102	Economie Facts and Fallacies

Despite misuses of the accreditation process, some standards of quality control are obviously required. No one should assume that either profitseeking or non-profit institutions automatically live up to quality standards, or even standards of honesty. A number of lawsuits claim that unaccredited, for-profit institutions have misled students into believing that their credits would be automatically transferable to other institutions and their degrees recognized, when in fact neither claim was true.

Academic Careers

The particular job security policies in American colleges and universities have their own peculiar consequences, often quite different from the goals of these policies. Academics who have been employed a given number of years at a given college or university must either be promoted to a position with permanent tenure or let go. This is called the "up or out" system. It means more job security for those who go up but less job security for those who are forced out— less not only compared to their more fortunate academic colleagues, but less compared to people of similar ages in other sectors of the economy without such job security systems.

Because academic job security systems leave colleges and universities with long-term commitments that can easily exceed a million dollars for each tenured faculty member, this can lead to more stringent requirements for continued employment than if no such commitment were implied. Untenured faculty members whose current work is perfecdy satisfactory will often be let go— not have their contracts renewed— when time comes for the "up or out" decision, when there is not yet sufficient evidence to be confident that this person will in future years progress to the higher performance levels expected of senior faculty members, notably in scholarly research.

In the absence of this "up or out" system, people who are perfecdy satisfactory as assistant professors could continue to be employed as assistant professors, while others could progress onward and upward to become associate professors or full professors at whatever time their work merited

Academic Facts and Fallacies

103

such promotions, whether that was before or after the number of years established for making "up or out" decisions under the current system. Those who never reach the higher levels of performance required for such promotions could nevertheless continue to be employed at their current level, so long as their work was satisfactory at that level.

In other words, people would be able to keep their jobs, in the absence of the current academic job security system, instead of losing their jobs because this job security system imposes long-term commitments that colleges and universities seek to minimize by retaining only those young faculty members whose promise seems great enough and clear enough, soon enough. Nor is there any reason to believe that the next crop of assistant professors will be any better than those dismissed, even though turnover has costs to the institution as well as to the individuals concerned. The reason for the turnover is to comply with the standards of the American Association of University Professors without getting stuck permanently with costs of a million dollars or more per faculty member.

At the highest-rated universities, it is common for most assistant professors to be terminated before time for them to become associate professors, since there has seldom been enough time for them to have produced the high levels of research quantity and quality required for senior positions at such institutions. In short, the goal of a policy— in this case, greater job security— turns out to have little to do with the actual outcome of that policy, which is less job security than most people of similar ages have in other sectors of the economy where there are no such policies as those surrounding academic tenure.

This academic promotions system also helps explain a common but paradoxical phenomenon at many universities— the outstanding young teacher who is terminated, often to the consternation of his students, who may even mount organized protests, usually in vain. A former dean at Harvard noted "the widely held undergraduate opinion that their favorite teachers are systematically denied tenure."2 3 It is even common on some campuses to hear the "teacher of the year" award referred to as "the kiss of death" for young faculty members. That is because outstanding teaching is very time-consuming, in terms of creating high-quality courses and

104 Economie Facts and Fallacies

preparing outstanding lectures in these courses, as well as giving individual attention to students who may be having trouble understanding the material in the course. This often leaves insufficient time for a junior faculty member to do the amount and quality of research required for getting tenure at a top university. Such institutions often fill their senior positions by hiring those people who have already produced the requisite quantity and quality of publications somewhere else.

The top-level universities in prestige— based primarily on research— are usually top-level in faculty salaries as well. Full professors at Stanford, Princeton, and the University of Chicago each averaged more than $160,000 per year in academic year 2006-2007, and full professors at Harvard averaged more than $177,000. Meanwhile, full professors at Birmingham-Southern or Kalamazoo College averaged less than $80,000.2 4 None of this, however, indicates where a student is likely to get the best undergraduate education.

THE STUDENT S

Students choose colleges and colleges choose students— and there are facts and fallacies involved in both choices.

Choices Among Colleges

Since a college's or university's academic prestige depends primarily on its professors' research and publications, students will not necessarily get a better education at the more prestigious institutions with the higher paid faculty. Various studies have shown students at small liberal arts colleges doing as well as, and sometimes better than, students from prestigious research universities on tests such as those for medical schools, and a higher percentage of the liberal arts college students going on to receive Ph.D.s.2 5 This is not very surprising in view of a study indicating that teaching takes

Academic Facts and Fallacies

105

up less than half the working time of faculty at research universities and nearly two-thirds of the working time of faculty at liberal arts colleges.2 6

The four institutions with the highest percentage of their undergraduates going on to receive Ph.D.s are all small colleges, with less than 2,000 undergraduates each: Cal Tech, Harvey Mudd, Swarthmore, and Reed. Cal Tech and Harvey Mudd have fewer than a thousand undergraduates each. Small colleges in fact dominate the top ten. Grinnell College has a higher percentage of its graduates go on to receive Ph.D.s than does either Harvard or Yale.2 7 Of the chief executive officers of the 50 largest American corporations surveyed in 2006, only four had Ivy League degrees and just over half graduated from state colleges, city colleges, or a community college.2 8 Some, including Michael Dell of Dell computers and Bill Gates of Microsoft, did not graduate at all.

