Monday, November 13, 2006

What If?

I had a somewhat unusual day Saturday. Lazing around the house, catching up with sleep, that was the normal part. But then I saw a really offbeat movie called The Waterdance, about guys in a hospital ward, all wheelchair bound, because they had spinal injuries. I was drawn to the film (the Dish Network guide gave it three and a half stars) in part so I wouldn’t watch football and in part because of my own leg injury – there but for the grace of god… It is an interesting study, apparently based on a true story, about how the guys in the ward, filled with anger about their condition and ultimately hostile toward the ones they love the most just because they are other than themselves – they are healthy, discover each other as human beings, their paralysis below the waist a common bond. I didn’t think it was a great picture, but it was interesting to view. It made me wonder if I’m repressing anger about my accident, though I believe my condition to be temporary. I nonetheless share some aspects with the characters in the movie. Certainly I would not yet characterize my circumstance as normal.

The other thing I did was read a good chunk of the Spellings Commission Report on Higher Education. This report got some discussion at our CIC Learning Technology Conference last week, some of my peers were excited about it – perhaps our LT Group should spend some time discussing it at our next meeting and contemplating a reaction, particularly on the measurement front, where some of my colleagues have done interesting work. And the report got a mention from Tom Reeves in his keynote address, as something we should pay attention to and consider as we plan our own activities – he was talking primarily to our staff, who made up the bulk of the attendees at the conference.

I probably read this sort of document in a different way than my peers do, my economics background and general cantankerousness gets in the way. I do recognize that many of the commissioners are luminaries in Higher Education for whom I have a good deal of respect – James Duderstadt, former President of the University of Michigan and a true visionary; Charles Vest, former President of MIT and instigator of the Open Courseware Initiative, and Robert Zemsky, Professor of Education at the University of Pennsylvania and co-author with Bill Massy of a variety of NLII White Papers that I cut my teeth on about ten years ago prior to engaging in the SCALE Efficiency Projects, on using technology for reducing cost of instruction while enhancing quality. But there are also a variety of politicos among the commissioners and any report such as this, the product of committee decision making, may reflect compromise in such a way as to lose the sense that it represents a coherent point of view. Further, none of the commissioners appear to be economists, so their recommendations are unlikely to be disciplined by some consistency arguments that any right thinking economist would insist upon.

Let me illustrate, as I think my metaphors/analysis might be a bit alien to others who think about these issues. This is the same type of analysis I would teach in Economic Principles. Divide the potential student population into three segments: extramarginal, those not currently enrolled because “they can’t afford college;” inframarginal, those who are currently matriculating and who would continue to do so even if tuition or other factors that influence the enrollment decision were modestly tweaked; and marginal, those who are on the boundary between the other two groups. For those in the marginal category, the benefits from attending college, which are mostly in the form of higher future wages and direct consumption benefits (the latter may be hard to monetize in a simple way, but conceptually there is no problem in doing so), must equal the opportunity costs, mostly the direct tuition costs and the foregone wages from spending time in school rather than at work. It’s useful to keep this result in mind (the Commission seems to ignore it) so one can see what’s at issue with some of the recommendations. I should note that the result does have to be adjusted for risk – the current foregone wages and tuition are known items while the higher future wages are uncertain and in the present arrangement it is the student who bears that risk, something I’ll come back to in a bit.

If we applied a uniform approach to all students enrolled in college, with a common tuition and quality of instruction (this is far from the truth but it does help simplify the argument), then it might be as the Report argues that lowering tuition and thereby increasing access would be good for our economy, since some of those extramarginal potential students would now have the benefits of a college education and their contributions to society would be enhanced as a consequence. But it also might be that raising tuition and hence raising expenditure on those students who are enrolled is better for the economy, the inframarginal students will gain in productivity in such a way that more than offsets the enrollment decline that will result. A priori, it can go either way. The Commission presumes the former is the right answer, though the fact that ritzy private schools are in huge excess demand, in spite of their very high tuitions, suggests perhaps it should be the other way. I’ll return to that point as well.

