November 19, 2007

Economist Says U.S. Spends Too Much on Higher Education

A paper released today by Richard K. Vedder, a professor of economics at Ohio University and founder of the Center for College Affordability and Productivity, argues that, contrary to popular belief, the United States is too invested in its universities, and much of that investment is wasted. Mr. Vedder also says that most incremental appropriations to higher education lead to higher spending rather than lower tuition, and new funds often go to noninstructional purposes, such as administrative salaries, student services, fancy recreation facilities, intercollegiate athletics, and research.

Mr. Vedder outlines what he says are 12 reasons for rising prices in higher education, including high administrative costs and an inefficient model for paying the bills.

The report, “Over Invested and Over Priced,” is available on the Center for College Affordability and Productivity’s Web site. —JJ Hermes

Comments

1. This is an excellent report. Mr. Vedder’s points were very accurate based on my own experiences working in the field. As a doctoral student in Organizational Psychology, I have particular interests in organizational effectiveness and efficiency, where the lack of is often related to a lack of accountability or specific measures of accountability for institutions of higher education.

   — David Ross    Nov 19, 03:57 PM    #

2. Perhaps we begin the savings by cutting the excessively high compensation of economics and business faculty

   — hippokleides    Nov 19, 04:17 PM    #

3. This is the same old privatization debate that we’ve heard for years. Economists know that there are billions of dollars to be made from higher education, and many capitalists want to get their greedy hands on the profits.

   They build a paper tiger by saying that the argument for investing in higher education is to promote economic development. No, the purpose of investing in higher education is that education is a core institution of DEMOCRACY. Adam Smith recognized this, but today’s neoliberals have radicalized classical liberal economics.

   Second, Vedder asks “Could not enormous savings be realized by expanding audiences via electronic means, by
   using taped lectures on multiple occasions, or by utilizing interactive computerized learning approaches in survey courses?”

   This is the problem when people try to influence education without having even a basic knowledge of learning psychology. Higher education requires individualized ENGAGEMENT, not lecturing and programmed interaction.

   Finally, Vedder proposes increased managerialism, saying that subordinates (faculty) should not choose their bosses. He wants an authoritarian leader to make decisions about higher education.

   He wants a professional administrator to tell our nuclear scientists how to do their work, to explain to biochemists how to manage their labs, and to correct philosophy professors when they step out of line.

   This is the thinking that has left our auto industry in dire straits. The Japanese recognize that innovation and other intellectual endeavors require freedom of thought—not overbearing management.

   The good academic administrator will protect the university’s technical core—scholarship—from a radicalized political economy.

   — David Ayers    Nov 19, 04:19 PM    #

4. Are we all to be condemned with the “broad brush” approach. Surely there are some institutions that are both effective and efficient. SWOSU is a regional university located in southwestern Oklahoma. The IPEDS Data Feedback Report just hit my desk today. According to the report, our tuition and required fees are 70% of our peers and our Institutional Support (administration) costs are about 27% compared to our peers. Can we improve-probably; but I don’t think we need to be lumped in with all institutions.

   — John Hays    Nov 19, 04:20 PM    #

5. It seems to me that The Chronicle likes to select work by economists that can “tart up” its headlines and negatively provoke others in higher education. Why not talk to Jonathan Gruber, Nora Gordon, David Figlio, or many others and print something about the economics of education that is merely enlightening.

   — Sam    Nov 19, 04:31 PM    #

6. Referring to Comment #2:

   Oh … did the article claim that all economics professors make this argument? I missed that.

   We could further save by cutting the excessively high compensation of doctors, at least the ones who teach in medical schools. And we could all drive better cars if we cut the excessively high price of BMWs. Or maybe the quality of the cars, doctors, and economists that would then be available wouldn’t be as good. Hmmmm … that sounds like the kind of argument an economist would make.

   — Mark    Nov 19, 04:32 PM    #

7. I do not think the “broad brush” approach is appropriate for all of higher education; however can any institution explain how they are both effective and efficient? If we are effectively engaging our students can someone explain the atrociously high attrition rates?

