Dennis A. Ahlburg
In Alan Ware’s latest defence of his views on higher education, “a tale told by an idiot, full of sound and fury, signifying nothing” (Macbeth), he claims that I have not addressed the heart of his argument – that a large minority of students do not land graduate jobs and that a large minority of student loan money will not be repaid.
In my initial comment on his views, I argued that jobs are changing so rapidly that an outdated classification of what constitutes a “graduate job” is not an appropriate measure of the impact of higher education. A more appropriate measure is earnings of those with a degree compared to those without it. Ware initially rejected that such a premium existed for most graduates. He seems to have shifted his position to this is true only for “a large minority”, now arguing that the standard measure of the university premium is “now irrelevant”.
He proposes a comparison between the bottom 25-30 per cent of graduates and the best qualified of 18 year olds who did not attend university (a comparison that is only known ex post). Ware believes that only this comparison can answer the question “is a substantial minority of graduates better or worse off in future years than contemporaries who did not go to university”. The answer to this question is available from the standard premium calculation. Ware’s rejection of decades of economic studies on the return to higher education is similar to Donald Trump calling anything he dislikes “fake news”. For Ware, it is “junk in, junk out.”
Estimates of the non-repayment of student loans depend on predictions of earnings over the next 30 years and so need to be handled with caution but certainly not rejected. But surely instead of decrying this as “social waste” one could think of the current system as one in which students fund 60-70 per cent of their education and the public funds the remainder instead of a system where the public funded 100 per cent.
Ware also displays an inconsistent attitude to the market: at times contempt, at other times admiration. For example, he says “the intellectual content of many masters courses is of little direct relevance to the employer.” It would be interesting to know which courses, as it’s unlikely that employers would pay for irrelevant skills.
Ware states that “there are many skills being taught at British higher education institutions today that could be supplied less expensively and in less time.” Again, it would be useful to know which these are, who could supply them, and on what evidence?
Ware’s statement that “firms’ recruitment is no longer based on identifying those seemingly proficient in the skills required” does not stand up against the fact that the Society for Human Resources Management estimates firms are spending between six and nine month’s salary to replace a salaried employee.
Ware embraces the market when he writes “one aspect of progressive reform is to permit universities to charge whatever fees they like “because low-prestige universities “would be bankrupt within a year”. But higher education is not that efficient a market. The National Audit Office concluded that “competition between providers to drive improvements in price and quality have yet to prove effective”. Education is an “experience good” that can only be fully evaluated years after “consumption”. 80 per cent of students are unaware of information on universities, 60 per cent lack the skill to make complex financial decisions, and only two per cent of students switch institutions – hardly an efficient market. The entry of for-profit institutions in the U.S. has led to higher prices and more student debt; an odd result for greater competition.
We do agree that “the financial value of a degree has become obscured”. As I noted previously there is information to make returns less obscure but much remains to be done. In terms of how to proceed, Ware wants to start at the top of the education ladder and I support starting where disadvantage begins.
What seems to drive Ware’s view is a model of higher education where, like football academies, the goal is to impart a “restricted range of human skills” that are employer-relevant and need to be cheaply and quickly pumped into the student. He rejects what he disparages as ”University Lite” because it adds “some form of theoretical or non-practical training”. Perhaps he means the cognitive skills and the “soft skills” of problem solving, critical thinking, and communication that are much in demand in the labour market. While a restricted range of skills may be appropriate for a football academy, they are not appropriate for a university.
Dennis A. Ahlburg is Distinguished Professor of Economics and former President, Trinity University, San Antonio, Texas, and Visiting Fellow, Oxford Centre for Higher Education Policy Studies, New College, University of Oxford.
Image by Daniel Zimmel.