick McDavis, discussed "Vision Ohio", the institution's long range plan for the future.

What were the four components to the plan? First, advancing "national prominence." Second, "promoting diversity." Third, "enhancing financial support," and fourth, "grow partnerships." Nowhere in its "vision" is there anything like trying to "improve the quality and quantity of the knowledge we disseminate to students" or "increase the extent to which we advance the frontiers of knowledge." Learning, per se, is not mentioned. Advancing prominence means getting higher rankings in magazine surveys and more publicity for students getting nice awards. Promoting diversity means getting a different ethnic and racial mix of students and promoting international programs. Advancing financial support means getting more gifts and federal grants. And growing partnerships means making deals with private companies about investing monies or doing research contracts, or with other universities to collaborate in some fashion.

The true goals of universities ought to be simple: to improve the quality and quantity of the teaching and research efforts per dollar spent. We want to have students graduate who are better trained, who know more, who get better jobs, who succeed more in life both vocationally and in other ways. We also want to help extend our understanding of our intellectual, historical, and cultural milieu through research and creative endeavors, consistent with the resources available. We want to be good at an affordable price.

Yet too many schools are defining their goals like OU does, often looking at means (e.g., raising money) rather than ends (having better educated students or more meaningful research). They are adopting strategies (e.g., encouraging small alumni donations) that raise one up in the US News rankings but do nothing to truly improve the quality of the learning experience. Raising money becomes an obsession, getting far more attention than thoughtfully contemplating how the funds will be used to promote learning. Diversity is never talked about in its truly important dimension, namely the need to encourage intellectual discourse and tolerance of alternative perspectives of the world. We are worried about name recognition more than knowledge, about dollars rather than learning, about inputs more than outcomes. The Ohio University vision is the vision of many universities on the make, and it is not a good one for the long run.

Thursday, February 01, 2007

Just Saying No To Tuition Increases

By Richard Vedder

My sidekick extraordinaire, Bryan O'Keefe, wrote a very nice blog on Princeton's decision to freeze tuition for the first time since 1967. The good news was they did it, but the bad news is that a huge room and board increase meant total fees are continuing to rise a good deal more than inflation for the typical Princeton student who pays for his/her education.

Still the move to freeze tuition rates has enormous appeal, and is feasible without discernible impact on undergraduate education at a number of wealthy schools (e.g., Harvard and Yale, and some rich liberal arts colleges, such a Grinnell College in Iowa). I think a close look historically at the finances of these schools would show that the rise in endowment income, federal grants, and private gifts alone with modest inflation-related tuition increases, would have allowed for high quality education to continue. The big increase in fees that in fact happened, however, has funded the frivolities, inefficiencies, resource reallocations, and rent payments of higher education --more administrative staff, big salary increases for senior personnel, more climbing walls and jacuzzis, lower teaching loads, and the like. When prosecutors go after white collar criminals they say "follow the money." And reducing the rate of increase in the money flow to universities and colleges, particularly the elite four year schools, would go a long way to moving colleges towards becoming more efficient. So I say, hooray for the tuition freeze movement. Okay Harvard, Yale, Williams, Amherst, Grinnell -- can you match Princeton?

Facts and Fiction About Higher Education: An Encounter with Larry Summers

By Richard Vedder

A couple of days ago I found myself sitting next to former Harvard President (and Treasury Secretary) Larry Summers at a congressional hearing (the Joint Economic Committee of Congress; those interested in my testimony should be able to get it on the American Enterprise Institute website). I have always considered Summers to be arrogant, abrasive, self-centered, but also bright and sometimes even courageous. I told him, quite sincerely, that I was rooting for him as the Harvard faculty bashed him for such things as telling Cornell West to do some real academic work for a change, and for noting gender differences with respect to quantitative skills. He was ousted more for stating not only his opinion, but in some cases the simple facts, and for not bowing to the oppressive left-wing intellectual conformity of the Harvard faculty.

But much of my positive feelings for Summers dissipated during his testimony. Some of the things I strongly disagreed with him on dealt with issues like the causes of the Great Depression that go far beyond the interests of this web site. But he said a few things of interest to higher ed. As typical of university presidents, he complained about a lack of funding, especially for research and development. Fair enough, I guess. But he implied that Harvard could not keep good researchers for a lack of funds. A look at IPEDS data on Harvard faculty salaries show sharp increases in them over time, increases that have no doubt been furthered by the huge increases in Harvard's endowment in recent years. Senior faculty in the sciences at Harvard fairly commonly earn $200,000 or more annually with huge fringe benefits and job security. While some may be lured away by private industry (who cares whether their research is being done for companies or universities?), on the whole raising the specter of a loss of talent because of stagnating budgets may have been a bit much, at least as it pertains to Harvard.

But that was nothing compared with his statement about how he was disturbed that students from the bottom 50 percent of the income distribution constitute only 10 percent of students at top universities and how that somehow that is partly the fault of inadequate federal programs. That is complete bull (actually, "mostly bull" as the under representation of lower income students at those schools is very real). Most top schools have used their own institutional aid in recent years increasingly on a merit basis, tending to deemphasize need based aid. Federal financial assistance for higher ed has risen something on the order of 10 percent compounded annually for at least 12 years. To claim "we are neglecting the poor" is outrageous in light of the data on federal financial support and in light of the actions of schools like Harvard to turn their back on the needy (go to the Education Trust website for a marvelous study by Kati Haycock and a colleague on this point).

The Administration's Pell Grant Initiative

By Richard Vedder

I received a nice email yesterday afternoon from Sara Martinez Tucker, our capable Undersecretary of Education who oversees higher ed. She noted the President's budget, out Monday, will propose a fairly hefty increase in Pell Grants, with the maximum going immediately from $4,050 to $4,600, and up by smaller increments annually for several years. Politically, the Administration is bowing to the reality of a Democratic-controlled Congress, and is trying to be consistent with the recommendations of the Spellings Commission that it created (the recommendation to increase Pells was pushed strongly in the Commission by former North Carolina Governor Jim Hunt).

I have long argued that: 1) our federal financial aid system is exceedingly complex and dysfunctional and needs to be simplified, 2) that massive increases in federal financial aid in modern times have had unintended consequences, including accelerating tuition increases in some cases, and 3) that a voucher approach that builds on Pell Grants is the best vehicle on which to base any short-term reform, although a strong case can be made that the Feds should exit the financial assistance business altogether.

The Administration's plan does partly deal with the third point. Even there, however, the current system of giving money to colleges to administer grants is grossly inferior to giving vouchers directly to students and letting them select the college they want. The current system is a step towards a voucher, but does not give students full control. In my reply to Undersecretary Tucker, I made note of this fact and agreed with Bob Zemsky's comment in the Chronicle that the Spellings Commission did not really address dealing with the financial aid morass.

Sara has written back, promptly, in response to my comments, and apparently a similar one from Western Governors University's able Prez Bob Mendenhall: "watch this space." I take that to mean we will be hearing more from the Administration in the coming months, which I interpret very positively (the system cannot get much worse).

And I hark back to Charles Murray's marvelous Wall Street Journal article where he noted that success in college is strongly correlated with cognitive ability. We ought to be researching whether our past Pell Grants money to marginally qualified students has had any impact on student completion. Charles's article would suggest that the answer to that question may be "no." We want to give people educational opportunity, but we also have finite resources, and any policy towards pushing "greater access" should consider whether the incremental spending is promoting greater true academic attainment or is contributing to higher attrition from college than otherwise would be the case. Are we sending some students down the primrose path of disappointment in trying to show our generosity and support of equal educational opportunity? Stay tuned. This debate will be growing in the months and years ahead.