Mark Perry

College Tuition continues to rise but at a slower rate in recent years.s up

John Arnold:

Since 1990, Pomona

of students: +17%

of tenured faculty: -3%

of administrators: +454%

Bryan Caplan:

On the growth of higher ed expenditures, for years, I bought into the lagging productivity view as forwarded by Richard Vedder and others. In fact, William Poole, while still president of the St. Louis Fed, delivered a speech on this topic to a small luncheon group at WKU with our university president sitting right there. It was fairly humorous seeing our president’s reaction. However, I realized that in assessing productivity, Vedder, Poole, and others (like myself) routinely treated education as the sole product/service.  Yes, we had always acknowledged a “consumption” component to student demand, but we treated that as a nuisance element, not as an integral feature of the market. That was probably not a bad assumption back in the mid-20^th century and earlier.  Over the last 50ish years, the consumption element has become increasingly important but remains ignored as merely a nuisance factor. Even the educational part itself has taken on more of a consumption aspect as students have opted into degrees that are more about avocation than serious academic study or vocation.

For all my grousing about the lack of student interest and “why are they even here,” the puzzle existed only because of my underlying, single-product assumption. There is a large demand for the consumption aspects of the higher ed “experience.” The U.S. is a rich society, and students (and their families through intra-household economics) want to consume the college product/service bundle – the “college experience” as even this verbiage began to reflect the shift toward non-educational, “summer camp”/ consumption. It is related to what we have observed at lower levels of education where the reason there isn’t more learning has little to do with teaching methods or school systems but the lack of interest by students and their parents in the educational component. For many parents, school is mainly about cheap day care. That’s a point that I make in my 1999 Spoiled Rotten: Affluence, Anxiety, and Social Decay in America.

Yes, $1.5+ trillion in student loan guarantees helps bolster this demand, but $1.5 trillion in loan guarantees is not the same as handing out $1.5 trillion in direct subsidies (grants), at least not yet. During most of this growth period in demand, the majority of students/parents expected to repay these loans. That may have changed more recently.

JUST OUT: New "Chart of the Century" with data through December 2023. Increases in College Tuition and Fees continue to far outpace increases in Average Wages and the Overall CPI. If College Tuition had increased at the rate of the Overall CPI since 2000, it would be 28% LESS… pic.twitter.com/kWlo1nP7I6

— Mark J. Perry (@Mark_J_Perry) January 18, 2024

NYC spends $38k per pupil and most kids don’t learn at grade level and 100k a year drop out. There are similar stories across the country. This should be the focus of American education policy debate not the nuances of admissions policies at elite schools.

— Lawrence H. Summers (@LHSummers) July 16, 2023

Scott Girard:

“The Joint Committee on Finance does not need to bring in Dr. Underly to hear more empty promises about how DPI wants to better serve our kids,” Born said. “Republicans are gathering feedback from families and local school district officials across the state and will craft a budget that supports our kids and gives teachers and schools the tools they need to improve our students’ educational outcomes.”

The office of JFC co-chair Sen. Howard Marklein, R-Spring Green, did not respond to a request for comment Monday on the decision.

Republican leaders reacted to Evers’ budget request in February by suggesting it was a non-starter, and legislators would instead mostly write their own base budget to start from. While school districts put together their budgets for the 2023-24 school year, they are awaiting information from the state on how much they’ll be able to spend and how much aid they’ll receive.

Under the proposal from Evers and Underly, districts would see increased revenue limits, boosted funding for special education and mental health initiatives and free school breakfasts and lunches for all students.

On Monday, Underly said she has spoken to individual representatives and senators, but not the JFC as a whole about the budget. She suggested there will be wide-ranging “repercussions” if legislators fail to provide enough funding, especially after two years of no increase in the per-pupil revenue limit, which governs how much districts can receive through the combination of state aid and local property taxes.

“Joint Finance has had opportunities to provide our students with resources that they’ve needed for success, even in years without this incredible surplus boon,” Underly said. “There are no excuses, they need to do their job.”

In the prepared remarks Underly would have delivered with an invitation, she used two example Wisconsin districts to illustrate the common and distinct challenges districts face.

