Tuesday, November 23, 2010
The questions readers put to my previous column on the supposed college cost crisis are best answered by economists. Accordingly, the editors and I have asked the economists whose book formed the basis of my remarks, Robert B. Archibald and David H. Feldman, to reply. — Stanley Fish
We would like to thank Stanley Fish for allowing us to respond to reader comments regarding his column about our new book. Reading them felt like working through the worst set of course evaluations a professor ever received.
The power of the dysfunction narrative was on full display in the responses. Stories of waste and inefficiency in higher education have a strong appeal, and they are deeply embedded in our public understanding of rising college cost.
Many who wrote took issue with us based on their personal experience. Although this is perfectly natural, generalizing from experience is not always sound. We need to stand back and take a broad look at the economic landscape of higher education.
At the core of the dysfunction narrative you will find a college-centric view of the world. If something unpleasant is happening, like rising cost, then the reasons must lie within the institutions themselves. We take a different approach, and the diagram below helps explain why we argue for a broader aerial view of the higher education industry.
Between the late 1940s and today, the inflation-adjusted prices of dental services and of higher education have behaved in a strikingly similar way. A wide variety of other personal services (ranging from the services of lawyers and physicians to bank service charges and life insurance) also display this same basic pattern of price change. These similarities could be coincidences. Perhaps each industry requires its own separate explanation. We don’t think so. We think one explanation fits them all.
College cost, and cost in the other similar industries, is rising for three broad reasons.
First, over time we have found ways to reduce the number of labor hours and kilowatts of power needed to produce most manufactured goods and agricultural products. By contrast, many services remain artisan-like. The time of the service provider is the service itself, and labor-saving productivity gains are very hard to achieve. As a result, the cost of a year of college or an hour of a lawyer’s time must rise compared to the price of a ton of steel or a bushel of wheat....
Second, the upward trend of college cost has been accelerated by changes in income distribution over the last 30 years. People with high levels of education have seen big income gains. Universities rely on highly educated people, as do hospitals, law offices and dental practices, to name a few. Rising income inequality is a force for rising cost in any industry like higher education. And rising income inequality also drives affordability problems. ...
Third, technology is a double-edged sword in many industries. For the most part, technological changes in how we teach, how we do research and how we equip our facilities have come at a cost. Some new technologies do make us more efficient. We no longer employ typing pools. But other new techniques, like computer-aided design in architecture classes or pulsed lasers in physics labs, have increased cost.