   — David Ross    Nov 19, 04:36 PM    #

8. The comment in #8: Rent Seeking, that research supported by grants would get done anyway, without grant support is grossly off the mark for research in engineering and the physical and life sciences. Equipment for research in these areas is capital intensive, and so are many of the laboratories used. Most of this research would clearly not get done without ferderal grant support; state and industrial support for this research is minimal, despite the demand for the graduates by state and industrial employers. Perhaps the author could argue that such graduates and research are no longer needed with the advent of globlization and outsourcing, but that is a controversial view for now. But it is a view not lost on potential students.

   — waldo    Nov 19, 04:40 PM    #

9. Are we to accept Mr. Vedder’s claims merely because of his qualifications? Where is the evidence?

   — Ed    Nov 19, 04:41 PM    #

10. It is not an efficient allocation of resources to spend research money on projects to support pre-selected narrow political agendas. This report is full of cavernous, significant holes.

    — CEK    Nov 19, 04:43 PM    #

11. I do not know of Richard Vetter or his work. It would seem required protocol today – given the writings and utterings of “fringe” scholors – to include a brief bio on the author. Is Vetter connected to the right wing group that wants to privatize HE so taxes will be reduced (as these people claim) and some sleazy private enterprise can reap windfall profits? Or, is Vetter a disgruntled liberal leaning whiner who has some selfish gripe with his Dean and/ or President? To which political, social and professional organizations does he belong? One needs such a “scorecard” today at ascertain whether positions, such as those taken be Vetter, have any real merit or are they just useless drivel?

    — Bill    Nov 19, 05:10 PM    #

12. My, my. In my econ classes of decades ago, we were taught a concept of “inelastic demand” — that an increase in price would not equate to an overall decrease in revenue because the demand for that product or service was “inelastic” — meaning that folks would buy the product more or less regardless of the price (within reason, of course). That is, and has been, the situation in Higher Education for the last several decades. We have so inculcated in Americans that Higher Education is so worthwhile (in terms of future earnings) that Americans overall just grit their teeth and pay the price. In this sort of situation there is little market discipline to keep down the price charged, hence, as Mr. Vetter talks about, Higher Education is indeed characterized by inefficiency. Eventually, in the long run, market forces will prevail and non-profit colleges and universities will have to scale back on the price charged for their product and service. In the meantime, enjoy it while you can!

    — PA Man    Nov 19, 05:31 PM    #

13. Vetter’s specifics aside, there is tremendous waste and inefficiency in the academe, those that deny it have their head in the sand.

    — Tom    Nov 19, 05:35 PM    #

14. Re: #12 – Richard Vedder is generally considered a conservative economist who has argued for some time that there is too much money in the US higher education system, esp. federal student aid — see Going Broke By Degree: Why College Costs Too Much (2004). Vedder has been a Visiting Scholar at the American Enterprise Institute, and he was a member of the Spellings Commission.

    — Braden Hosch    Nov 19, 05:35 PM    #

15. Why does it cost so much, unfunded federal mandates, underprepared students, having to be prepared for any potential disaster looming…..

    — John    Nov 19, 05:45 PM    #

16. Vedder served as “peer-reviewer” for a pro-tobacco junk science report: Science, Economics, and Environmental Policy: A Critical Examination also published by AdTI.

    There are 45 documents in the Tobacco Institute documents online mentioning Richard Vedder, many of them are confidental reports listing “hired guns’ in academic white labcoats that will provide expert testimony.

    What was the Tobacco Institute? The Tobacco Institute was the umbrella trade and lobbying association for the U.S. tobacco industry. The purpose of the Institute was to defeat legislation unfavorable to the tobacco industry, put a positive spin on the industry, bolster the industry’s credibility with legislators and the public and help maintain the controversy over “the primary issue” (the health issue).

    Conservative economist? More like Darth Vedder of the Tobacco industry.

    — wil    Nov 19, 05:46 PM    #

17. The “Center for College Affordability and Productivity” which backs this paper is a three-person outfit. The only one without strong conservative credentials is an “Adjunct Research Fellow” with background at the National Endowment for the Humanities. How much input she might have had into this paper (if any) is questionable.

    Their agenda is seriously suspect, and the bent of the “report” makes it much more so.

    And IMO, efficiency and productivity are not the overriding goals of a university education. There are also important goals of helping students mature and socialize while they go through that maturing process – neither of which will ever be neat, tidy or efficient. Academics are far from the only thing going on at 4-year colleges and universities.

