Reconsidering Elitism in Public Education

The core argument in this piece is that we should expand elite offerings at public schools and public universities as a way to enhance social welfare and address the issues that ail us in education.

What does this mean in plain English?

I'll try to illustrate with a few examples.  The University of Illinois at Urbana-Champaign is the flagship university of the U of I system and is generally regarded at the best public university in the state of Illinois.  Illinois State, in Bloomington-Normal, is a good university but is less prestigious.  What I'm arguing is that some students who ended up at ISU should instead be attending the U of I.

Similarly, within the Urbana-Champaign campus some colleges are considered elite and are more restrictive regarding admission, while other colleges are more accepting.  Since I teach economics, which is in the College of Liberal Arts and Sciences, and many of the students I teach would have preferred to be in the Gies College of Business, what I'm arguing is that some of these econ students should actually be admitted to Gies, by an amount that is more than a mere drop in the bucket.  The increased numbers should be on the order of 50% to 100% of current enrollments. And I mean this to be a sustained plan over at least a decade, maybe longer, enough time to evaluate the impact of such a change.  In this piece I want to argue for why this is apt to be a change for the better.

Then, let's face it, there is elitism in public high schools and middles schools, elementary schools too.  This goes under the name tracking, or honors programs, or gifted programs, or some other labeling that makes the students in such programs seem to be the elite.

I am arguing to make the elite student more abundant, as a policy matter, thereby lessening the value in the distinction of being designated an elite student.  I hope to explain why this would be helpful in addressing key issues in education and why public institutions, in particular, should feel obligated to proceed along these lines.  From a social-welfare point of view, the same argument applies to non-profit but private educational organizations.  However, I believe it will take substantial coercion of such institutions to achieve this end.  So I will focus in this piece on public institutions, because the argument is easier to make in this case. If that argument succeeds in convincing readers, the private educational organizations can be taken on then.

On the other hand, I'm not arguing to treat all students as perfectly equal, which some might consider the ideal.  I believe that treating students as completely equal, irrespective of student intellectual and emotive capacity at any fixed time, is impossible.  To ignore student differentials when they are evident, purely in the name of equality, would be self-defeating.  So, while the temptation to be a purist on this is definitely there, that's not where we're headed.  Later in this essay, I will argue for why some apparent elitism is necessary.  What I would like to see, whether this is possible or not is to be argued thoroughly, is for all students to count in the social welfare function that determines how public education goes about things.  It seems to me now that non-elite students are ignored.  That's what needs to change - dramatically.

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With this, I'm trying for two different things in this piece.  One is an explanation for why the mental health issues among current college students are so acute.  This requires an explanation of causality.  In this part, the current post is a sequel to my previous one, about students embracing the creative attitude on their own.  Here we're considering what in the academic environment might be changed to make for substantial improvement in student mental health.

The other is why the system doesn't have auto-corrects that are built in which would remedy the immediate issue, at least eventually.  It doesn't seem there is an immediate remedy.  Why is that?

So, I'm hoping that this piece will get others to pose these questions as well.   But I also want to note, those who are managing the elite units in public education have an incentive to leave well enough alone.  I don't want to get into combat with such folks.  My objective is more modest here.  I merely want to get such folks to ask - is there something that can be done to better the situation overall.

Then, further, I surely don't mean this piece as the last word on the matter.  Rather, I mean it as a beginning of an investigation as to what institutions might do, together, to ameliorate the issue.

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I'd like to begin this section with a little jargon from economics, which I think will be helpful in framing the issues.  An economic rent is a payment to a factor of production in excess of what is needed to elicit its supply.  The concept was first developed by David Ricardo, who was concerned that the landed gentry would earn rents from tenant farmers and thereby suck out valuable resources from the economy that otherwise might be invested in productive activities. Rent seeking is competition done where the prize at the end of the tunnel is an economic rent.  The rent seeking, if itself otherwise not productive, dissipates the surplus from the economic rent.

Now let's consider a different notion from economics, product differentiation.  To keep things simple economists talk about vertical product differentiation, in which case the products differ in quality where everyone can agree which product is of higher quality and which of lower quality, and then they talk about horizontal quality, where the products are different but people will disagree as to which they prefer.  Vertical product differentiation is often associated with what is called second degree price discrimination (menu pricing) where the seller offers the buyer a variety of choices.  The most expensive is associated with the highest quality.  Seating on airplanes conforms with this approach - first class is better than coach and it is more expensive to fly first class.  Conversely if you are buying a particular model car of a certain year, car color acts to differentiate one car from another, but there is no price differential based on color.  Vehicle color is an example of horizontal differentiation.

