What Do Universities Produce?

24 July 2011 at 1:34 pm 18 comments

| Peter Lewin |

Naomi Riley’s new book on university tenure is creating a bit of a stir. It is of a kind with a number of similar works reflecting growing unease about the traditional arrangements in academe. One reads frequently about the lack of value for money that students get for persistently rising tuition fees. And a colleague of mine says he thought he was hired to do research and found out he was actually hired to create publications — and these can be drastically different things. (Witness the recent post by Nicolai).

I wonder how these arrangements have survived in the marketplace. Clearly, universities are multi-product firms. Education (for which tuition is paid) is only one of the products. Another is “research.” This is supposedly a public good (in large part — I guess some products of research could be proprietary). So it is reimbursed by the public purse — aka we have a rent-seeking situation with all its dysfunctions, including minimal feedback on product quality. There is no constituency of consumers to speak of. In effect the producers (the researchers) end up judging their own work and setting the standards and (perhaps most importantly) the rules of the game. Put this in motion and you get a system that serves only the players of the game — provides them with formidable isolating mechanisms and protections.

One implication is that the larger the share of revenue accounted for by tuition (as with liberal arts colleges) the higher the quality of teaching should be. And a growing share of tuition dollars should put pressure on these isolation mechanisms. Of course, where this tuition is paid mainly by the state (state schools) this would not be the case.

So, its a bit of a puzzle to me why the liberal arts colleges don’t have a larger market share. Why do the big “research” schools maintain their prestige attraction when they cost so much and produce such low quality teaching? Maybe its a kind of screening effect — the job market rewards students who graduate from prestigious schools so good students tend to go there and the teaching is irrelevant — a network effect.

Entry filed under: Education, Former Guest Bloggers, Institutions.

Two New Papers … Another Benefit of Globalization

18 Comments Add your own

  • 1. DRDR  |  24 July 2011 at 2:42 pm

    At these prestige schools, a lot of students spend more of their time in extracurriculars and networking functions rather than the classroom — Larry Summers once complained a decade ago that his University had become “Camp Harvard.” The students believe the advantage in peer effects in these prestige schools makes up for the teaching deficiencies.

  • […] “Naomi Riley’s new book on university tenure is creating a bit of a stir. It is of a kind with a number of similar works reflecting growing unease about the traditional arrangements in academe. One reads frequently about the lack of value for money that students get for persistently rising tuition fees. And a colleague of mine says he thought he was hired to do research and found out he was actually hired to create publications …” (more) […]

  • 3. Richard Ebeling  |  24 July 2011 at 7:22 pm

    I wonder if universities would place so much importance and faculty expectations on research and/or scholarly publishing if those institutions of higher learning were completely private and dependent upon private tuition and voluntary charitable giving.

    Being a heavily state subsidized institution that they have been for so many decades now, administrators and faculty have been able to forget that a college or university is a place that has “consumers” known as students, and who have a product they are expected to “produce” called education.

    Teaching would not be considered a “sub-human” role in the college and university environment — as it often is at too many such institutions — if they actually had to be concerned with making the customer happy if they did not want to risk loss of revenues over time due to disappointed consumers (parents and students).

    Would we really expect to see the amount and degree of worthless drivel that we see in too many of the academic and scholarly journals, if professors actually had to do what a school is supposed to be about — teaching and educating?

    Perhaps some will remember a book from a good number of years ago called, “Prof Scam.” I don’t think much has changed at many of these places.

    Richard Ebeling

  • 4. Michael Marotta  |  24 July 2011 at 11:08 pm

    Yea-saying Ebeling above, I have to ask: who, what, where, when, why, and how?

    “… why the liberal arts colleges don’t have a larger market share. Why do the big “research” schools maintain their prestige attraction when they cost so much and produce such low quality teaching? Maybe its a kind of screening effect – the job market rewards students who graduate from prestigious schools so good students tend to go there and the teaching is irrelevant – a network effect.”