    — Al    Nov 19, 06:03 PM    #

18. Given the rather large number of comments regarding Mr. Vedder’s report, it is evident that he hit a raw nerve. To me it appears he is yet another troglodyte who rather dimly conceptualizes higher education from a business efficiency standpoint. Learning is an inefficient process, full of trial and error, and those of his ilk need to come to understand that. On the other hand, he is certainly correct in pointing out that there is waste in higher education, but its source is in the whole business/accountability approach of the last couple of decades. Those who worry about “atrociously high attrition rates” need look no further than admission standards designed to provide increased enrollments and by extension, budgets, which are the academic administration’s version of profits. And then there is accountability and all the accoutrements that trail along in its wake. First of all accountability imposes huge costs in the form of the bureaucracy whose existence depends on it, and second, it makes extraordinary time demands on the faculty who must supply the data. No one seems to be willing to address what these mindless bureaucratic exercises truly cost. In my career in both faculty and administrative ranks, I have been repeatedly appalled by the sheer waste of valuable faculty time (the University’s real asset) for the paperwork excesses imposed by decree, some self-inflicted, but mostly from government and accreditation agencies, but that’s another story.

    — CW    Nov 19, 07:16 PM    #

19. If that is what Mr. Vedder thinks, he should be a very happy man, since in many states we are spending, in inflation-adjusted dollars, about half as much per student today as we were in the early 1970s.

    — John    Nov 19, 09:24 PM    #

20. Did anyone do the math? For a top private college, excluding room and board:

    Tuition $36,000

    Divide by 9 classes during the year and you get $4000 per class per student.

    Take $4000 * 19 students per class * 1.5 classes per semester , and you get an annual per instructor expense of $228000. This is in a selective school, but the math works similarly with higher teaching loads but lower tuition rates. So that $228,000 has to pay faculty salaries, staff salaries and fixed costs as well. Sounds pretty reasonable to me.

    — Humble bookkeeper    Nov 20, 07:20 AM    #

21. For what it’s worth, at least Richard Vedder is being honest about his views that higher education should be funded on a shoestring and should admit far fewer students. The report truly summarizes views in a remarkable way, however thinly reasoned they are.

    Re comment 16: Vedder’s name appears on many of the Tobacco Institute’s papers because the lobbying arm kept copies from the National Chamber Foundation, whose anti-tax activities distributed a bunch of materials citing Vedder, whose views of excise taxes would have been familiar to them. There is no evidence Vedder was ever directly related to the Tobacco Institute.

    — Sherman Dorn    Nov 20, 08:06 AM    #

22. Vedder’s thesis makes a lot of sense to me. When I see the perks provided for students, faculty (and yes) administrators in the name of higher education, it is very discouraging. The standards for campus services demanded by parents and students have little to do with the quality of education. Perhaps our outputs would be better if we provided more of an educational environment than a country club for indulgent students. I know I’m just grumbling but in the face of budget cuts at state institutions, why are we required to devote more an more resources to student life, student activities, athletics, student housing facilities at the expense of teaching and research?

    — NJ Higher Ed Administrator    Nov 20, 08:15 AM    #

23. “...but in the face of budget cuts at state institutions, why are we required to devote more an more resources to student life, student activities, athletics, student housing facilities at the expense of teaching and research?”

    Because those are auxiliary services NOT funded by tuition revenue at public schools. These are student fees that they pay separately. It is often those things that attracts students and retains students.

    — SMF    Nov 20, 09:43 AM    #

24. There are many in the higher education community who have long felt that the funding of higher education is not a political issue. Traditionally, both liberals and conservatives recognized the importance of a strong investment in the public funding of higher education. However, that common ground has been evaporating in recent years as more and more institutions have seen their priorities on the chopping blocks because of increased pressure on state budgets. The legislative assault on higher education, which is largely the product of the conservative movement, has created a charged political environment around the issue of higher education funding.

    Both the Spellings Commission and a this report from the Center for College Affordability and Productivity highlight this changed environment. The author of the study, Dr. Richard Vedder, is a visiting scholar at the conservative American Enterprise Institute, the same conservative group that is credited with developing President Bush’s foreign policy agenda. This group also has long challenged the prevailing scientific view on global climate change.

