The Costs of Higher Ed

I teach philosophy at Bowling Green State University, and I like what I do, but I have to admit I don't think higher ed provides a very good bargain for students. According to a recent study, college students aren't learning much, and meanwhile the cost of getting a degree continues to rise. Tyler Cowen at Marginal Revolution recently blogged about what might be keeping higher ed costs so high, and he linked to a couple of recent posts by Matthew Yglesias on the same topic. I'm glad that more people are thinking about this issue, because it has perplexed me for a long time.

The general problem is a lack of incentive among higher ed administrators to reduce prices and improve quality. One solution might be to replace not-for-profit private universities and state-run universities with for-profit private universities, but I imagine that this would be too controversial to ever actually happen, regardless of how effective it might be. (David D. Friedman has a chapter in his anarchist manifesto Machinery of Freedom dedicated to this idea, which he titled "Adam Smith U.".)

Even in cases where universities offer a quality education (as measured in terms of actual learning outcomes), costs are often higher than they should be. Part of the problem is supposedly due to the "Baumol cost disease," which in the case of higher ed is due to the fact that salaries of professors have continued to rise despite the fact that their productivity has not. I suspect this is part of the problem, and that new technologies might be able to reduce the teacher to student ratio at higher ed institutions (and thus reduce the amount spent on faculty labor), but there are probably other factors as well, such as the amount spent on the administration, on facilities such as rec centers (et multa alia) that aren't directly connected to learning outcomes, and on building and maintaining a physical campus (as opposed to having the school operate over the internet or in un-glamorous but cheaper physical spaces). One institution dedicated to finding ways to lower the costs of higher ed while at the same time improving outcomes is The National Center for Academic Transformation. Unless the incentives facing administrators, faculty, and other people involved in higher ed change, though, I wouldn't anticipate much improvement.