Why We Cannot Afford the Status Quo

By Richard Vedder

In recently talking to a private company that advises college business officers (as well as other university administrators) on best practices, I got thinking about the economics of current instructional practices in research universities. I did a Vance Fried-sort of accounting analysis in my mind, getting down to the micro level.

Let us look at the senior faculty at a major flagship university, say the University of Michigan. Take a senior full professor of, say, political science or history. He or she probably makes a low six digit salary which, with fringe benefits, may total $150,000 a year. Suppose this person teaches three classes over the course of an entire academic year. One is to advanced undergraduates in a small lecture hall environment, with 50 students. One is a standard graduate course with 25 students, and one is an advanced Ph.D. seminar with 10 students. The first class meets three times a week for an hour (academic hour, which is 50 minutes) the second twice a week for an hour an a half, and the third class meets in a 3 hour session once weekly.

Let us say the professor is writing a book that will take five years to complete (implying six or seven books over his/her career, a rather sizable output), and writes one fairly significant journal article each year as well. He/she also does some thesis supervision, advises a few students, and is on a couple of committees. This would be the typical life of a successful and relatively productive professor at a typical major university.

Now, let us cost it out. Starting with the professor's salary and benefits, let us allocate 40 percent for class instruction, 40 percent for research, and 20 percent for other-- "service" and other quasi-instructional duties. In other words, the core instructional and research duties each cost $60,000 a year. In the case of instruction, that is $20,000 per course. For the Ph.D. seminar meeting 16 times, that is $1,250 a session or $125 per student per class. Even for the undergraduate class meeting 45-48 times, the instructor's compensation cost is well over $400 a session or more than $8 per student for 50 minutes. Not cheap.

But that is not the biggest burden. If we assume the professor devotes his/her time equally to writing the journal article and the book, the journal article costs $20,000. Suppose, very optimistically, 500 people read it --that is $40 per person --not for a book, but for what is perhaps a 20-30 page paper. If, more realistically, 200 persons read it, the cost per reader is $100. The book will ($20,000 X 5)cost $100,000 in professorial time to prepare. Suppose 1,500 read it (a pretty good readership for an academic book). The cost per reader is $667.

And this does not consider all the overhead costs, academic support, etc. If we assume, as do federal granting agencies, that these costs are at least 50 percent of the direct salary costs, all the numbers above should be multiplied by at least 1.5. Thus the book will cost about $1,000 per reader. Moreover, suppose the professor is a historian writing the 20th account about some aspect of Andrew Jackson's life. Is it really worth it to society to spend $150,000 (plus book publication costs) to offer that 20th perspective? NO ONE DOES A COST BENEFIT ANALYSIS OF THE RESEARCH. The professor decides what to research and how to allocate his time, which is an expensive resource.

With assistant professors at mid-quality universities, divide the numbers above by two or three to get per student teaching costs. Research efforts are less in quantity and typically quality, and also far less in readership. Suppose an associate professor at Slippery Rock costs, with fringes, $100,000 a year, and she devotes 30 percent of her time to research, and writes one paper a year for an obscure academic journal and gives one paper at an equally obscure academic gathering-- a rather typical occurrence. The journal article still costs at least $15,000, maybe $22,500 after indirect costs. Suppose, more realistically, that 50 people read the article in the Journal of Last Resort or its equivalent. The cost per reader is $450 for a paper that does not move the academic world, much less western civilization, one bit. If 25 people attend the session at the academic meeting that the paper is presented, that would be considered pretty good. If the article costs $15,000 in salary and $22,500 in total to produce, the cost per listener at the meeting is $900. Outrageous. Yet no one does anything about it.

That is why administrators are substituting cheaper help to do a lot of the teaching. They may stop hiring tenured faculty altogether, except ones with sterling research records who can pay their own way with external research grants. In addition, administrators may be starting to evaluate the effectiveness of institutionally funded (via low teaching loads) research. And, if they don't, perhaps some of the third party payers (e.g., state legislatures) will. Expect the fall in teaching loads that has been a central figure of modern academic life to stop --and for good reason.

I am not anti-research. God knows. I have done a lot of it, and love to do it. I am writing what is anywhere from my 8th to 10th book, depending on how you count, and have literally hundreds of published papers floating around, a few of them even occasionally read. But is society better off for it? Perhaps, but at what price?
To be sure, there is a lot of scientific research that is done that has real payoffs for society and I would hate to see universities become solely teaching institutions. Research can have modest but real positive spillover effects with respect to teaching, although it can also hurt instruction when professors treat the teaching function indifferently. But the important thing is we do not analyze the cost or benefit of the way we perform EITHER function, and as resources become scarcer, policymakers may demand that universities start doing it.