Arnold Kling  

Economics of Higher Education

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James B. Twitchell writes,


At the turn of the 20th century, one percent of high school graduates attended college; that figure is now close to 70 percent. This is an industry that produces a yearly revenue flow more than six times the revenue generated by the steel industry...

Americans donate more money to higher education than to any other cause except religion...

American colleges and universities raise about $25 billion a year from private sources. Public universities are new to this game, but they’ve learned that it’s where the action is. Private dollars now account for about 30 percent of the University of Illinois’ annual budget, about 20 percent of Berkeley’s, and about 10 percent of Florida’s. In a sense, tuition-paying undergrads are now the loss leaders in the enterprise...

schools like mine have four basic revenue streams: student tuition, research funding, public (state) support, and private giving. The least important is tuition; the most prestigious is external research dollars; the most fickle is state support; and the most remunerative is what passes through the development office.


Read the entire article, which is a wonderful blend of facts and rant.

I will add that on Friday I went to my alma mater, Swarthmore College, to attend a memorial service for Bernard Saffran. I allowed time for traffic, so I arrived on campus almost an hour early. I was struck by the large number of new buildings. It made me think that Swarthmore is the most over-capitalized entity in the country.

It was a bitter January day, so I went into the library to escape the cold. The few students who were there were working on computers, either the library's or their own laptops.

I then wandered to the "honors reserve" section of the library, where books for junior and senior seminars are kept. They seemed rather old and threadbare. I pulled a few off the shelf, and I did not find any with a copyright date after 1992. The economics books were not classics, just books from the 1960's through the 1980's, almost all of them forgettable.

I felt a pang of pity for the college, and this pathetic book collection. Then I turned around, once again seeing the fancy computers, and remembered the new buildings. It struck me that in 20 minutes of walking around the campus and 20 minutes in the library, I had seen more buildings that had been built than books that had been purchased in the past 15 years. Poverty amid plenty.

For Discussion. Why do Americans give such a large share of their charity dollars to colleges and universities?


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The author at View From a Height in a related article titled Economics of Higher Ed writes:
    Via EconLog, a great discussion of Brand State U: At the turn of the 20th century, one percent of high school graduates attended college; that figure is now close to 70 percent. This is an industry that produces a yearly... [Tracked on February 4, 2005 7:20 PM]
COMMENTS (11 to date)
Scott writes:

I don't know why people are so attached to their colleges and especially their college sports teams.

Maybe it's because I took a non-traditional route and dropped out for a few years before returning at age 25 to finish things up, but I don't feel that attached to my school. (And I really don't care much about sports.)

For now, when they call me to try raising money, I dismiss them by telling them I'm still paying for my education. Not sure what I'll say in three years -- maybe I'll just give the standard and cranky, "I'm already paying money to the school through taxes."

blaine writes:

I have two thoughts.
First, money helps universities improve their public image and prestige. Since graduates want their universities to continue to be prestigous so that being a "whatever" graduate continues to add value to my resume, it seems like a good place for money.
Second, many, if not all, universities keep track of how much money all their alumni donate. When one calls the admissions office to try and get a child, nephew, whatever admitted, the office will look at how much that person has donated and consider it when deciding how big of a thumb on the scale the call should be.

Lawrance George Lux writes:

It is a blend of Tax credits and fund-raising organization. It can be attributed to be a 'full Court press' policy, where every previous Alumni is contacted almost Quarterly by Students hired by a contracted Fund-Raising organization. Students have a script like all Telemarketing, plus regular Issues of the Campus paper--containing heavy content on threat to Campus activities due to financial shortages. lgl

Jon writes:

Colleges and Universities poor money into high visibility items like fancy buildings for the same reason that for profit companies poor money into stadiums or olympic visibilities. It is also the same reason a corporate executive spends hours of valuable time getting the powerpoint presentation looking nice--image and visibility matter for economic survival in both the for profit private, public, and non-profit sectors.

A Swattie writes:

While perhaps a nice story, I'm not quite sure that it holds empirical water: Looking at the books on reserve for advanced micro., at least a quarter are post-1992. According to postings around the library, it acquired 1768 new books in fall 2004. The new book shelf has as many books as the campus has buildings (and books are rotated every two weeks). There are many things to accuse Swarthmore of, but not buying books is a rather bizarre one.

Arnold Kling writes:

"According to postings around the library, it acquired 1768 new books in fall 2004. "

You know, that really does not strike me as very many. I personally bought about 35 over that same time period. So fifty people like me together bought more than the Swarthmore College library.

Or, to put it another way, they spent about $100,000 on new books in the fall, and at that rate they spend $200,000 a year. I wonder if that's even enough to merit a line item in the college budget.

Another Swattie writes:

As an economics major at Swarthmore, I find your comments on McCabe's collection a bit unfounded. The economics books in Honors reserve are only a tiny tiny fraction of the total economics in the library's collection. On McCabe's second floor you'll find that the economics collection is quite copious. Perhaps your comments would be better directed at the person who put together the Honors reserve sections (typically professors who request that certain books be placed there.) But I can assure you that we have access to more "classics" as well as "forgettable" books that we have time to read. In addition to the books in the library we have next-day access to any of the books in the Tri-College system and slightly less prompt access to virtually any book through Inter-Library Loan. Swarthmore also subscribes to countless online services (like JSTOR) which give full-text access to many different journals. For a small liberal arts college I think we are very well off. You should be able to see the library's catalogue for yourself at http://tripod.swarthmore.edu/ I doubt there is much that you will not be able to find.

David Thomson writes:

I am just an ordinary Joe Blow---and I probably bought at least a hundred books in 2004. 1768 books purchased by a university seems small by comparison.

spencer writes:

To answer your question about why they give rather then books-- maybe it is because they can see a return to society for their donations to a school but find it hard to find where the church does much to improve society?

Arnold Kling writes:

"You should be able to see the library's catalogue for yourself at http://tripod.swarthmore.edu/ I doubt there is much that you will not be able to find."

When I taught this fall an introductory course at George Mason University, I assigned a book review. I gave students a list of 13 books to choose from. The books are listed here:
http://arnoldkling.com/econ/GMU/booklist.html

When I search the Swarthmore catalog, 5 of those 13 books are not to be found. I do not think that is a very impressive result. I can find those books in the George Mason catalog.

mark writes:

5304 books per year, if the 1768 books for the fall semester was carried out to include the spring and summer semesters. To which should be added journal purchases and gift books.

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