Bryan Caplan  

Leveling the Playing Field for Online Education

Paul Samuelson's Take on the G... My Ohio Tour...
Governments at all levels annually give traditional colleges about one-third of a trillion dollars.  That's roughly $1000 per American per year, a massive subsidy. 

Question: Why don't cheerleaders for online education loudly call for slashing or ending this subsidy, to put traditional colleges on an even footing with the online alternative?  In my experience, even libertarian fans of online education rarely make a big deal out of these subsidies - even though they are a very big deal indeed.

A few possibilities:

1. The cheerleaders want to "level up" rather than "level down."  They want online education to enjoy the same generous subsidies as traditional college, not compete in a genuinely free market.

2. The cheerleaders think arguing for cuts in college subsidies is politically hopeless in the face of Social Desirability Bias.

3. The cheerleaders think online education is so awesome it can beat traditional education despite the tilted playing field.

Other stories?

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COMMENTS (10 to date)
Charlie writes:

4. They think most of that money goes to basic research, which should be subsidized by government, whereas online education can takeover teaching students.

(is it false?)

david writes:

Online education requires capturing the support of superstars or superstar institutions to produce or endorse courses - if they can't get the stars, they may as well not bother.

But it's not reasonable to expect to gain this support through fees so some degree of pandering to their politics or identity affiliations is required. Coursera subsists on its affiliation to Stanford, UC Irvine, etc. Khan Academy subsists on support from NGOs. It is hard to understate the extent to which an organized campus boycott would be fatal.

Tiago writes:

5. Cheerleaders of online education are not thinking a lot about that right now, they just want to make themselves viable in the short term and see what happens from there.

AS writes:

I believe it's a slight modification of #3:

3. The cheerleaders think online education is so cost-efficient it can beat traditional education despite the tilted playing field.

When a good can already be provided at near zero MC, subsidizing its production further doesn't make a huge difference. MOOCs are already near a lower bound in price; they just need to compete in quality.

JK Brown writes:

And such a call would accomplish what? Online education doesn't have the clout, doesn't have the mindless alumni. It would only force the traditional colleges to perceive it as an existential threat and thus get stomped out in its infancy.

When a new product starts out, it is often the worst compared to the traditional products. But as the new product grows, innovates and suddenly it has gutted the traditional and taken the market (Milton Friedman?)

Right now, a lot of the online education is still just taking the traditional offering, filming it and having some online quiz. Not much of a threat, but there is someone out there working on new ways to use the medium and then...

Not to mention, the valuation of education right now is on the signaling side vs. competency. That could shift, perhaps in an instant should some crisis arise. Something along the lines of the mobilization for WWI, where a lot of individuals needed to be trained to competency fast, may occur and online may be the fastest method to mobilize? Such a change would cause a radical shift in the campus/online equation. What could cause employers to shift to competency in new hires vs. traditional college?

I wold like to point out that we've all been conditioned in the same decades long "education" system. The ones most discussing the issue of traditional/online are the ones most successful in the old system. Either some emergency forces a massive governmental intervention with real threats to keep the system honest or it happens incrementally, slowly, until it reaches a critical mass.

Hunter writes:

I vote for number 2 for the reasons Bastiat gives.

But, by an inference as false as it is unjust, do you know what the economists are now accused of? When we oppose subsidies, we are charged with opposing the very thing that it was proposed to subsidize and of being the enemies of all kinds of activity, because we want these activities to be voluntary and to seek their proper reward in themselves. Thus, if we ask that the state not intervene, by taxation, in religious matters, we are atheists. If we ask that the state not intervene, by taxation, in education, then we hate enlightenment. If we say that the state should not give, by taxation, an artificial value to land or to some branch of industry, then we are the enemies of property and of labor. If we think that the state should not subsidize artists, we are barbarians who judge the arts useless.

Roger writes:

I suggest that if we want to incentivize experimentation into lower cost, decentralized online education that a condition for receiving subsidies includes the following conditions:

1). A low or no cost online accreditation process exists at that university for those interested.

2). That all research be provided free after a certain time period ( a year?) to the general public.

The details would need to be worked out. I think, over time, online processes would win out for both consequential education and signaling. But I could be wrong. Experimentation and cultural evolution would be the way to decide the issue.

Jeff writes:

I would venture it's simply because most people don't ask themselves these kinds of questions. State subsidies for higher education are mentally classified as "good," and thus people don't really think critically about them unless prompted to do so.

Jacob A. Geller writes:

My theory:

Online education providers neither oppose nor desire the subsidies enjoyed by traditional colleges and universities, because online education providers and traditional colleges and universities are not in the same market. Online education is about human capital formation, entertainment, and that's about it, whereas traditional college is mostly selling an extremely expensive signal in the form of a degree, which online education providers are not selling. If traditional education lost its subsidies and the cost to consumers went up, online education would not see much of a boost in sales, because they are not selling a close substitute for what traditional colleges are selling.

Online education providers *could* try to get the same subsidies for themselves, but everyone implicitly knows that they don't sell the same thing as traditional colleges. This may be put euphemistically (e.g. "They're not accredited!") but is the essential problem -- you can't ask for (much less receive) those subsidies if your students are not getting a valuable (i.e. wage-enhancing, employment-enhancing) signal in exchange for their money... and everybody knows this.

... But that is just a theory.

Ricardo Cruz writes:

@david is it true coursera still is affiliated to Stanford? I was under the impression Stanford started off its own online classes and is no longer present in coursera ...

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