Still a different economics notion is efficient risk absorption.  The standard example is buying insurance against some potential significant downside risk.  The insurance company, through diversification from offering many similar policies with independent risks, is better able to absorb the risk than the insured.  Indeed, that is necessary for the insurance market to work.  Yet there are limits to efficient risk absorption when the insured can impact the likelihood of the loss or the magnitude of the loss, should loss occur, and where lessening the risk is costly for the insured.  So it is well understood that the insured must still bear some of the risk, via deductibles, co-payments, and the like.  And sometimes there is absolutely no market for insuring certain risks because this moral hazard is simply too great to enable a market to function.  In particular, when a student enters college, the student can't purchase earned income insurance to cover income risk in the labor market that the student will experience after graduation. So the student and/or the student's family bears that particular risk entirely. Students whose families are reasonably well off can partially diversify this risk with holding other financial assets.  Other students, whose families are of more modest means, bear the full brunt of this risk.

Now a bit of an aside.  When I started working as an assistant professor, in fall 1980, there was debate going on about whether a college education was a public good, in which case the tuition should be paid for by the state and funded from tax revenues or if, instead, college education was a private good, so tuition should be paid for by the student and/or the student's family.  One can agree there is a mixture of the two but then disagree about the relative importance of each component.  Milton Friedman famously took the position that college education was primarily a private good.  Indeed, at public universities the share of the cost of education borne by the state has declined over this time period, which suggests that the private good view of college education has increasing credence with the electorate.  Nevertheless, there remains a popular view that college education should provide a path for upward mobility,  thereby justifying need-based scholarships.  But at what volume are these offered and how much upward mobility is actually generated?  Bernie Sanders popularized the notion of free college as a way to get at this matter.  Yet community colleges have always been a lower tuition alternative, at least for the first two years of college.  Elite public education needs to be factored into this discussion.  Does free college merely end up being the lower quality version of some second degree price-discrimination approach to tuition? Further, if there is a threshold family income above which the student isn't qualified for free college, let us note that the family will bear the income risk.  On middle income families, that can be quite a burden.

Thus an argument can be made that some other party should bear that income risk.   Some years ago I wrote a speculative post on employer pay for college, reasoning that the future employer could better bear the risk, and then would extract what was paid in tuition by lower wages to the new graduate over some pre-specified period of time. A similar argument could be made that the Federal government pay for college and then have the graduate face higher taxes over a period of time.  If the student could commit to living within the state after graduation, it could be state government that does this.  The difference between this approach and the current approach with student loans is that the amount actually paid back would vary with future income, not just with the amount of tuition paid.  This strikes me as the right way to manage the issue, but might never happen because there is no champion to advocate for it and it could end up a political football.

Let me turn to the next economics issue, which is related.  Capitalism features income inequality.  To illustrate, there is a well known story about when a reporter asked Babe Ruth how come he was paid more than the President of the United States.  The Babe responded, "I had a better year."  The story illustrates that we associate higher earnings with higher performance and, as I mentioned, that's a feature of the system, not a bug.  However, there is now a growing consensus that income inequality has been growing over the past 40 years and the consequences have been extremely pernicious.  You hear that in the expression "the hollowing out of the middle class."  The causes for this increase in income inequality are many and varied.  I will list a few of them: income tax rates have become less progressive, manufacturing went into decline, labor unions lost their power, greater lobbying and increased campaign contributions occurred so the rich could lock in rents that had been previously generated, less enforcement of antitrust law, etc.  There is a growing consensus that we should start having the pendulum swing in the other direction.  I believe, and this may be controversial, that public education should be part of this effort in reducing income inequality.  To do this, assuming that on average, the future earnings of elite students are higher than the future earnings of ordinary students, this means there should be earnings compression.  How would that happen?  One possible way is for public education, across the board, to embrace a more progressive tax system.  This may not be the best way to achieve the result.  I would welcome others who can think through a better alternative.  But, I want to note here, that elite public education may now be encouraging increases in income inequality.  Elite public education therefore needs to take a look at itself to see if the charge sticks.

