Bryan Caplan  

Online Education: The Rationale for the Revolutionary Definition

Stossel on Jobs... Moral Authority, Continued...
My recent post on online education specifies:
When I talk about "online education," I don't just mean students at existing brick-and-mortar colleges taking some classes from their dorm rooms.  I mean students enrolling in virtual colleges instead of physical colleges.
Tyler objects:
I would say he is defining away the most likely model, namely a hybrid model which has a significant on-line component.
I think my definition is much closer to standard usage than Tyler's.  In any case, though, there's a simple rationale for my usage: If online education in my sense takes off, education will become drastically cheaper, and most existing schools will crumble into bankruptcy.  In contrast, if online education in Tyler's hybrid sense takes off, education will be at most marginally cheaper, and most existing schools will stay in business.

Think about it this way: Why do people keep talking about the effect of the Internet on the music industry?  Because Internet delivery made music vastly cheaper (often gratis) and destroyed the leading brick-and-mortar retailers like Tower Records.  Shocking.

By way of contrast, picture a "hybrid" scenario.  Tower Records opens an online store in addition to its brick-and-mortar stores.  Both kinds of stores continue to charge old-economy prices.  The end.  That would still be progress, but nothing to write home about.

At risk of sounding extremely narcissistic, the key question for Tyler and me is whether online education is going to put the two of us out of a job.  Our definitional conflict notwithstanding,  the two of us both answer this key question with a resounding "no."  For the sake of the world, I hope we're both wrong.

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COMMENTS (21 to date)
Tyler Cowen writes:

Rather than Tower, focus on the major music companies for an analogy. The major ones are still in business and still lead the sector, albeit with considerably less revenue. Live performance is thriving. And yet the sector is still radically different than say fifteen years ago.

David R. Henderson writes:

Bryan, You’re fired! :-)

ThomasL writes:

It is still fairly locked in to the idea of "enrolling in a university. The only real difference is the way the lectures and exams are presented.

If there is a sea change coming, I cannot see why we should expect the new thing to be just like the old thing, only viewed on a screen.

To borrow your music example, it is closer to saying, "In the future people will be able to order music online without even going to a record store."

That did happen, but I think it doesn't quite capture the picture of artists raising money on Kickstarter to record an album, that is sold by the song on Bandcamp, and streamed on Pandora and Zune.

Frank Howland writes:

I think that online courses have terrific potential. If one diligently follows the lectures from Udacity or the enhanced courses at MIT called OCW Scholar (MITx and EdX courses will probably be similar), one learns a great deal. However, it seems to me that there is a large problem of motivating students to do the work.

For that reason, I think that different versions of the hybrid model will eventually succeed. Some might be closer to Bryan's definition of online education with clever software which both motivates and monitors students. Some versions would be closer to Tyler's, where in more introductory classes the main content is on-line but face-to-face class meetings act to motivate and monitor students while more advanced courses have much less online content and more traditional labs, lectures, and discussions.

Bill Hocter writes:

I think it will depend on which model attracts the better teachers, and offers better as needed tutoring services for the dollar.

John Roccia writes:

The thing is, online education already IS vastly cheaper (to produce) than standard education, but several other factors are affecting the outcome you describe (which may or may not happen in the future, but is certainly being delayed now):

1. Standard education being more expensive is, as you often point out, a selling point. Most people don't have a good mental metric for how they can tell whether Harvard is better than another school, other than that it COSTS more. The people that graduate from there probably are richer, too - but that would have been true whether those people went to Harvard or stayed home in most cases.

2. Even though online education costs vastly less to produce, the "cheapest" it can go is often a price floor set by how much Federal Financial Aid is available. The moral hazard is strong with the students in the demographic many online schools attract - if they're not paying the money up front, out of pocket, less than 1 in 20 actually inquire about the cost. As a result, what motivation does the school have to price themselves any lower than the maximum they could get?

2b. - Examine the following logical process. Less educated (and possibly less intelligent) students ask fewer questions about cost. They're more likely to just "sign up" regardless of true cost, as long as they're not paying it themselves up front. Ergo, it makes more business sense to target your advertisement to less-educated students. As a result, many online schools have the lowest possible entrance requirements allowed by Dept. of Ed. standards, in order to attract specifically they students that couldn't get accepted anywhere else. Extra profit is channeled into more aggressive recruitment campaigns and more advertising. This process widens significantly the "reputation gap" between online schools and traditional brick-and-mortal schools. Even if only 20% of online schools perform this way, the very fact of their aggressive advertising will mean that these are the schools that dictate the public opinion of all of them.

The feds have, on several occasions, sued online private schools for these kinds of behaviors - but the sole factor that makes them not only possible, but the most rational course of action from a profit-making perspective, is the federal subsidizing of higher education itself!