“Well, it’s kind of too bad that we’ve got the smartest people at our universities, and yet we have to create a law to tell them how to teach.”

The data clearly indicate that being able to read is not a requirement for graduation at (Madison) East, especially if you are black or Hispanic”

My Question to Wisconsin Governor Tony Evers on Teacher Mulligans and our Disastrous Reading Results

2017: West High Reading Interventionist Teacher’s Remarks to the School Board on Madison’s Disastrous Reading Results 

Madison’s taxpayer supported K-12 school district, despite spending far more than most, has long tolerated disastrous reading results.

“An emphasis on adult employment”

Wisconsin Public Policy Forum Madison School District Report[PDF]

WEAC: $1.57 million for Four Wisconsin Senators

Friday Afternoon Veto: Governor Evers Rejects AB446/SB454; an effort to address our long term, disastrous reading results

Booked, but can’t read (Madison): functional literacy, National citizenship and the new face of Dred Scott in the age of mass incarceration.

No When A Stands for Average: Students at the UW-Madison School of Education Receive Sky-High Grades. How Smart is That?

A lot of the people in the replies are treating this like it was a tradeoff, but was it? Did cheaper cellphones make houses more expensive? Or did certain sectors do their job innovating and growing while others (housing, college) sat on laurels https://t.co/oynOwKUBGE

— Jacob Shell (@JacobAShell) December 18, 2022

check out these Texas superintendent salaries.

Klein: $754,211
Cypress Fairbanks: $512,439
Barbers Hill: $446,062
Ysleta: $425,582
Duncanville: $403,442
Dallas: $365,820
Houston: $350,000
Northside: $343,662
Austin: $342,756

i wonder why they're so afraid of competition 🤔 pic.twitter.com/sbDBCobk11

— Corey A. DeAngelis (@DeAngelisCorey) December 18, 2022

Niskanen Center:

We are in an era of spiraling costs for core social goods — health care, housing, education, child care — which has made proposals to socialize those costs enormously compelling for many on the progressive left. This can be seen in the ideas that floated around the 2020 Democratic primary, which are a preview of coming policymaking attractions. Proposals for free college and student debt relief, Medicare for All, free or nearly free universal child care, and massive subsidies for renters in expensive cities were floated by President Biden’s challengers, and continue to be at the top of the progressive agenda. Indeed, the current vogue for “socialism” on the left is, on closer examination, almost always about socializing these common household expenditures. The traditional socialist call to “seize the means of production” has thus been updated to something closer to “subsidize my cost of living” — a less revolutionary ambition, perhaps, but one that is no less myopic.

The regulatory roots of cost disease explain why fiscal conservatives are poorly served by strategies focused on austerity and direct budget controls. Unless we are able to effect regulatory reforms to subdue costs in diseased sectors, public demand for socializing such costs will prove irresistible. But such socialization will only exacerbate cost disease over time, leading to renewed public demand for increased socialization in a dismal cycle of bloat and waste.

Matthew Skala:

The lovely and talented Scott Alexander has a posting on Cost Disease: the costs of some things, notably education and medical care especially in the USA, have increased in the last few generations to a really unfathomable extent. He gives detailed statistics, but it’s typically about a factor of 10 after accounting for general inflation. Why has this happened? He gives some hypotheses, and in a followup posting shares some ideas contributed by readers, but it’s not at all clear what’s going on. And it seems like knowing might be valuable, because the fact of this phenomenon’s occurrence (whatever the cause) is causing a great deal of misery for a whole lot of people, bearing on many other important issues.

I don’t know either, but it made me think of some things.

The Horror of the Mall
I don’t like shopping malls. When I go to one, I can feel my mental protective filters kicking in. It’s like I don’t even really see a majority of the stores – because the mall is mostly clothing stores. The fraction of storefronts devoted to clothing alone feels grossly disproportionate. If I go to a mall’s Web site and visit the alphabetical list of tenants, maybe there’ll be a name on it I don’t recognize. So I click on it, thinking it might be something interesting – but no, it’s just another damn clothing store. What is with all these clothing stores? How many do we need?