Actually, the Commission wants to have it both ways and argues that by pulling the proverbial rabbit out of the hat --- technology, that little rascal that can improve quality and lower cost, if only we in Higher Ed wouldn’t block innovation in practice, innovation that would effectively leverage the technology towards these ends. And with that they cite Carol Twigg’s work with the National Center for Academic Transformation. Now I really like this work – I was directly involved with the first year of the projects when this was funded by Pew Charitable Trusts and I plan to do this sort of thing in the high enrollment courses in the College of Business here, as we move to a Blended Learning approach. But it is a far cry from achieving these type of gains in a few high enrollment courses to reducing costs across the board at the institution level for an entire university.

The latter requires addressing a host of issues that are not on the radar of the commission, for example: Should adjuncts or “clinical professors” become the primary teaching faculty to hold down the cost of instruction and should such instructors not have tenure? Should we continue the common practice where course offerings are idiosyncratic to the particular instructor, with syllabus and teaching approach determined at that level rather than from above? Should we continue to be comprehensive in our offerings or narrow down to the more popular disciplines with only a few specialties?

I don’t know the answer to any of these questions. My point is that to answer them one has to make tradeoffs and I explicitly presented my analysis as one of tradeoffs – lower price to increase access or raise price to spend more on those who are enrolled. But the commission has no use for tradeoffs. It gives us a free lunch in the guise of technical innovation unleashed by a widespread innovative culture. Do these folks really believe the stuff they are pushing?

And that gets me to the next point. This report ignores incentives, a big mistake in my view. For example, the report deplores the building of expensive sports recreation facilities that we are seeing on so many campuses. And it may very well be that this is a form of rent seeking, a dissipative activity that is socially wasteful, in spite of the fact that students do need physical fitness and that some aspect of college, particularly in the residential setting, is consumption benefit. But the report doesn’t ask at all why colleges engage in this type of rent seeking. The documentary Declining by Degrees does. It observes this is a necessary consequence as colleges engage in a non-price competition to recruit students, especially high ability students, and facilities clearly matter in this type of competition.

If one did focus on incentives, however, and if one was prompted with the observation that some forms of competition are inclined to produce social waste, then one might be led to ask a different type of question. Can we change the rules of the game so that the type of competition that emerges produces more of the type of results that we’d like to see? This is the type of question I wish the Commission had put on the table, because it would have been interesting to see what they come up with. Instead, they seemingly presume the answer, a Higher Education version of No Child Left Behind. (I am dismayed but not surprised that No Child Left Behind got nary a mention in the recent run up to the election. Between Iraq, Katrina, and the various scandals we have the three main points that I was taught recently are the essence of getting an effective message out when dealing with the press (particularly our student reporters at the Daily Illini) and No Child Left Behind somehow doesn’t even vault ahead of immigration reform as the fourth bullet on the list in the public consciousness, at least according to CNN. Yet the recent work by Jonathon Kozol makes it clear that No Child Left Behind has been a disaster for those it has been intended to benefit, so much for increasing access, and it has also resulted in a narrowing of the curriculum and a reduction in enrichment programs at schools with a primarily middle class student body, so much for raising the quality of instruction for those students who are already getting a “good education.” Perhaps we can procrastinate on implementing the recommendations of the Spellings Commission until the Bush Administration is out of office and its successor can try some other approach.)

What if we had a draft?

Of course, I don’t mean a military draft. I hope that our country never again imposes conscription, though I would not oppose an analogous requirement for public service. By draft, I’m thinking of the sports kind, the type the NBA holds (along with the lottery for choosing the draft order) or the type the NFL holds, where there has developed a cottage industry of experts such a Mel Kiper Jr. and Paul Zimmerman to handicap the draft itself. Indeed, keeping with the sports metaphor, and I know this analogy will bother some people but bear with me for a bit so we can work through the entire thought experiment, what if we viewed undergraduate education as the Minor Leagues for Corporate America, a place for “player development,” a place where the parent clubs had already invested in their talent and want to see good return on that investment, a place where not everyone makes it to the big club but where those with potential can get more effective attention than if they go to the Bigs straight away.

So envision a huge national draft held during the summer where students who have completed their junior years in high school could declare themselves for the draft (but they could opt out and go through the college application process and the paying of tuition in the more traditional way) and older students, those who have finished high school or those have some college credit but are as of yet undrafted could declare their eligibility as well. They would be registering for a system where if they were drafted and if they then signed with the company that drafted them, that company would pay for the student’s college education and perhaps pay a stipend during college as well in exchange for the student providing years of job market service after graduation (say 5 years) at a wage that was pre-specified by the draft (a la the NBA minimum salary for rookies.) There would also be a “free agent” market of this sort so that students who either went undrafted or who didn’t sign with the company that drafted them would have other alternatives to sign this sort of deal, but to prevent opportunism by students in high demand because they are obviously of high ability, there would be some restrictions on when such students could declare for free agency, say two years after they’ve completed their junior year in high school.