(Source: I work for a prominent online school.)

allen writes:

If it's a revolution you're looking far I'd offer you're looking in the wrong area of education.

As much as government's intruded into higher education it still enjoys a strong component of free trade economics. Not so much in the cost to students/parents which is heavily influenced by government money but in the pursuit of students. That's why higher education standards haven't gone the way of K-12 education standards.

That's where the real revolutions abrewing, at the K-12 level.

Public education's the overwhelming market presence so it enjoys the perquisites of monopoly. But it's a government-protected/mandated monopoly that requires its services must be paid for even by those who don't want to use them and requires that it's services or a privately-financed substitute must be used.

Until recently there was one way to do public education and that was via a district. That's changing as charters point the way towards alternatives to the sacrosanct district model but there's a large wellspring of dissatisfaction with public education in general and, taken together with the swift pace and vast scope of change in the tech sector, is liable to work such wrenching changes in K-12 education in a very few years it'll be a very different institution for what it is today.

Foobarista writes:

I often wonder if universities are going to be like the current situation with cable TV: currently, you have a small set of "packages", with a bunch of "bundled" stuff, some of which you want, much of which you don't care about as a "consumer" - and some of which you just have to tolerate because it serves the interest of the enterprise, and switching costs are high enough that you put up with it.

In the case of universities, academic research will definitely come under pressure; if I'm a student, I want a teacher, not a researcher who hates teaching, and certainly not one of his grad students. I want to take classes that are relevant to my vocation, not "distribution requirements" that subsidize the "angry studies" departments. Also, I want to pick and choose the offerings, and have the freedom to switch vendors if my current vendor isn't satisfying my requirements.

One item: much of the academic bureaucracy will be toast. Who can afford a vice associate dean of QWERTY student affairs - and her staff - in the new, cost-pressured, hyper-competitive world of higher education? Universities may look lots more like other content delivery businesses, with just enough bureaucracy to keep the system working, and nothing more.

Foobarista writes:

My point about cable and universities was garbled: the point is both are coming under pressure to 'de-bundle', and ultimately for much the same reasons. "Bundling" is far more of an advantage to the producer than the consumer, and as soon as it's technically possible to unbundle, it will happen.

Mike Mathea writes:

My experience teaching online economics courses has lead me to agree you need a teacher not a researcher running the course. The teacher must be able to engage the students very quickly since many programs have 8 or 9 week classes. If the students fall behind it is almost impossible for them to catch up.
Specially prepared video is a must. Trying to use existing U-tube material can be helpful but it has to fit your course style.
My years tell me the mixed class structure may work the best. I am designing a semester long intro macro course that will meet once a week for an hour with the balance of the course online. Some version of that format seem to me to be the future for us in bricks and mortar institutions.

Steve Sailer writes:

How are movie studios doing in the Internet Era?

E.G. West
"Education Without the State"

What is needed is choice in education. School choice has not and will not lead to more productive education because the obsolete technology called ʺschool” is inherently inelastic. As long as ʺschoolʺ refers to the traditional structure of buildings and grounds with services delivered in boxes called classrooms to which customers must be transported by car or bus, ʺschool choiceʺ will be unable to meaningfully alter the quality or efficiency of education.
It is a mistake to equate "school" and "education". We'll leave aside the role that schools play as sources of political support for incumbent politicians and padded contracts for politically-connected insiders. Schools teach, test, and certify. These functions are conceptually separate. It is a clear conflict of interest for teachers to grade their own students. Once a major employer such as the Federal government accepts degrees earned entirely through credit by exam, the current model of "school" is doomed. There is no good reason that a degree in English History or Math should require a fixed amount of time, a fixed schedule of examinations, or a physical location for anything beyond an examination hall. Let Congress mandate that the five service academies license private organizations to proctor exams and award degrees to anyone who accumulates sufficient credits and competition between Sylvan Learning Centers, the University of Phoenix, and the Kumon Institute will drive the cost of a degree down to the cost of books and grading exams.

DK writes:

Bryan Caplan:
the key question for Tyler and me is whether online education is going to put the two of us out of a job. Our definitional conflict notwithstanding, the two of us both answer this key question with a resounding "no." For the sake of the world, I hope we're both wrong

Not very convincing, given that you both are guaranteed taxpayers' handouts for the rest of your lives. And if you (Bryan) were truly and honestly believe in what you keep saying, you'd resign from academia by now.

Steve Sailer:
How are movie studios doing in the Internet Era?

Hanging in there. The movie theaters are not doing that well however. Not at all. But what is the difference in investment needed for making a platinum record and a blockbuster movie - 100-1000X?