Clothing is a basic necessity. Everybody needs to buy it on an ongoing basis. I don’t keep exact records of this, but I figure I myself spend a few hundred dollars per year on clothing, out of my income which is a few tens of thousands of dollars per year. So, maybe I spend 1% to 3% of my income (probably nearer the low end of that range) on clothing. On that basis at first glance it would seem we need somewhere around one clothing store per mall complex. Maybe not every mall really needs to have a clothing store. So when I go to the mall I mentally do that calculation and then am horrified at how it differs from reality.

Much more on cost disease, here.

Despite spending more than most, now $18k/student and rising, Madison has long tolerated disastrous reading results.

Scott Alexander:

There was some argument about the style of this graph, but as per Politifact the basic claim is true. Per student spending has increased about 2.5x in the past forty years even after adjusting for inflation.

At the same time, test scores have stayed relatively stagnant. You can see the full numbers here, but in short, high school students’ reading scores went from 285 in 1971 to 287 today – a difference of 0.7%.

There is some heterogenity across races – white students’ test scores increased 1.4% and minority students’ scores by about 20%. But it is hard to credit school spending for the minority students’ improvement, which occurred almost entirely during the period from 1975-1985. School spending has been on exactly the same trajectory before and after that time, and in white and minority areas, suggesting that there was something specific about that decade which improved minority (but not white) scores. Most likely this was the general improvement in minorities’ conditions around that time, giving them better nutrition and a more stable family life. It’s hard to construct a narrative where it was school spending that did it – and even if it did, note that the majority of the increase in school spending happened from 1985 on, and demonstrably helped neither whites nor minorities.

I discuss this phenomenon more here and here, but the summary is: no, it’s not just because of special ed; no, it’s not just a factor of how you measure test scores; no, there’s not a “ceiling effect”. Costs really did more-or-less double without any concomitant increase in measurable quality.

So, imagine you’re a poor person. White, minority, whatever. Which would you prefer? Sending your child to a 2016 school? Or sending your child to a 1975 school, and getting a check for $5,000 every year?

I’m proposing that choice because as far as I can tell that is the stakes here. 2016 schools have whatever tiny test score advantage they have over 1975 schools, and cost $5000/year more, inflation adjusted. That $5000 comes out of the pocket of somebody – either taxpayers, or other people who could be helped by government programs.

Locally, Madison spends about $18k/student annually. This, despite its long term disastrous reading results.

FT alphaville: 88% of US price increases since 1990 occurred in four highly regulated sectors, including education.  

Madison’s nearly $18k per student K-12 spending. 

Justin Fox:

That said, the U.S. probably also ought to be spending less on infrastructure. Not overall, but on something like a per-mile basis. Broad international cost comparisons across all kinds of infrastructure don’t seem to be available, but there is a growing body of evidence on one particular infrastructure area that matters a lot to me as a New York City commuter: subways and other rail systems. And it shows that U.S. construction costs are among the world’s highest.
 
 Transportation blogger Alon Levy has probably done the most to raise awareness of this, with five years of posts documenting the cost differences. And last year, Tracy Gordon of the Urban-Brookings Tax Policy Center and David Schleicher of Yale Law School examined 144 planned and finished rail projects in 44 countries and found that the four most expensive on a per-kilometer basis (and six of the top 12) were in the U.S.
 
 To put these numbers in global perspective, New York’s Second Avenue Subway will cost roughly eight times more than Tokyo’s Koto Waterfront line and 36 times more than Madrid’s Metrosur tunnels on a per-kilometer, purchasing power parity (PPP) basis.
 
 Why is this? It’s actually pretty hard to answer. Here’s Levy, writing in November 2014:
 
 I try to avoid giving explanations for these patterns of construction costs. If I knew for certain what caused them, I would not be blogging; I would be forming a consultancy and teaching New York and other high-cost cities how to build subways for less than $100 million per kilometer.
 
 Still, others have been willing to offer explanations. In a 2012 Bloomberg View piece, New York land-use and transit writer Stephen Smith blamed over-reliance on outside consultants, overly ambitious station architecture and a legal system that favors contractors over the agencies paying them to build things. Gordon and Schleicher agreed that the legal system may be an issue, but for other reasons:

The Week:

A report from the Federal Reserve Bank of New York suggests that federal student aid programs are doing more harm than good. When subsidized federal loans have the effect of “relaxing students’ funding constraints,” universities respond by raising tuition to collect the newly available cash.

