Higher Education Funding Models

[Riceball]

I came across an article this morning, written by one Prof. Henry Ergas, a pretty rightwing Australian economist, discussing a recent report into public university (read college) funding. I usually can't stand this guy's stuff - its generally so ridiculously one-eyed that it makes a cyclops look optically bipedal - but I like his arguments about higher education funding models. The article is here:

https://www.theaustralian.com.au/news/opinion/dont-just-throw-cash-at-universities/story-fn7078da-1226235953897

His central argument is that by offering an implicit 'blank cheque' to institutions in the form of direct student subsidies, society is worse off over time as it does not take into account diminishing marginal returns (in so far as the marginal benefit to society of the 100th economist is less than the marginal benefit of the 1st). His solution is something akin to the voucher system that DTF hates so much, although its not a full 'money is attached to the student' system as students are liable for some portion of the fees - which he believes should be set by the institution along the lines of greater student contribution => greater quality of education in order for a market to develop.

My explaination of his solution doesn't do it justice, so its probably best to read the article.

Unfortunately due to the guys reputation he will probably be ignored, but what do you think of the idea?

[El Barto]

Looks like a membership is required to read the full article,  so I can only speak of your brief synopsis.

Based on that,  I have a notion regarding his theory.  There won't be 100 economists.  If Uh-merica started giving free college education to all of it's citizens,  the numbers wouldn't change that much.  plenty of people would still opt to work at McDonalds,  deal drugs, be a rock star or pimp hos.  Plenty more would go to college to get drunk, laid and expelled.  Like Judge Smails said,  the world needs ditch-diggers, too.    I suspect you'd see a small increase in people going to college that otherwise wouldn't, but not much.  Of that small group,  plenty of them can turn out to be people with something genuinely good to offer, that otherwise would have gotten left behind. 

[Scheavo]

Looks like a membership is required to read the full article,  so I can only speak of your brief synopsis.

Based on that,  I have a notion regarding his theory.  There won't be 100 economists.  If Uh-merica started giving free college education to all of it's citizens,  the numbers wouldn't change that much.  plenty of people would still opt to work at McDonalds,  deal drugs, be a rock star or pimp hos.  Plenty more would go to college to get drunk, laid and expelled.  Like Judge Smails said,  the world needs ditch-diggers, too.    I suspect you'd see a small increase in people going to college that otherwise wouldn't, but not much.  Of that small group,  plenty of them can turn out to be people with something genuinely good to offer, that otherwise would have gotten left behind.

I really don't know how anyone could argue with pragmatism like this.

Though, I'd add I don't think it's so much a choice, as much as it is that anyone who actually wants to become an economist, is probably going to be able to at least find scholarships, etc, so that they'll most likely be going to college. There'd be a few who simply couldn't afford it and be left out in such a system, but I doubt it'd be a terribly large incentive.

And as for his actual solution, I'd say America sorta does something similar to that as it is. Without knowing more, I'd say perhaps if loans aren't involved - with loans involve, students just end up having to take out large loans, that they most likely don't full understand the consequences of, and which they are more or less forced into by societal pressure to get a job, and get an education. I can't find the statistics right now, but younger people are being especially hurt doing the recent recession/depression in America (something like 55% of people under 30 don't have a job, and they also generally are around ~20k in debt, with a net worth of around 3k... which describes me to a degree). I think there's a lot to be said for a voucher system, it's not a new idea in the world, but I think in the end, you sorta have to set a limit for what you will subsidize - that is, only subsidize if it covers like 80%+ of the cost, or some other percentage, cause I just pulled that out of my ass.

[Riceball]

Well, yeah in reality there won't be 100 economist (I'd like that, keeps my market value up). Ofcourse, we are talking at the margin here, so his argument is that the government is still paying the same for every economist despite the benefit to society not being equal.

Its essentially looking at things at a very basic, microeconomic level where the government is assumed a profit maximiser, and so should stop the 'production' of economists where MR < MC - the thorn being how do you measure that?

This has got me quite interested now...

I think there's a lot to be said for a voucher system, it's not a new idea in the world, but I think in the end, you sorta have to set a limit for what you will subsidize - that is, only subsidize if it covers like 80%+ of the cost, or some other percentage, cause I just pulled that out of my ass.

The report he is referring to postures a uniform 60/40 split between Government/Student, which I guess is what his main bugbear is. Currently, splits vary wildly from 20/80 for things like accounting and law to 82/18 for medicine (but I suppose you can argue that fees for 80% in accounting are almost the same as 18% in medicine). This seems to imply that the split between public and private benefit is skewed further in favour of public for medicine relative to accounting.

[Scheavo]

Honestly, I'm not sure there's too much the government can do to incentive people to do certain jobs, regardless of how the pay scheme is set up. That might come into play if it's "what kind of engineer do I want to be," or "what kind of doctor" do I want to be, but I'm going to bet that there is usually a more internal motive for becoming something, and not simply the money.

Before when I say "very large incentive" I meant "percentage." I'd imagine there's some people out there who may want to become, say, an accountant, or something else less subsidized, and instead picks something else less desirable. And in the case, I'd say societies less better off, becuase people will be better at what they internally want to be, and not what they simply do for money / a living.