Shayne Cook writes:

@ Bryan:

I think you are lacking a degree of precision in some of your statements. The Internet has NOT made either music or education "cheaper".

The Internet is a marvelous thing, but it can only make the delivery of music and education "cheaper". And even that not remarkably so. It does NOT reduce the costs of production of either music or education, nor does it reduce the costs/prices to the final consumer of those goods.

Two of the local colleges where I sometimes teach have ventured heavily into on-line course delivery. They, as economic principals indicate, priced their on-line courses slightly higher than the conventional classroom equivalents, in order to capture at least part of the excess "Consumer Surplus" entailed in student convenience in taking courses on-line.

Shayne Cook writes:

Follow-up ...

To your final question and concern: As long as you and Tyler are producing and delivering some good/service that is perceived by your customers to be making their lives better - at an acceptable price - your jobs are both safe.

If, however, either of you, for whatever reason, fail to do that, I'm afraid you'll have to run for public office in order to remain employed.

Gil writes:


Why would it put the two of you out of a job?

I would expect both of you to create and deliver great content that will be consumed online.

There would be a market for fewer econ professors, but the superstars will be able to reap greater rewards.

Are you worried that you're not worthy of producing online course material?

And, I think Tyler is right that there will probably be some kind of hybrid institutions, eventually. But, I would expect them to be primarily online with some real-world facilities to support socializing and in-person study/discussion for those who want those things, too.

Scott Gustafson writes:

I teach at Mesa Community College, one of the ten Maricopa County Community Colleges. While we offer both face to face and online classes at Mesa, one of our sister schools - Rio Salado - is exclusively online.

At Mesa our experience is that online is not a less expensive delivery system than f2f. What you don't have to spend on facility support you spend on tech support. Faculty time per student is greater for online, hence lower limits on online class sizes.

At Rio, they have a lower overall cost. Part of that is a very small physical infrastructure but most of it is faculty costs. Virtually all of Rio's classes are taught by adjuncts which cost about a third of regular faculty.

All that being said, the ultimate issue isn't online versus traditional, it's productivity. How do we increase outputs while decreasing inputs.

BTW brain research seem to indicate that hybrid works best.

Perhaps I am mistaken but when people discuss "online" education or "online" schooling, I infer that they imagine interaction between students and living teachers in real time. This follows the current model more closely than available technology and likely innovations require. I don't see that the functions of school, instruction, testing, and certification, require course schedules and faculty anymore than they require classroom buildings.

A large cost of the current system is the opportunity cost to students of the time that they spend in school. "Online" instruction which eliminates buildings and faculty but which retains course schedules does not lower this cost. Why not operationally define "Math B.S." or "English Lit. M.A." as a score at or above X on some exam or series of exams and let students get there in their own time, as quickly or as slowly as they please?

Aeon J. Skoble writes:

"In the case of universities, academic research will definitely come under pressure; if I'm a student, I want a teacher, not a researcher who hates teaching"
This is a false dichotomy. You can't be a good teacher if you aren't a researcher. It's not like "teaching" is some standalone skill that can pick up independent of being a scholar. I understand that there's some validity to this concept for K-3 education, but you're talking about univ-level. Not analogous.

Ken writes:

Gil writes: "There would be a market for fewer econ professors, but the superstars will be able to reap greater rewards."

I totally agree with the superstars aspect. The greater rewards, maybe not. I believe Udacity professors are getting $5-10k/ course. On the other hand, it's an opportunity to sell LOTS of textbooks.

Scott Gustafson writes: "At Mesa our experience is that online is not a less expensive delivery system than f2f. What you don't have to spend on facility support you spend on tech support. Faculty time per student is greater for online, hence lower limits on online class sizes."

The Udacity model is probably 10,000+ students per faculty member per course. They were hoping to get over 160,000 students for the statistics class that just started. I'm not sure how that turned out. After their debut, the courses are re-used over and over. Economies of scale and eliminating the waste of re-teaching are big contriobutors to the economics of this model.

Currently, the best available online courses are free. The companies creating them are also not rent-seeking. They are looking at things like selling lists of students to potential employers.

(Skoble): "You can't be a good teacher if you aren't a researcher. It's not like "teaching" is some standalone skill that can pick up independent of being a scholar."
This I doubt. There's a confusion of "researcher" and "scholar" here. The two are far from synonymous. The difference is analogous to that between experimentalist and theorist in physics or field biologist and theorist in ecology. And neither may be a great teacher. If I had to bet on the outcome of an experimental test of teacher competence, measured by student performance, I'd put money on the scholar, not the researcher. The researcher's emphasis must be on unsettled questions, while the scholar's emphasis is on what is known.

Maybe I'm wrong. As always, "What works?" is an empirical question which only an experiment can answer with any reasonable accuracy.

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