The resultant tuition hikes can be substantial: The researchers found that each additional dollar of Pell Grant or subsidized student loan money translates to a tuition jump of 55 or 65 cents, respectively. Of course, the higher tuition also applies to students who don’t receive federal aid, making college less affordable across the board.

Nathan Heller:

Gregory Nagy, a professor of classical Greek literature at Harvard, is a gentle academic of the sort who, asked about the future, will begin speaking of Homer and the battles of the distant past. At seventy, he has owlish eyes, a flared Hungarian nose, and a tendency to gesture broadly with the flat palms of his hands. He wears the crisp white shirts and dark blazers that have replaced tweed as the raiment of the academic caste. His hair, also white, often looks manhandled by the Boston wind. Where some scholars are gnomic in style, Nagy piles his sentences high with thin-sliced exposition. (“There are about ten passages–and by passages I simply mean a selected text, and these passages are meant for close reading, and sometimes I’ll be referring to these passages as texts, or focus passages, but you’ll know I mean the same thing–and each one of these requires close reading!”) When he speaks outside the lecture hall, he smothers friends and students with a stew of blandishment and praise. “Thank you, Wonderful Kevin!” he might say. Or: “The Great Claudia put it so well.” Seen in the wild, he could be taken for an antique-shop proprietor: a man both brimming with solicitous enthusiasm and fretting that the customers are getting, maybe, just a bit too close to his prized Louis XVI chair.
Nagy has published no best-sellers. He is not a regular face on TV. Since 1978, though, he has taught a class called “Concepts of the Hero in Classical Greek Civilization,” and the course, a survey of poetry, tragedy, and Platonic dialogues, has made him a campus fixture. Because Nagy’s zest for Homeric texts is boundless, because his lectures reflect decades of refinement, and because the course is thought to offer a soft grading curve (its nickname on campus is Heroes for Zeroes), it has traditionally filled Room 105, in Emerson Hall, one of Harvard’s largest classroom spaces. Its enrollment has regularly climbed into the hundreds.
……
Rather than writing papers, they take a series of multiple-choice quizzes. Readings for the course are available online, but students old-school enough to want a paper copy can buy a seven-hundred-and-twenty-seven-page textbook that Nagy is about to publish, “The Ancient Greek Hero in 24 Hours.”
…
At one extreme, edX has been developing a software tool to computer-grade essays, so that students can immediately revise their work, for use at schools that want it. Harvard may not be one of those schools. “I’m concerned about electronic approaches to grading writing,” Drew Gilpin Faust, the president of the university and a former history professor, recently told me. “I think they are ill-equipped to consider irony, elegance, and . . . I don’t know how you get a computer to decide if there’s something there it hasn’t been programmed to see.”
…
The answer is c). In Nagy’s “brick-and-mortar” class, students write essays. But multiple-choice questions are almost as good as essays, Nagy said, because they spot-check participants’ deeper comprehension of the text. The online testing mechanism explains the right response when students miss an answer.
…
It is also under extreme strain. In the mid-nineteen-sixties, two economists, William J. Baumol and William G. Bowen, diagnosed a “cost disease” in industries like education, and the theory continues to inform thinking about pressure in the system. Usually, as wages rise within an industry, productivity does, too. But a Harvard lecture hall still holds about the same number of students it held a century ago, and the usual means of increasing efficiency–implementing advances in technology, speeding the process up, doing more at once–haven’t seemed to apply when the goal is turning callow eighteen-year-olds into educated men and women. Although educators’ salaries have risen (more or less) in measure with the general economy over the past hundred years, their productivity hasn’t. The cost disease is thought to help explain why the price of education is on a rocket course, with no levelling in sight.
…
King rattled off three premises that were crucial to understanding the future of education: “social connections motivate,” “teaching teaches the teacher,” and “instant feedback improves learning.” He’d been trying to “flip” his own classroom. He took the entire archive of the course Listserv and had it converted into a searchable database, so that students could see whether what they thought was only their “dumb question” had been asked before, and by whom.

