Diminishing Returns on Research Investments

by Daniel L. Bennett

Inside Higher Ed and the CHE both reported on a NBER working paper by James Adams yesterday. Both publications highlighted Adams' finding that scientific research output has declined among public universities. Adams' regression results suggest that

"Research output rises, usually significantly, with tuition plus state appropriations"

However, and perhaps more importantly, he also notes that

"universities are subject to decreasing returns to scale in research, since the sum of the output elasticities of R&D stock, graduate students, and financial resources is less than one"

and that

"Since this is the definition of decreasing returns, one might suppose that beyond the efficient scale, more growth could be obtained at less cost by spreading research funds over a wider range of universities"

Given diminishing returns to scale on research, one might also consider abandonment of the research university model that is one of the drivers of rapid tuition inflation in favor of an old-fashioned teaching university model. Edward Morris -whose employer, Lindenwood University, has been able to offer a private school education at a cost comparable to its Missouri public school counterparts because it focuses on teaching - suggested that "with faculties of hundreds of lesser-known universities jumping into research in recent years, there may be too much research chasing too few good ideas."

Thomas Sowell, remarked on the one of the adverse affects of the research model, in Inside American Education, stating that

"over the past half-century, one of the most striking results has been that professors have taught fewer and fewer classes, and have done more research."

and that

"More money for higher education will never mean more teaching -much less better teaching - as long as that money goes into reducing teaching loads and financing more research."

A friend of mine - who works for a national public research university as a grant administrator -exemplified this matter by informing me that the stimulus bill nearly doubled the size of the grant that his employer received from a federal agency for research and that, not surprisingly, all of the administrators have since received substantial raises, with no expected increase in research output as a result of the increase in funding. So the mere suggestion that more public subsidies are needed to enhance research output sickens me.

The research emphasis has already provided a major distraction from the "education" portion of higher education, as well as contributed to soaring undergraduate costs --aided significantly by a publish or perish tenure policy and the pursuit of prestige. The focus of higher ed reform should be on increasing the quality of our college grads so that they can compete in the dynamic global world. This can only be achieved by plugging "education" back into the equation of higher education.