A common attribute of service sector organizations is that their costs of operation have increased at higher rates than those of other sectors. Sectors of the economy that have used electronic or mechanical processes to assist human labor have shown larger productivity gains (output per labor hour). For example, manufacturing firms, using automation, have increased their production per employee in significant ways. Higher productivity often leads to cost benefits for the resulting products.
In contrast, for example, psychotherapy using clinical therapists, show lower productivity gains. It’s difficult to imagine how a single therapist could greatly increase the number of patients served without a loss of quality. Hence, the cost inflation is larger for such activities than those not solely dependent on human labor.
Using traditional categories, higher education falls into the service sector of an economy – it provides educational services to students. In that sense, universities share many of the attributes of other service sector providers. Having a faculty member teach ten times as many students in a single class will increase productivity, if only measured by number of students taught, but the service provided is generally believed to be of lower quality.
Part of the process of explaining the cost inflation of higher education is, therefore, inevitably intertwined with arguments about what constitutes quality aspects of education. This question has led to discussions of what are the desirable outcomes of education.
As we crawled slowly out of the Great Recession, great attention was paid to income impacts of education. We now have highly replicated results that the value of a bachelor’s degree is over $1 million in increased lifetime earnings, relative to a high school diploma. Further, if you factor out the missed employment for four years of a bachelor’s curriculum and the cost of tuition, the economic gains of higher education remain clear. Higher education pays off in income gains.
If income were the sole outcome of higher education that was relevant, we could easily compare quality adjusted productivity across different curricula. But we believe, especially at Georgetown, that empathy, civic engagement, commitment to social justice, creative thinking, leadership, resilience, self-teaching ability, etc., are also outcomes to be valued. Not all of these are correlated with income of first job.
However, the measurement of these attributes is not easy. Behavioral, observable indicators are available only for a few. Most are internalized attributes that are usually (but imperfectly) measured only by self-report.
For those of us who work in highly selective universities, there is another concern. Entering our universities are highly accomplished young people, with superior cognitive abilities, many who sought out rigorous educational curricula and excelled. That they then achieve great success after graduation begs a question. What evidence do we have that what the students experience in our university is a cause of their later success? How do we know our institutions are significantly increasing the chances of their success? Would they have achieved the same wonderful outcomes without us?
To explain costs of higher education, we must understand and provide evidence for the value of education. To explain the value of education, we need more serious attention to measuring the outcomes of education that we value.