William G. Bowen, Matthew M. Chingos, Kelly A. Lack & Thomas I. Nygren:

Online learning is quickly gaining in importance in U.S. higher education, but little rigorous evidence exists as to its effect on student learning outcomes. In “Interactive Learning Online at Public Universities: Evidence from Randomized Trials,” we measure the effect on learning outcomes of a prototypical interactive learning online (ILO) statistics course by randomly assigning students on six public university campuses to take the course in a hybrid format (with machine-guided instruction accompanied by one hour of face-to-face instruction each week) or a traditional format (as it is usually offered by their campus, typically with 3-4 hours of face-to-face instruction each week).
We find that learning outcomes are essentially the same–that students in the hybrid format “pay no price” for this mode of instruction in terms of pass rates, final exam scores, and performance on a standardized assessment of statistical literacy. These zero-difference coefficients are precisely estimated. We also conduct speculative cost simulations and find that adopting hybrid models of instruction in large introductory courses have the potential to significantly reduce instructor compensation costs in the long run.

Alex Tabarrok:

A 25% time-savings is significant. Moreover, the 25% time-savings figure is in itself an underestimate of savings since it does not include the time savings from not having to drive to class, for example.
Online education even in its earliest stages appears to be generating large improvements in educational productivity.

The Economist:

HEALTH-CARE expenditure in America is growing at a disturbing rate: in 1960 it was just over 5% of GDP, in 2011 almost 18%. By 2105 the number could reach 60%, according to William Baumol of New York University’s Stern School of Business. Incredible? It is simply the result of extrapolating the impact of a phenomenon Mr Baumol has become famous for identifying: “cost disease”. His new book* gives a nuanced diagnosis, offerings both a vision of a high-cost future and a large dose of optimism. The cost disease may be incurable, but it is also survivable–if treated correctly.
To understand the cost disease, start with a simple observation: whatever the economy’s average rate of productivity growth, some industries outpace others. Take car manufacturing. In 1913 Ford introduced assembly lines to move cars between workstations. This allowed workers, and their tools, to stay in one place, which cut the time to build a Model T car from 12 hours to less than two. As output per worker grows in such “progressive” sectors, firms can afford to increase wages.
In some sectors of the economy, however, such productivity gains are much harder to come by–if not impossible. Performing a Mozart quartet takes just as long in 2012 as it did in the late 18th century. Mr Baumol calls industries in which productivity growth is low or even non-existent “stagnant”.

Tyler Cowen:

Matt Yglesias has a good post on the recent Steven Pearlstein column. Here is Matt:
…people need to start paying much more attention to questions of tax efficiency. It’s overwhelmingly likely that we’re going to want the public sector to be a larger share of the economy in 10, 20, 30, 40 years than it is today and we need to find relatively growth-friendly ways to make that happen.
Here is Pearlstein:
From a political perspective, Baumol’s most important insight is that government spending must grow as a percentage of the economy. Most of the services that are provided by, or financed by government — health care, education, criminal justice, national security, diplomacy, industry regulation, scientific research — are those that suffer most acutely from Baumol’s disease. That’s not because of incompetence or self-interest on the part of public servants or even the socialist instincts of Democratic politicians — it’s in the nature of those activities.

I’ve long found these posts rather curious in light of I Madison’s “more than most” k-12 tax & spending practices: now > $25k per student, amidst declining enrollment. In 2007, we Madisonians spent 333,101,865 for K-12. Inflation adjusted $486,328,722, today. Yet our current budget is $557,015,538 (it is higher every time I look). Readers interested in a deeper dive might find the topic of cost disease worth a look.

“Wisconsin Watch” channels two sources: the Wisconsin Policy Forum” and “Wisconsin Public Radio”

As ever, we are in budget season:

Ope!

✔️K-12 public school spending saw third-slowest growth in the nation

✔️Improve literacy by funding literacy programs/teachers

✔️Public schools provide the most protection/transparency under the law

✔️Public schools are overseen by elected members of the community https://t.co/KFqozg4xca

— Rep. Kristina Shelton (@RepKristina) May 20, 2023

“Well, it’s kind of too bad that we’ve got the smartest people at our universities, and yet we have to create a law to tell them how to teach.”

