The Future of Higher Education

29 06 2011

The White Paper on the future of higher education in England was released yesterday. You can read it here. The best summary of the White Paper was provided by the FT. For other press coverage see here, here, and here.For blogosphere reaction, see here and here.

Although I’m busy with other things, I invested some time in reading the report because it may have a direct bearing on my own professional future.
The key idea behind this report is that competition is good. In the last decade, the UK has moved to a US-style market approach to higher education: most students admitted in 2012 will pay £9,000 p.a. in tuition fees. This report takes the idea of competition a few step further. The big changes being proposed by the government are:

a) the end of the cap on admissions at high-ranking institutions. Currently, the number of spaces in, say, chemistry at the University of Manchester is strictly limited, which forces many students in the “pretty good but not stellar” category to study chemistry at universities with less prestige. Needless to say, this arrangement benefits the lower-ranked universities (e.g., Manchester Metropolitan University). The lifting of the cap at the prestige institutions will likely erode the market share of the second-tier players unless they can offer something special.

b) more cheap providers of degrees. after 2012, 20,000 places at universities will be allocated through a system designed to reward low-cost providers. Further education colleges and for-profit providers such as BPP are expected to benefit from this system. take advantage of this opening. For-profit training providers will be allowed to access the subsidised student loan system in the same way as conventional universities. US for-profit “universities” such as DeVry and the University of Phoenix will likely move into the UK market. This reform will also erode the market share of the second-tier universities. Oxford, Cambridge, and the University of Manchester don’t have to worry about their students deserting them for a private university’s classroom in a shopping mall, but some other universities may lose market share. Personally, I think that few students are likely to desert traditional universities, which offer many social amenities, for online courses or classes delivered in leased offices on the edge of town.

c) giving applicants more information about universities. The authors of the White Paper understand that the market can only work efficiently if consumers are empowered by information. That’s why the government forces food companies to print ingredient lists on the labels. So new rules will force all providers of higher education to publish even more stats than they currently do on graduation employment rates, contact hours, student satisfaction.

My main reaction is that while competitions should be viewed as a means to an end rather than an end in and of itself. In some circumstance, competition has been a powerful tool that benefits society. In other cases, competition isn’t the right instrument. My sense is that the White Paper may be driven by an ideological committment to competition as a goal.

At this time, it is worthwhile considering the arguments advanced by Professor Alison Wolf in Does Education Matter? Myths About Education and Economic Growth.  Wolf is Alison Wolf is the Sir Roy Griffiths Professor of Public Sector Management, at King’s College, London. (I should mention in passing that she is married to Martin Wolf, the famed Financial Times economics journalist).  Wolf is a critic of the idea that increasing the proportion of the population with degrees is the key to economic growth and social mobility, an assumption that is shared by both the opponents and the supporters of the White Paper’s proposals.  She was recently interviewed by Spiked’s Tim Black.

Ok… now back to work.


Update: the economics blogosphere in the United States has heated up in the last few days as people have debated the rate of return on higher education.In general, libertarian economists are arguing that the benefits to a young person of doing a degree have been exaggerated and that too many young people go to university. The libertarians are pretty hostile to President Obama`s plan to increase the proportion of young Americans who go to university. The argument of Arnold Kling is that while it is true that degree-holders earn more over their lifetimes than those with just a secondary education, this doesn`t prove that degrees have caused their higher income: it`s just that people who have natural intelligence happen to go to universities in larger numbers.  David Leonhardt of the New York Times and Matt Yglesias, a centre-left economics blogger, are arguing the exact opposite, namely the returns on investing in a degree are pretty good and that university adds a lot of value to a person`s earning power. I have to say that the libertarians`argument that higher education isn`t such a good investment seems based in ideology rather than evidence. Moreover, there is an element of hypocrisy here, as many of the people making this argument have degrees. Some of them are even university educators. Any individual who collects a salary for teaching university students while affirming that getting a university education is a bad life choice for most peiople would appear to lack integrity. (Most university educators will admit that they have had a few students who don`t belong in university).

It should be  noted that Prof. Tyler Cowen, a libertarian economist, is among those who is arguing that universities add value.

I think that Matt Yglesias put it best when he wrote:

Tyler Cowen has an excellent post smacking down right-of-center skeptics about the value of education. I have to say that I think it’s strange that the pure signaling model of education is so popular among libertarian college professors. How does Bryan Caplan’s belief that attending college imparts no useful skills impact his pedagogical methods when students take his undergraduate econometrics class? see here.



3 responses

29 06 2011
Kevin D Tennent

I think your conclusion is probably correct. No one is thinking here about what universities are for, and what we need from them to stay competitive as an economy and society.

My big fear is that the UK sector will be invaded by firms from related sectors who’s real industry is transmission of information, and who have no interest in research because its not profitable. Google could come in quite easily; indeed they are already partnered with a lot of Universities via their apps for education product.

29 06 2011

Hi Kevin, I didn`t know that Google had apps tailored to the education market…

29 06 2011
Kevin D Tennent

Hi Andrew – indeed – a well known British distance learning institution is trailing it at the moment – but they claim Brown among their customers!

For my money, the popularity of the traditional 3 year full time undergraduate model will fall away in the UK outside of the Russell Group, because most people leaving university now end up in menial jobs. Thus there will be no point spending three years doing that when you could leave university and go straight into a menial job. Many will turn to affordable DL solutions to catch up while they work – and that’s where private capital comes in.

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