Cookie Monsters Run Higher Ed

[Anon1787]

https://www.insidehighered.com/views/2022/12/19/why-production-cost-and-resentment-rising-opinion

Baumol cost disease is not the primary cause of the increasing cost of higher ed. Rather, Howard Bowen

"maintained that colleges and universities seek and spend all the revenue they can get. Like leaders of charitable, ecclesiastical and social service organizations, those in higher education [Ronald Ehrenberg called them "cookie monsters"] believe altruistically that the need for revenue is insatiable because additional funds can always be put to good use. In addition, intense competition for prestige and influence drive the infinite need, Howard Bowen said. Through this strategy, he maintained, higher education deliberately increased its production cost, contrary to William Bowen's exculpatory account.

Not only do colleges and universities, particularly the wealthiest, seek ever more revenue, they spend less and less of the increases on instruction, maintained Howard Bowen. Some of the non-instructional spending is justified by unfunded government mandates, for example. But much of the non-instructional spending reflects an "administrative expense bias" that increases the fraction of revenue spent on administration as the total revenue grows. Directors, deans, vice-presidents and their assistants multiply.

In addition, Howard Bowen showed that financial data do not support the cost-disease thesis. Drawing on large datasets that William Bowen had not, Howard Bowen revealed that per-student instructional cost declined significantly during the 1930s, 1940s, and 1970s. Our study of earlier decades reveals that the total per-student production cost scarcely escalated at all relative to the price of commodities between 1875 and 1930. In fact, this per-student cost became about three times cheaper relative to the per-capita national income over that period, largely because the number of regular students rose astronomically. Historical financial data therefore do not support William Bowen's historical account of inexorable, unpreventable cost escalation."

[dismalist]

The article's William Bowen is really William Baumol. That should remove the confusion caused by two Bowens! :-)

From the article, I like this causal explanation of rising cost per student by Ronald Ehrenberg, who wrote that higher education leaders must and do act like "cookie monsters." In pursuit of "maximizing value," higher education leaders "seek out all the resources that they can get their hands on and then devour them." Every selective college and university is therefore "engaged in the equivalent of an arms race of spending to improve its absolute quality and . . . its relative stature in the prestige pecking order."

That doesn't explain the administrative bloat, though. And it's a game public institutions need not play.

[Hibush]

The article's William Bowen is really William Baumol. That should remove the confusion caused by two Bowens! :-)

From the article, I like this causal explanation of rising cost per student by Ronald Ehrenberg, who wrote that higher education leaders must and do act like "cookie monsters." In pursuit of "maximizing value," higher education leaders "seek out all the resources that they can get their hands on and then devour them." Every selective college and university is therefore "engaged in the equivalent of an arms race of spending to improve its absolute quality and . . . its relative stature in the prestige pecking order."

That doesn't explain the administrative bloat, though. And it's a game public institutions need not play.

Ehrenberg teaches a course on "economics of the university" which covers the various resource allocation decisions the university must make. That should be a must-take class for all the prospective @ass_deans and cookie monsters.

[Wahoo Redux]

The reasons why higher ed costs so much to produce also explain why historical esteem for higher education has shifted to resentment, write Bruce A. Kimball and Sarah M. Iler.

Has this been in contention ever? 

[kaysixteen]

I get that the economics theory and argumentation causes my brain to spin, largely because I have so litle interest in economics, and disdain much of the pretentious thinking many economists engage in, but the arguments of Howard Bowen cited by the authors here seem to have merit.   Certainly much of the increase in higher ed costs do stem from admin bloat and additional extra-/non-curricular activities and student services fluff.   But wrt the difference between college x's stated tuition rate vs the actual institutional cost per student is a question I have long wondered about.  The authors say that most colleges eschew telling us what their discount rate is.... certainly this was not the case in the 80s at Dear Alma Mater, which was already by this era raising annual tuition rates beyond the prevailing (and very low in the mid-/late-80s) inflation rate.   Every year, when the new tuition rate was announced, a letter from the campus pres to parents and students explained this, and claimed that we were only being asked to pay 60% of the total cost, or thereabouts.  (Whether DAM still sends such missives out I do not know, but the current tuition and expenses rate has continued to go up much much more than inflation, even before the resurgence of inflation over the last 18 months or so).  And the campus pres then never bothered to itemize the overall factors that went into the total price of a per student DAM education, of which all students were supposedly getting that instant 60% discount.  The extra fluff, which DAM can obviously afford, must needs also be much greater today (15 years ago they literally tore down the less than 50yo student union building and replaced it with, well... at more or less the same time they poached a 5-star chef from a Maine ski resort to become the food service menu specialist).  Now of course DAM is special, but most colleges, pub and private, are doing things like this, because I guess they feel they have to do so, and this is contributing to resentment on the part of kids and their parents wrt the ever increasing college costs.   Lastly, one other thing about this has long been quizzical in my mind-- is the 'total cost', down from which the actual cost is discounted, also perhaps being artificially inflated, precisely in order to lower the price with discounts and say how much of a deal they are giving the kids?  This would of course be exactly what many retail outlets regularly do, especially (but not exclusively) with their 'sales'...