The data clearly indicate that being able to read is not a requirement for graduation at (Madison) East, especially if you are black or Hispanic”

My Question to Wisconsin Governor Tony Evers on Teacher Mulligans and our Disastrous Reading Results

2017: West High Reading Interventionist Teacher’s Remarks to the School Board on Madison’s Disastrous Reading Results 

Madison’s taxpayer supported K-12 school district, despite spending far more than most, has long tolerated disastrous reading results.

“An emphasis on adult employment”

Wisconsin Public Policy Forum Madison School District Report[PDF]

WEAC: $1.57 million for Four Wisconsin Senators

Friday Afternoon Veto: Governor Evers Rejects AB446/SB454; an effort to address our long term, disastrous reading results

Booked, but can’t read (Madison): functional literacy, National citizenship and the new face of Dred Scott in the age of mass incarceration.

When A Stands for Average: Students at the UW-Madison School of Education Receive Sky-High Grades. How Smart is That?

Timothy Lee:

Decade after decade, health care and education have gotten more expensive while the price of clothing, cars, furniture, toys, and other manufactured goods has gone down relative to the overall inflation rate — exactly the pattern Baumol predicted a half-century ago.

Baumol’s cost disease is a powerful tool for understanding the modern economic world. It suggests, for example, that the continually rising costs of education and health care isn’t necessarily a sign that anything has gone wrong with those sectors of the economy. At least until we invent robotic professors, teachers, doctors, and nurses, we should expect these low-productivity sectors of the economy to get more expensive.

While some argue that prices keep rising because the government subsidizes health care through programs like Medicare and college educations through student loans and grants, you see the same basic pattern with services like summer camps, veterinary services, and Broadway shows that aren’t hamstrung by government regulations and subsidies.

Of course, as the Atlantic’s Derek Thompson pointed out a few years ago, the cost of many of these services is actually rising faster than wages are growing, suggesting that Baumol’s disease isn’t the whole story. Universities, for example, have been hiring a growing army of administrators and building ever more lavish amenities to attract the best students. The growing incomes of the richest Americans are a major underlying factor here — rich people are buying services like Broadway shows, summer camp spots, and Harvard educations more quickly than anyone can expand the supply.

Dan Primack:

At the time, it just felt like idle elevator conversation. But that was my mistake, because Miner is now planning to launch an education-focused company within Google GOOG -0.88% . This also means that he’ll be stepping down as a general partner with GV, transitioning into a venture partner role through which he’ll maintain some of his existing portfolio board seats.

“cost disease” opens many opportunites for diverse education services, rather the generally monolotithic k-12 world. The current system, despite spending more than any other country, often struggles with the essentials.

Grey Gordon, Aaron Hedlund:

We develop a quantitative model of higher education to test explanations for the steep rise in college tuition between 1987 and 2010. The framework extends the quality-maximizing college paradigm of Epple, Romano, Sarpca, and Sieg (2013) and embeds it in an incomplete markets, life-cycle environment. We measure how much changes in underlying costs, reforms to the Federal Student Loan Program (FSLP), and changes in the college earnings premium have caused tuition to increase. All these changes combined generate a 106% rise in net tuition between 1987 and 2010, which more than accounts for the 78% increase seen in the data. Changes in the FSLP alone generate a 102% tuition increase, and changes in the college premium generate a 24% increase. Our findings cast doubt on Baumol’s cost disease as a driver of higher tuition.

Casey Newton:

Looking back, Mike Sego says, he was always meant to work in education. His dad taught fifth grade for 37 years, three of his older siblings were K-12 teachers, and he spent free time as a kid grading papers for fun. But like so many people who arrive in Silicon Valley after college, Sego first started working in tech. He worked on The Sims, and later got to know Mark Zuckerberg when his virtual pets game, (fluff)Friends, was one of the first hits on Facebook’s new games platform. Around that time, Zuckerberg had become interested in education as part of his philanthropy, donating $100 million to Newark schools in 2010. After a stint as CEO of Gaia Interactive, Sego decided to turn his attention to education. He called Zuckerberg and asked if they could work together.

Inevitable, given cost disease and Madison’s long term, disastrous reading results.