Corporate America, for their part, would participate in such a draft so they could ensure a high caliber pool of new talent down the road and so they could more actively engage early on with the education this talent is receiving and, frankly, so they are not out-recruited by their competitors. Indeed, as long as the starting salaries the drafted students would receive upon graduation are not too high, the corporations would view this entire enterprise as one of paying of the student loans in advance in exchange for getting these talented individuals to work for the company over at least a 5 year period and in so doing achieving an efficient shifting of risk, since these big companies are in a far better position to absorb the productivity risk of the students than are the students themselves.

I really don’t know if such a thing could work, but imagine if it did exist. Then regarding admission Universities would deal not only with individual students and their families, but also with corporate buyers who might be in a much better position to tie what they pay in tuition (and in other forms of grants as well) to the performance of the students upon graduation (just what the Spellings Commission would like to see). But in evaluating the job colleges do, they would be evaluating their role as coaches and as producers of mature talent, not by the performance of that talent per se. That too would have to be evaluated, but it would be a separate deal.

Further in this type of market with several big “buyers” one might envision that the buyers themselves recognize they have many common interests and so form intermediaries that advise both the Corporations and the Colleges on how best to structure higher education offerings and how to make effective deals between the Corporations and the Colleges. Such intermediaries might be much more effective than current accrediting bodies, because they’d have a dual accountability and their own viability would depend on the performance they deliver.

And consider the impact both on student seriousness and on faculty seriousness as well, particularly regarding the issues around grade inflation. Contracts between the companies and students might specify that if effort by the students is lacking then the deals become null and void, perhaps after a probationary period where all parties are on alert. That would put the universities in the position of monitoring student effort and providing convincing evidence of it to the companies. And, of course, the companies would be interested in student performance too as it might affect bringing the students up early or affecting the job to which they ultimately might be assigned. So the companies would want accurate information about performance and they, unlike the students themselves, would prefer to see an accurate grade instead of an inflated one.

There are a host of other issues that would naturally arise and should be considered before embracing such a system, quite apart from the obvious about whether anyone would play the game even if it were so designed. A short list of such questions is:

(1) What would be the role of government? (To help make a market by facilitating information flow and by assuring that abuses get unearthed and then punished.)

(2) What would the impact be further down in K-12? (I would hope to create aspirations that students would be drafted and therefore to create the analog intellectual experience to that of practicing jump shots at the backboard nailed to the garage at home.)

(3) What would be the impact on how college is taught? (I have no idea, but I do know that if such a system were in place the pressure would be much higher to deliver results and necessity is the mother of invention, so this would be a source of innovation.)

And then there is the other obvious question:

Lanny, do you really believe this sort of thing can work? (My answer to that is it depends on whether there are crucial attributes of students, identifiable early on, that make them likely to be high performance in the corporate setting. If SAT scores were such an identifier, it would be a cinch, but now we’re being told by many that SAT scores don’t even predict performance in college. (I’m guessing that outlier scores actually do predict quite well but that small changes in scores near the mean don’t have much impact.) I’m somewhat aware of the (highly criticized) work of Lewis Terman, but I’m not knowledgeable at all about whether big corporate personnel departments collect data about employee characteristics that get them onto the fast track. If there are such data and if the crucial characteristics are observable early on in people, then this market can flourish. Otherwise the solution can’t work at all as everyone would play the Billy Beane strategy of trying to pick up cheap but productive talent, by staying out of the draft entirely and dealing only with more mature free agents.)

Even if it can’t work, let’s note that I’m just one guy, not an entire commission, and I produced this blog post in a couple of days, not after months and months of study. Let’s also note that I certainly have not exhausted the possible solutions to the question – what if we changed the game in which Colleges compete to produce outcomes that are more in tune with what is socially desirable? So even if you reject my ideas out of hand, you might want to consider other institutional arrangements that you deem more likely to occur and more appropriate for obtaining good outcomes. Part of my aim here is simply to provoke thinking in that direction.

It might help you to get in the right mindset if you broke your leg first. And then get angry.

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