It’s been a while since we have treated ourselves (and we hope you) to one of our occasional pieces on applying basic economic concepts to problems in higher education.

Today, we want to take a look at the idea of “monopolistic competition”, a notion introduced to the profession by Edward Chamberlin and separately by Joan Robinson in the 1930s.

Classically, economists have distinguished between competitive industries and monopolies. Under “perfect” competition, a number of firms produce an identical product (wheat) and all sell it at the same price, a price determined by the market and not the individual firm. In “pure” monopoly one firm is uniquely equipped to sell a certain product and has control over some resource that stops other firms from selling the same product or a close substitute. Microsoft Office, drugs whose patents have not expired, and cable companies …

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Many need-based student aid programs are designed to solve only one problem–inadequate funds to pay for education. There is no doubt that transferring funds to low- and moderate-income students is a critical component of making postsecondary education an option for them.  But necessary is not the same as sufficient.  And we may have focused so much on attempting to increase the number of dollars we provide to students that we have lost track of some of the other things they need to succeed.

It is not news that financial barriers don’t explain all of the differences in educational attainment across socioeconomic groups. There is extensive evidence that inadequate academic preparation, combined with low expectations and a discouraging history of past schooling experiences, often plays a large role. Nonetheless, we remain highly focused on dollars. One reason is because we know how…

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There is something a bit odd about the terms on which we debate the merits of for-profit vs. community colleges: thinking of one as a bastion of private enterprise and the other as an example of low-cost provision of services through the public sector.

The fact is that both community colleges and for-profit colleges are in large measure government-financed arrangements to pay for the postsecondary training of people who can’t afford to pay the costs of college and lack the qualifications to be admitted to selective institutions.

Community colleges are publicly owned and get the bulk of their financing through operating subsidies from state and local governments. For-profit colleges are privately owned and get the bulk of their financing through student aid (grants and loans) from the federal government. The grants are of course direct costs to the federal budget. Some of the…

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The national agenda for increasing educational attainment requires a clear focus on postsecondary access and affordability for students in all 50 states. Yet each of those states has a unique population, a unique set of public colleges and universities with responsibility for providing opportunity to residents, and unique fiscal circumstances and priorities.

Focusing on rising tuition levels at public institutions is the simplest way to frame concerns about assuring access. But a clear understanding of developing problems requires a view of the diversity across states—including tuition levels, state grant programs, and state funding. Some examples of individual states (drawing on data from the College Board’s recently released Trends in College Pricing 2011 and Trends in Student Aid 2011 reports) illustrate the array of patterns.

In Arizona, tuition and fees at public…

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When a public-policy matter becomes an intense focus of ideological controversy, facts often become inconvenient obstacles to upholding an already determined view, instead of being received as instruments for refining one’s views. Unfortunately, there is reason to worry that this kind of ideological warfare has overtaken the important national discussion of the role and the management of student debt. Is the total amount of student debt bigger or smaller than $1-trillion? Do students right now owe more to banks and the federal government than Americans owe to credit-card companies? By what standard should we judge these numbers?  We can’t think of any social or ethical judgment or any practical decision that turns on the answers to these two numerical questions.

Our aim in this post is not to contribute to advocacy on one side or the other of the student-debt question—a…

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The “Trends in College Pricing” and “Trends in Student Aid” reports released by the College Board earlier this week contain some interesting information about changes in the way we finance higher education in the U.S.  Few people are surprised to hear that once again, tuition and fee charges increased faster than average prices of goods and services in the economy. A passing knowledge of the fiscal troubles facing state governments is sufficient to anticipate the continuing decline in the appropriated funds available to public colleges and universities to educate the growing number of students enrolling on campuses across the country. That the federal government would take up a significant portion of the slack, and that it would do so in new ways, was less predictable.

The increase in federal spending on Pell Grants for low-and moderate-income students has received considerable…

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The Spencer Foundation has been working on finding way to get philosophers and political theorists more engaged with issues in educational policy and practice.  (Thanks to Richard Kahlenberg for calling attention to Spencer’s recent conference on this subject in an Innovations blog post. See http://chronicle.com/blogs/innovations/calling-philosophers-of-education/30542.) Many philosophers know a lot about, and especially know how to think well about, questions about values and morality – questions of a kind that abound in education.

A big challenge in tapping into what philosophers have to offer to work on contemporary educational issues is that they don’t for the most part know much in detail about actual problems of policy and practice in education. Even many philosophers of education are most at home working at high levels of abstraction, questions say of ultimate purposes…

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Discussions of improving postsecondary outcomes and increasing educational attainment frequently refer to the changing character of the student body.  It is easy to visualize “college students” as those who who graduate from high school, enroll full-time, and earn a college degree in the prescribed time frame. But many students – and a disproportionate number of those who never make it through – are older, enroll part-time, have dependents, attend two-year colleges.  Unfortunately, efforts to call attention to this reality are too frequently combined with the claim the “traditional” student is an anachronism – that over time students have come less and less to look the way they did in the 1950s and the 1960s. Fewer and fewer students fit the stereotype, the argument goes, so designing policies focused on those rare (and privileged) few misses the point.

Is there really…

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Discussions of “online” vs. traditional learning often go in either/or terms. Which is better? Will online learning wipe out the traditional classroom, or will it fail? This way of thinking risks missing the point in two ways.

First, the terms in question are far from clear. Online learning can mean everything from showing a movie of someone giving a lecture (whether the movie is shown on a big screen in a lecture hall or a little screen on an iPod) to an expensively crafted, learning-science-driven, highly interactive, asynchronous production. Similarly, the traditional classroom can mean anything from 10 students around a table to 800 students in a lecture hall.

Second, the better/worse question implies that both modes of instruction are trying to do the same thing, like a track meet where everyone is running the 100 yard dash and the index of success is completely clear….

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Our next economics lesson is on “price discrimination.” This is economists’ label for the phenomenon of different customers being charged different prices for the same product or service. Familiar examples are airline trips, hotel rooms, and college tuitions (net of student-aid grants). In most circumstances, the motivation of sellers in introducing these differential prices is simple: some people are willing to pay more than others. So if you can charge more to those with greater willingness to pay, you make more money. Despite its suggestive name, this practice can also be good for society—allowing consumers who would otherwise be excluded to enjoy a good or service.

Any merchant of course would be happy to get extra cash from customers who are less sensitive to price. But doing so is a lot easier and a lot more significant for some products and services than others.

It�…

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