    This recent report has ruffled a few feathers in the higher education community, as evidenced by this discussion. But, rather than simply generating charged rhetoric, this needs to spur institutions to become more aggressive in defending themselves and developing a grassroots base that will support stronger investments in higher education. For example, the environmental movement was eventually able to turn the tide on AEI’s tactics by creating a strong base that loudly supported their efforts. The time of bipartisan agreement on the funding of higher education has passed, and institutions must start leveraging their supporters to make sure their priorities are being funded.

    — Mike Dean    Nov 20, 10:34 AM    #

25. There are an awful lot of people here that have taken the time to write comments about Vedder’s research. Most of you have been able to see through this thinly veiled ideological attack on one of the last possibly democratic spheres in our society. As such, it is our responsibility to have these discussions with our colleagues, friends, and familes – to gather support, to organize, and to fight back.

    Higher Education is vital to any semblence of a critical democracy, and if we continue to passively allow these neoliberal talking heads to dictate policy – we will find ourselves in considerable trouble.

    We need to reevaluate the mission of higher education, society’s responsibility for higher education, and how we go about the process of teaching and research.

    People on the other side of the fence need to start being more vocal, develop a working analysis of our problems, and work to create democratic change and avenues for resistance to these privatizing polemics.

    — Tom Fleenor    Nov 20, 11:42 AM    #

26. My, my, the liberal invective is flowing. Conservatives are the root of all evil. Well, sad to say, I’m rather conservative (though to the left of Vedder), but I share some of his concerns with the cost of a college education – just as I share some of the concerns of his critics. One thing that hasn’t been touched on the the demand for “research” in second-tier state universities. In my own discipline, the number of “scientific journals” has proliferated. The quality of the majority of these journals is appallingly low, but plenty of economists (yes, I admit to being one) are publishing uninteresting junk in these journals because they are expected to do “research.” When the modal number of citations to an economics article is zero, I submit that we need to reconsider what we mean by research. More time for preparing good materials for creative presentation to students could easily be created by redefining “research” as “having a firm understanding of the current state of the discipline and actively considering ways to engage students in that learning.”

    — NTS    Nov 20, 12:23 PM    #

27. For all his touted expertise, Mr. Vedder makes a fundamental statistical error, that of using an arbitrary baseline—1976—without explanation. In fact, universities and colleges in 1976 were quite dissimilar to those in 2007 and ought not be compared, especially in light of the computer revolution which added an expensive infrastructural and personnel cost to modern colleges. Furthermore, economist that he is, Mr. Vedder should know that were colleges and universities costing too much, the system would break down; to wit, parents/students would go elsewhere and taxpayers would revolt. Neither has happened, which leads me to believe that the universities are exactly where the market says they should be.

    — marci    Nov 20, 12:26 PM    #

28. I don’t know where the money is going for H.E. but it certainly is not going into faculty salaries. You’re getting teaching on Missionary Pay: why don’t M.D.s and Lawyers who also go to post B.A. programs get such pay? Why are the intellectuals the only ones expected to tighten their financial belts? Could it be the usual anti-intellectual bias of American Culture? Higher Ed is for education, not job-training or discipline-schooling or did I miss something when I read the dictionary?

    — Karen    Nov 20, 02:21 PM    #

29. Many colleges are exceedingly large bureacracies; that they expend extra money in a way that not everyone agrees with should surprise no one. That they will eventually learn that resources available to them are not limitless and go through a “focus on the fundamentals of our mission” cycle like other organizations (including for-profit businesses and federal government agencies) is to be expected.

    M. Vedder makes a strong case on some points even while others are flawed. I don’t think the notion of eliminating student loans for the affluent is radical; nor should it be highly arguable.

    — Richard Jacik    Nov 20, 05:19 PM    #

30. Cheaper higher ed? EASY Colleges have become summer camps with classes. Strip the playgound equipment, namely, the programs, facilities, offices and staff that buttress peripheral functions on campuses—and you’ll find loads of money for delivering instruction. Good professors, paid what they’re worth. Proper equipment but not necessarily the latest whiz-bang tech toy. We know how to make our institutions run on much, much less money.

    It won’t be hard, when once again we make the money we spend OUR money, not taxpayers. The liberal socialist government-provides-all choaks costs and productivity like nothing else.

    — Mark Miller    Nov 20, 05:47 PM    #

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