Let's move on to the last economics idea to be considered here.  This is the notion of sector-specific hyperinflation, sustained price increases in a sector at a rate that is higher than the general inflation rate.  This has happened in healthcare.  It's also happened with elite higher education, and here I'm including private non-profits as well as public colleges.  Full tuition at these places has experienced hyperinflation over the past 40 years. One measure of how elite these colleges are is their selectivity in admissions.  Highly selective colleges have excess demand for the slots they are to fill.  (There is a substantial measurement issue with how much excess demand there actually is as many elite students apply to multiple colleges for admission and, to my knowledge, these students don't provide their rankings among those colleges as to which is the most preferred, the next most preferred, etc. But that there is excess demand seems unmistakable.)  The excess demand persists because the supply of slots at these elite colleges doesn't grow.  That supply is fixed to generate a predetermined quality of education, which, ironically, is determined to a large extent by the quality of the new admits.  (Though I'm no great fan of standardized testing, the scores can be used as a way to measure the quality of the new admits.)  Hyperinflation is the result under chronic excess demand.  If this much of the fundamentals we can agree upon, and if leadership in higher education overall has some responsibility on keeping costs under control, then expanding the slots at elite colleges and within elite programs is a rational management strategy.  The additional students who fill these slots will have to come from somewhere; a good number of them will likely be students who otherwise would attend a non-elite college.

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Here will be a brief bit on teaching to the student rather than simply teaching the subject.  The best example I have of this, which I believe worked pretty well at the time, was the SRA reading program we had in elementary school.  Students differed by the speed at which they read and the comprehension they showed in what they read.  The students were put into different categories, color coded, that were sorted in vertical fashion, so they could receive instruction according to their current reading level.  They would demonstrate mastery at that level and then advance to the next level.  This is in accord with current views of developing expertise by deliberate practice.  In my school, when the class did SRA, students changed where they sat so that all the students working on the same color level were in the same row of seats.  And the sorting of students progressed from one level to the next.  So kids could see who the better readers were and who the worse readers were.  I don't know if that was necessary as part of SRA or if it simply was easier for the teacher to manage the students that way.  In any event, teaching that does target where the student is currently along a trajectory of growth invariably invites students to make comparisons between themselves and other students.   Of course, the teacher does this too when assigning grades

Not all instruction can be done via self-study as with SRA.  Sometimes the teacher must teach the class as a whole.  Which student does the teacher target with this instruction?  Will it be the elite students who always raise their hands while the more ordinary students who keep quiet?  How does the instructor get greater participation from the ordinary students?  This is the argument for tracking, that makes learning better for all the students as there is less variation of student quality within each class.

But there can be lock-in with tracking so once on the fast track the student stays there, regardless of seeming performance, and likewise, once in the slow track the student stays there, possibly by not trying very hard with the learning.  In this the elite students can start to believe it is an entitlement, rather than a temporary solution.

There is then the reality that schools are now measured by standardized test performance and elite students then become valued commodities, since they enhance (some) school performance measures.  Further, if transferring to another school is an option, the school then has some reason to accommodate the elite student, to preclude that outcome.  Parental pressure on the school surely matters here.  So, some tracking seems inevitable that is beyond the amount that benefits all students.  The issue is whether that can be limited whereas now it appears to be off the charts.

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Now I want to start to put the pieces together.  The idea that getting an education is at least partly rent seeking has been with us for a very long time.  I found this commercial of Abe Lincoln going to an employment agency looking for a job - you ain't going nowhere without that sheepskin, fella - which was on TV when I still was in high school.  And I can certainly remember students who were referred to as grade grubbers, both when I was in high school and when I was in college.  (Pre-med students had a bad reputation that way.)  So it wasn't just the degree, it was the GPA too, or so it seemed. 

The thing is, students can go about their schooling in different ways.  My preferred way is for students to embrace the creative attitude, as I discussed in the previous post, do that intensively, and then get the good GPA as a byproduct from that.  In this way the student will learn to direct the learning and that will tend to produce good mental health.  (I want to be clear that this is not foolproof.  Bob Seeger's phrase - the awkward teenage blues - are still possible even with students who have embraced the creative attitude - so mental health issues can emerge from that.)  But, let's agree that many students go about things differently - even good and conscientious students.  I wrote about this in a post called, Why does memorization persist as the primary way college students study to prepare for exams? The quick and dirty answer to that question is that many students are not confident in their own ability to learn deeply, so they try for a different method that still is apt to produce reasonably good results as far as achieving a good score on the exam.  They are doing this to get the approval of others, mainly parents and teachers.  They do not learn to direct their own learning this way and the approach is far less nurturing regarding their own mental health.  If they have other activities, hanging out with friends or pursuing some hobby deeply, they can self-nurture that way.  This requires free time outside of school, however.