    First, there is the discussion of whether education is supposed to get you a job. University education in the Middle Ages through the 18th century reflected the bifurcated motives that Sir Isaac Newton called lucreferous and luciferous (bearing money and bearing light). The American physicist Josiah Williard Gibbs earned a doctorate in engineering before traveling to Europe to attend lectures in mathematics. Nominally, his bachelor’s degree should have gotten him a good job building bridges. As it turned out, he was honored with a Nobel Prize.

    Second, we know that the problem with following the herd is walking in what they leave behind. Billions and billions of individual sales at McDonalds validate the power of their advertising. I stop there, too. Yet many orders of magnitude lower are the members of local food co-operatives, and, again, I am a member and have served on the board. So, too, does “everyone” want to go to a Big Ten school with a Big Name sports program. At the same time, other people make other choices.

    As above, a truly free market would instantly solve a lot of problems. However, that miracle depends on a change in paradigm within public opinions. Thus, it is unlikely short of a focused and engaged campaign as unrelenting as the “progressivism” that got us here over the last 100 years.

    However, regardless of what “everyone” does, the individual can still make good choices. I high recommend Mark Van Doren’s Liberal Education to anyone in high school or college.

  • 5. Steve Phelan  |  25 July 2011 at 6:40 pm

    Here’s an interesting article on the future of the university in the face of disruptive online innovation…

  • 6. srp  |  25 July 2011 at 7:54 pm

    There’s so much question-begging in these types of discussions that it isn’t funny. Teaching is not more legitimate than research or more true to the institution’s “purpose,” at least for the more prestigious schools.

    Contrary to the cranky pseudo-libertarian views so often promulgated, private schools started by industrialists (Stanford, Chicago, Johns Hopkins, etc.) were intended to be research-oriented, no-undergraduate schools at their inception. (The model was the German research university of the 19th century.) It was the large public land-grant state schools that were founded with an emphasis on “useful” knowledge and teaching. These entrepreneurial private schools added undergrads only later.

    Harvard, Yale, and Princeton were much older, starting out as religious schools with a “mental discipline” ideology of teaching, but moving in the direction of pure research by the late 19th century. (Princeton has maintained a stronger emphasis on its undergraduate program than most similarly situated schools, but that has required a lot of centralization and the avoidance of big professional schools.)

    A good survey here is Veysey’s The Emergence of the American University, which focuses on the interplay among the pure research, utilitarian, and mental discipline ideologies while giving a lot of institutional and biographical detail.

  • 7. Peter Lewin  |  25 July 2011 at 8:55 pm

    @Steve: Thanks, very interesting. I think this is definitely a factor. The digital world is going to change the character of higher education – it already has – hopefully for the better.

  • 8. Ryan  |  25 July 2011 at 9:03 pm

    This reminds me of a game designed by Michael Spence (Marketing Signaling, Cambridge, MA; Harvard University Press, 1974). In his game, education is valuable for the same reason that wearing a rolex to a job interview is valuable: it is just a signaling mechanism that doesn’t augment job skills. Even under this extreme set of assumptions, it is still a nash equilibrium for students to attend college if they are able to. Liberal arts colleges’ lack of market share may be evidence that this game isn’t too far from reality.

  • 9. Peter Lewin  |  25 July 2011 at 9:07 pm

    Hmm! Never been called a cranky pseudo-libertarian before – perhaps I should consider it a compliment.

    Question begging? I don’t see this. More like differences of opinion as to the value of the so-called “research.” And, after all, these institutions prominently advertise quality education as one of their products. Seems like a legitimate criticism to point out that they are not delivering on their promises.

    On the question of research, even if this was and is their primary product they face problems. In a private setting donors get to evaluate the products of the research and can pull the funds if they are dissatisfied. Not perfect, but some check on quality – on what the “public” regards as beneficial. The way it is now, with the prominent role played by government grants (hell they even teach courses devoted to grant writing!), if it weren’t so tragic it would be funny. The fact that 90% of all published research articles never get read by anyone besides the authors, editors and referees (maybe) should be testimony enough.

