Arnold Kling  

The Education Gap

In Search of Another Theory of... Males, Females, and College...

Mark Thoma writes,

David Brooks says, "Especially in these days after Katrina, everybody laments poverty and inequality. But what are you doing about it? For example, let's say you work at a university or a college. You are a cog in the one of the great inequality producing machines this country has known. What are you doing to change that?"

Let me defend universities against the implied notion that colleges aren't doing anything to address these problems...I chaired the University's Scholarship Committee, the committee responsible for allocating the entire pool of University scholarship money. As Chair, I had the committee reexamine each step in our process to try and identify hidden bias in the award of scholarship money...I resent the implication that we do not care, are not sensitive to, or are not taking action to address these problems. We are.

In my view, the issue is larger than universities' policies concerning admissions and financial aid. It concerns how universities are financed, and how this affects the distribution of income.

First, consider state subsidies for universities. These are almost certainly regressive. Much of the subsidy goes to raise the rents earned by administrators and professors. Much of the rest goes to affluent students. The taxes that pay for the subsidies come from all economic classes.

Second, consider university endowments. Again, they serve to increase rents of employees and to subsidize those students who attend the most elite institutions--a student population that is disproportionately affluent.

Imagine instead what might happen if state funds and alumni donations funded vouchers for student tuition.

Compared with reforming university finances, tinkering with admissions and scholarship policies is beside the point. It may "show that you care," but has little practical significance.

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COMMENTS (3 to date)
drtaxSacto writes:

As someone who has spent most of a career discussing this very issue, I am interested that you would pick it up. Ultimately, the literature in the field suggests that first, there are some public goods implications (the ground breaking research about price elasticities by Hansen and Weisbrod) generated a lot of discussion. The process in most states at this point is to recognize the regressivity of the subsidy and in most states prices are rising relatively quickly for public sector institutions - many of those same states have made a serious commitment to establishing equity payments to those who cannot afford to attend the newly priced institutions. Some of those are institutionally limited others are more general. Unfortunately, because of the emotional side of the argument, I think the full implementation of vouchers for higher education is not likely to be implemented. In some states, student aid which allows students a range of choices beyond the public sector is pretty good. In others it is not.

There is one other set of questions involved - here Jim Doti (Chapman) has recently published a paper on the subject. Independent colleges have, for the last 20 or more years, in response to their competitive issues with the publics and for their own purposes and goals, have offered increasingly generous tuition discounts in the form of aid - most of those are need based. At some point that discounting becomes decreasingly effective. Doti's paper looks at the trendline for institutions and wonders when higher education pricing will become more like a commodity.

Finally, there is something from the national commission on college costs (which I served on) - the final report of that Commission made a distinction between cost, price, subsidy and net price. For a lot of reasons, most public policy discussions do not make those distinctions clear. Gordon Winston and the Williams Center on Higher Education has done some really interesting work in that area,which deserves a much wider readership.

Roger McKinney writes:

Don't you think the financial benefits of a college degree are overstated? Except for law, medicine and possibly engineering, the pay for other fields isn't better than that for the trades, where most new jobs are created anyway. Education is a good example. Oklahoma cranks out thousands more teachers than the state can employ, so we export over half of them. Most carpenters and plumbers earn more than teachers. In my field, economics, you need a doctorate to earn more than a carpenter.

wkwillis writes:

The professors don't get rents, they get subsidized curiosity as part of their pay package. Professors that leave academia don't get grants and grad students and libraries that order magazines and books for them free anymore.
They have to settle for making twice as much money. Poor babies...

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