Now, let's do a longitudinal comparison between when I graduated from high school, 1972, and high school graduates now.  The incentive to treat school as rent seeking is far greater, given the increased income inequality and the greater income return to elite education.  Purely on those grounds, the Amy Chua tiger mom approach to parenting makes sense, perhaps starting when the kid is in grade school, because of the big investment that elite college education now is.  But this pushing comes not just with concern for the kid's GPA.  It also includes orchestrating the kid's extracurricular activities.  So the kid is fully (I would say over) programmed and the kid is not a driver of any of this, except perhaps by choosing not to rebel against the parent exercising control.  Early on, pleasing the parent might make the kid happy too.  Eventually, however, the kid will find no identity of one's own and no way to learn even what the kid wants for himself or herself.  This is quite bad for the kid's mental health.  For example, see Hanna Rosin's piece The Silicon Valley Suicides.

Many of these kids obsess about their GPAs, but actually fail to learn important life lessons as a consequence.  See Adam Grant's opinion piece, What Straight-A Students Get Wrong.  Then the argument is to save these students from themselves, reduce the incentive for rent seeking.  Depreciating the value of the credential, both the degree and the GPA, would be helpful here.  Further, if colleges did this then the same notion can be pushed down to the high schools, and so forth.

However, if only one college did this while the rest continued with business as usual, or one academic program did this but elsewhere it didn't happen, then the likely outcome would be an out migration of elite students to go elsewhere and a decline in the revenues that the innovating unit can garner.  With regard to elite public universities, in particular, one might not see the out migration of in-state students, because of the large tuition differential with comparable alternatives, but one is apt to see a decline in out-of-state students or international students, who pay much higher tuition rates.  Therefore, to embrace the recommended solution at scale would require the bulk of elite public institutions to do likewise.

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Keeping the previous paragraph in mind, I want to again look at these sort of decisions from the perspective of a single elite college within a larger public university.  I base what I have to say here on the four years where I was an Associate Dean in the College of Business (2006-2010) where there was a weekly meeting of other A-Deans and Department Heads.   Part of this period overlaps with the start of the Great Recession, which may have made everyone even more mercenary than they otherwise would be.  During this time period, the college got campus approval for students to pay a college-specific surcharge, in addition to the base tuition that all students pay. This may have further impacted my impression as I observe the following.

The way a high selective academic unit operates in determining the number of students to admit is very much like the standard textbook model of the monopolist that sets a uniform price when facing a downward sloping demand curve.  The standard result is that such pricing maximizes the producer surplus for the monopolist, but there is a loss in social surplus as compared to the alternative where the good is supplied in a competitive market.  This loss of social surplus is not a concern to the monopolist, but it is a concern to a planner who wants to maximize the social welfare.  (Note that if the monopolist can practice first degree (perfect) price discrimination, there is no loss of social surplus, but that textbook ideal is typically not feasible.)  So the argument is that the next larger containing unit, in this case that's the Urbana-Champaign campus, should be like the social planner and encourage more students to be admitted to the College of Business.  That would be welfare improving.

But under the approach to these decisions I was aware of when I was an Associate Dean (I'm guessing this is still true now, though I don't know that for a fact) each college gets to determine the desired number of new admits.  (Managing the yield on acceptances is a tricky matter, which I don't want to get into here. We will focus on the admit decision only, implicitly assuming that we can invert the yield function so to determine the number of new students.)   It would thus require a major change in campus culture to move the admit decisions for each college to the Provost's Office.

Likewise, the admit decision for the campus as a whole is determined by the campus, but by a similar argument that admit decision should instead revert to the U of I System or perhaps even to the Board of Higher Education in Illinois.   One might hope that individual units would be good citizens and thus could retain decision making power over admission after receiving edicts from above about what the ultimate goal is.  Keeping the decisions local can be argued because actual supply of instruction will be much better understood at the local level.  Yet, if my experience is still relevant on this, when money is especially tight, the incentive to behave as a monopolist is especially strong.  Counting on the good citizenship of each local unit may then be wishful thinking.

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I want to conclude here.  With that, I will briefly talk about my motivation for writing this piece.  While I have tried to take an arm's length and analytical approach in giving my argument, I'm really quite emotional about the issue of student mental health, as I've had several students last fall who were at varying levels of going over the deep end.  One, whom I gave an Absent from Final grade to and who in middle January seemed to be making up the coursework she missed in the fall, suddenly stopped doing the remainder of the work and I haven't heard from her since.  I sent her an email about a week ago to find out what's up but got no response.  Under the circumstances, that's really all I can do.

Kids like this, and there are quite a few of them, still matter.  I was able to help some others get through the course.  Higher Ed is responding to the crisis by talking about the shortage of mental healthcare professionals on campus.  That's an issue, but it is not the issue.  The issue is us and making how we go about things more humane, and more educative at the same time.  When will we wake up to see the need to do that?