  • 10. Peter Lewin  |  25 July 2011 at 9:11 pm

    @Ryan: exactly.

  • 11. srp  |  26 July 2011 at 8:05 pm

    1. The name-calling may have been an overreaction to hearing the same unsupported litany all over the Internet for the last few years. Also to the cheap shot at your co-blogger in the original post–if you’re going to attack someone for “publishing instead of research” you should at least offer a critique of the papers at issue. I’ll contain myself in the future.

    2. In any other market, if customers overwhelmingly show a certain pattern of preference we don’t argue that they’re being systematically duped for decades despite lots and lots of information flow within and across cohorts. Even in cases like Clorox bleach (where what superficially appears to be a commodity product with a useless name slapped on generates higher willingness to pay) most free-market analysts would say that there are deeper reasons for the premium. Something to do with quality uncertainty, perhaps, or with warm feelings associated with using the same brand one is familiar with from childhood.

    If you actually think a kid who qualifies to go to UCLA would be better off at the University of Phoenix or ITT–where “better off” is defined according to what the student actually prefers rather than your idea of what she ought to prefer–then you can make that case. (Obviously, it would depend on the student’s ability to pay and/or get financial aid.) Actually, under the hypothesis that research is a big waste of time at UCLA it should be easy to start your own university and compete them right out of the market.

    3. The question begging comes in with the idea that the higher-status non-profit universities a) pretend to be teaching colleges, b) don’t provide a better education and c) that students are or ought to be primarily concerned with classroom teaching. All three of these statements are unsupported.

    The signaling story is becoming a bit of an overblown cliche, but obviously holds some truth, i.e. there are some signaling benefits from going to a more prestigious school. What everybody underplays is the crucial importance of peer effects in the educational process, especially nowadays with all the emphasis on group work from high school on.

    4. It’s perfectly reasonable to complain about the preferences of students. I do it all the time. Most of the teaching “deficiencies” you will find in universities are joint functions of student and faculty preferences and constraints. They are the result of increasing market responsiveness and competition on both the output and input markets. I think there are some “entrepreneurial” solutions here, but it might not be remediable.

    5. The value of research (according to any valuation scheme) is roughly a function of the maximum-quality contribution in each field and subfield. Even though Sturgeon’s Law applies, the maximum of a set of independent random variables does go up with the size of the set (as long as the distribution doesn’t get too unfavorable as the set grows). So more research is likely to generate better research even as it generates more crap. It may be harder to sort through the crap as the total amount of research increases, which would make progress sub-linear in funding, but there also may be more synergies and combinations of good ideas as the set increases.

    6. Government grants play almost no role in funding research in English literature, cultural studies, philosophy, and history, the favorite targets of the anti-research bandwagon.

    Such grants do play a large role in STEM fields and I’m sure you would think some of that research is useless. But which? There’s an argument for bundling here, in that different people have uncorrelated preferences for different kinds of research–even without government grants, smaller private donors might be best served by aggregating their money into the equivalent of the United Way. So it’s hard to believe that most donors to research–either voluntary or involuntary–would be in control of the topics chosen.

    If you have a bone to pick here, it is with government funding of R&D, not the universities. If the programs are there, and intended to be used by them, should they let their competitors get all the money? There’s actually some evidence that STEM workers get rents from increases in government funding (Austin Goolsbee published it, interestingly).

    So a big debate about the NSF, NIH, DARPA, etc. may be a good idea. Complaining about research universities that often predate these funding sources (and that added their teaching missions only later) for taking the money is cranky. (I guess you could say that UT Dallas is evil, because it got started as a PhD-only school intending to tap these government funding sources for most of its revenue stream. But now that it virtuously added an undergraduate program it can move all the way to pure good by cutting out its original raison d’etre entirely and go into competition with UoPh.)

  • 12. Peter Lewin  |  26 July 2011 at 9:45 pm

    @srp: I will make only a brief response and leave it to others if they think its worth it to take it further.

