Jul 4, 2009
Academic Secrets
If you are in academia, have you ever wondered why politics dominates? Why administrators are weak? Why tuition keeps going up (but you may not be the beneficiary?)
Higher education is riddled with incentives that lead to inefficiency, political control, and higher costs. There’s a serious “principal/agent” problem. (This economic term refers to the tendency of managers [agents] to follow their own interests rather than those of the principals [the owners]). One reason the issue is so important in higher ed: No one knows who the principals are!
Robert E. Martin, a retired economist, has written an enormously important paper that focuses on the causes, rather than the symptoms, of problems in higher education, and especially on the principal/agent problem. “The Revenue-to-Cost Spiral in Higher Education,” specifically addresses higher costs but tells us much more. The Pope Center has just published it and I encourage you to read it. If the paper is a little lengthy for you, read George Leef's column about it instead.
Higher education is riddled with incentives that lead to inefficiency, political control, and higher costs. There’s a serious “principal/agent” problem. (This economic term refers to the tendency of managers [agents] to follow their own interests rather than those of the principals [the owners]). One reason the issue is so important in higher ed: No one knows who the principals are!
Robert E. Martin, a retired economist, has written an enormously important paper that focuses on the causes, rather than the symptoms, of problems in higher education, and especially on the principal/agent problem. “The Revenue-to-Cost Spiral in Higher Education,” specifically addresses higher costs but tells us much more. The Pope Center has just published it and I encourage you to read it. If the paper is a little lengthy for you, read George Leef's column about it instead.