Stange co-edits volume on "Productivity in Higher Education” with Caroline Hoxby

January 20, 2017

"Productivity in Higher Education," a forthcoming volume co-edited by Caroline Hoxby (Stanford University) and Kevin Stange, will include research by a number of Ford School faculty members including including Stange, Paul Courant, and Brian Jacob.


One of us (Hoxby) recalls a meeting, not so long ago, in which university leaders and faculty were discussing a project that cost at least nine figures. The costs were discussed in great detail. As the discussion neared its end, Hoxby finally asked, "But what are the benefits of the project? Is its ratio of benefits to costs high or would it be better to allocate the funds to more productive uses?" These questions startled the group for two reasons. First, those assembled had fallen into the habit of associating the merit of a project with its costs, not its ratio of benefits to costs (its productivity). Second, most thought it absurd even to consider measuring benefits. These two reasons were related: because most believed that it was impossible to measure benefits, they routinely focused on costs. Indeed, these habits were not limited to university staff. When higher education experts were asked which was the best institution, they tended to suggest a costly one and cite its high spending as evidence of its quality.

To economists at least, it seems unnatural to think so much about costs but so little about the productivity of a sector, higher education, that plays such a crucial role in the economy and society. For any society-wide question that involves allocating resources between some other sector, such as health care, and higher education, we need to know the sectors’ relative productivity. When judging whether the market for higher education generates good incentives or, rather, is plagued by market failures that allow institutions to be grossly inefficient, we need to know productivity. When assessing government policies, such as grants or loans, that subsidize students, we need to know the productivity of the investments these policies facilitate. To allocate a budget efficiently among their institution's many activities, higher education leaders need to understand productivity. When students decide whether and where to attend college, they need to know whether those investments will be productive. Thus, at every level of decision-making (social, institutional, individual), the productivity of higher education investments is crucial.

This volume, Productivity in Higher Education, is the result of a concerted effort by National Bureau of Economic Research scholars to advance the frontier of knowledge about productivity in higher education. The timing of this push is not accidental. Rather, it is the result of newly available data that allow us to assess benefits much better and analyze costs better as well. The new data come from administrative sources and therefore tend to be accurate. They also tend to be population data, not a sample. These attributes of the data are crucial for many of the studies in this volume. It is not merely that the better data make the findings more precise or permit otherwise infeasible empirical strategies, though they do both of these. Crucially they allow researchers to ask questions that simply could not have been asked previously. This expansion of the frontier of questions we can credibly answer meets a heightened demand for these answers from students, parents, and policymakers. We think it is fair to say that the productivity of higher education institutions – from large elite research universities to small for-profit colleges – has never been under greater scrutiny than right now. In short, this is an exciting and opportune time for research on productivity in higher education.