    I have no argument with much of what you say. My analysis is about the state of a particular industry – higher education. I strongly affirm the right of students, and their families, to choose whatever options they want. I am not advocating any kind of paternal action to “improve” their choices – though I find the whole thing a bit puzzling. I do believe the screening-network-story, and I do believe that the cost of tuition is driven to a large extent by federal loan subsidies that I would like to see discontinued. You are correct I don’t have figures on the extent of grants and other government money. I can only report anecdotaly that in my institution, and my school, it is a large part of the pie. I accept what you say about the humanities.

    The whole nature of research as a product makes it difficult to evaluate. A lot of it just seems to me to be nonsense – based on false methodologies.

    I really began my remarks thinking about the institution of tenure in research institutions and what this meant for product quality and management. It seemed to me that in most of these institutions activities are driven by what the producers think is good without any type of consumer group feedback. This is an unusual situation.

    I need to end by clarifying what may have been an unfortunate misunderstanding. I absolutely did not intend a cheap shot at any of my co-bloggers. I have nothing but admiration for their work! I think you are referring to my parenthetical reference to Nicolai which was about his post on the economic growth and male organ length article which I found amusing and clever (and somewhat disturbing for what it implied about research). I trust Nicolai understood that.

  • 13. vpostrel  |  27 July 2011 at 12:28 am

    It’s worth noting that tenure and research are entirely separable issues. You could have tenure entirely based on student evaluations, and you could have a non-tenure system in which hiring and promotion were entirely based on research productivity (or even fund-raising). One has little to do with the other. If you’re going to criticize tenure, address that issue. Don’t make vaguely supported claims about the supposedly bad quality of teaching at unnamed expensive prestigious research universities.

  • 14. Peter Lewin  |  27 July 2011 at 1:12 am

    Hmm. Evidently I have touched some nerves. I am not sure why.

    I intended to raise some issues based on what I thought were fairly uncontentious claims. Is there any doubt that tenure blunts the incentive for good teaching when it is based on “research” – read publications? Is there any doubt that many (most?) prestigious (and many other) universities dramatically downgrade the importance of teaching? I don’t think so. Pretty much the only universities that reward teaching are the liberal-arts colleges. If this is not common knowledge then I am misinformed.

    Based on this I would also still claim that the quality of teaching at “research” institutions is generally abysmal. Most professors just don’t care. Why should they when teaching counts for nothing in their careers? There are, of course, major exceptions – teaching stars who really do care and who stand apart. Again I would gladly be proven wrong. I claim the benefit of the burden of proof based on the structure of incentives.

    So, of course if tenure is based on teaching it has a different incentive effect. (But there is still the time inconsistency problem. The incentive disappears once tenure is acquired). And based on this I expect the quality of teaching to be better there, and I believe it is. (Again I could be proven wrong). And this leads me to the original puzzle I raised in my post for which my answer was the network effect.

  • 15. FC  |  27 July 2011 at 2:19 am

    I will begin by asking forgiveness for having the temerity to doubt the awesomeness of the teaching at the research-focused institution in which I was an undergraduate.

    Most of my classes consisted of about twenty minutes of vague lecture and then “class discussion.” As I listened to my classmates try (and usually fail) even to understand the question, let alone to answer it, I fumed to think that the professor could simply have told us the answer. But that would have required more than leaning against a podium and smirking indulgently.

  • 16. 31 July Roundup at Catallaxy Files  |  30 July 2011 at 7:58 pm

    […] Klein on “What do universities produce?” And how are they rated in the marketplace? So, its a bit of a puzzle to me why the liberal arts colleges don’t have a […]

  • 17. Cosa producono le università?  |  3 August 2011 at 10:37 am

    […] gli economisti perché mette in crisi le loro ricette. Così qualcuno in un noto blog come organizationsandmarkets  arriva a chiedersi come mai le grandi università di ricerca americane attirino così tanto gli […]

  • 18. Quality Function Deployment  |  22 August 2011 at 9:39 am

    Students only care about graduating from prestigious universities because that is what gets them the higher paying jobs. The quality of the instruction does not matter to them. It is a legacy effect.

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