Higher Ed’s Cost Disease

I recently read William G. Bowen’s The ‘Cost Disease’ in Higher Education: Is Technology the Answer? — a brief compilation of two lectures that he gave at Stanford in October 2012. For those of you who are unfamiliar with Bowen, he’s a former Princeton University president, who, as an economics professor, came up with the “cost disease” hypothesis for performing arts with William J. Baumol in 1966.

Three of the most important points about this report, in my opinion:

  • As a general trend, the cost per student in higher ed has risen faster than costs in the rest of the economy for as long as we’ve been collecting data on the subject — since the beginning of the 20th century. So rising costs is not a recent phenomenon. What is new is the reversal in the financial position of public and private universities. Public universities, because of reductions in state government allocations, have increased their tuition at a much faster rate than have private universities over the last few decades. To me this signals a movement toward the privatization of higher education in the USA.
  • While tuition has increased at both public and private universities, students and their parents have been forced to finance college education through debt, because incomes have not kept pace.
  • A well-designed empirical study at Carnegie Mellon found “no statistically significant differences in standard measures of learning outcomes . . . between students in the traditional classes and students in . . . hybrid-online format classes.” As the report points out, many other studies, less well-designed, have not found significant differences either. This leads me to think that the common criticism leveled against online instruction — that it simply “isn’t as good” as instruction that resides entirely within the physical classroom — might be more a reflection of our own emotion-laden memories of what we experienced as college students than anything else. Another factor that probably clouds our opinion of online instruction is the fact that the first providers of online education went after the bottom segment of the market, where quality in the physical classroom was probably just as terrible.