One of the biggest fallacies about academic institutions is that attendance at big-name colleges and universities is virtually essential for reaching the top in later life. How much colleges in general add to economic or other success in later life is not easy to determine and the methods often used can easily over-state the effect of college, and especially the effect of the more prestigious colleges. These methods would be valid if the people attending these institutions were comparable to begin with, so that their differences in incomes and occupations after graduation could be attributed to what happened in college. But if affluent or wealthy people are more likely to send their children to prestigious colleges and universities, then the incomes of those students in later life may reflect their greater career opportunities as a result of their family connections or their greater income from the earnings of inherited assets, rather than what they may have learned at the more prestigious colleges or universities.

The students themselves cannot be assumed to be comparable. If students who enter Harvard, for example, have higher qualifications than the students who enter Podunk State, then later differences between the graduates of the two institutions cannot be arbitrarily attributed to differences in the education received in these two places. If Harvard graduates are more likely to go on to medical school, law school, or other postgraduate study, then their later incomes are likely to be raised still

106	Economie Facts and Fallacies
further	above those of the graduates of Podunk State. Ideally, the

comparison should be made between people who went to Harvard and people who were admitted to Harvard but chose instead to go to Podunk State. Unfortunately, this is likely to produce samples too small for statistical analysis and those who make such choices may not be typical of the students at either institution.

Studies have been made of people with comparable test scores who attended prestigious and non-prestigious colleges and universities, in order to try to determine the "value added" by the institutions themselves. Some studies indicate that the more prestigious institutions do add value and others indicate that they do not. But seldom do they indicate that the value added is as great as the raw statistics might suggest without making allowances for the differences among the students themselves.

"Value Added"by College

Similar problems arise when trying to determine the value of going to college at all, as compared to going to work after finishing high school— or not finishing high school. It is common to compare the incomes of college graduates with the incomes of high school graduates, high school dropouts, or others, and then attribute the much higher incomes of the college graduates to the education received in college. But people whose education stops before college cannot be assumed to be the same in orientation, values, priorities, or ability as people who go on to college. Therefore income differences between them cannot be automatically attributed to what was taught in college. A further complication is that many— if not most— people who drop out of high school later resume some form of education, whether in academic institutions or by studying a trade or acquiring certification from courses given by Microsoft, Oracle, Adobe, or other computer companies.

Is the income of dropouts who later resumed their education elsewhere to be counted in the statistics on the incomes of dropouts? Are the incomes of dropouts who go on to earn a Ph.D. without ever getting a high school

Academic Facts and Fallacies

107

diploma (such as the author of this book) to be included in the statistics on the incomes of dropouts? Or is the term "dropout" to be reserved solely for those who never resume any further education? As a practical guide to those considering when to discontinue their academic education, at least temporarily, it makes a big difference whether particular statistics make that distinction. Given the greater difficulty and higher costs of following particular individuals over time, it is very doubtful if most statistics— or perhaps any— make that distinction. This means that the incomes of people who dropped out of high school and later received an academic degree without bothering to go back and get a high school diploma are very unlikely to be counted in statistics on the incomes of high school dropouts.

The Cost ofCollege

Even in an era of high and rising college tuitions, the biggest cost of going to a college will in many cases not consist of the tuition being paid but the cost of foregoing opportunities to earn income from a full-time job. The average tuition at state colleges and universities is often less than the income from an entry-level job, and the tuition at community colleges is almost invariably less. The cost of attending college also includes the growing costs of books but does not include the full costs of room and board, since students would have to be housed and fed whether they went to college or not. Only to the extent that these costs are higher on campus can they be considered part of the cost of a college education. In short, money outlays do not measure the total costs of going to college, which can be higher or lower, depending on the institution and the circumstances.

Many lament that the costs of going to college can leave graduates with substantial debts to pay off in later years— and that these debts can be especially burdensome for those who go into occupations with modest pay. Politicians are likely to be responsive to such laments, especially in election years. However, many or most of the discussions of such issues ignore the larger role of costs and prices in general, and proceed as if anyone whose desires are constrained by economics should have those constraints removed

108 Economie Facts and Fallacies

by government— which is to say, by shifting those costs to someone else, namely the taxpayers.

Among those students who graduate from college owing a debt for their education, the median debt is $19,3002 9 — roughly the cost of a modesdy priced automobile, and no one thinks that the debt incurred in buying an automobile is so crushing that taxpayers must subsidize the purchase of cars. Moreover, the debt from a college education is paid just once, while most Americans buy more than one automobile in a lifetime. Finally, it is by no means certain that the average taxpayer makes more money than the average college graduate, so the case for forcing taxpayers to subsidize people with better economic prospects than themselves cannot invoke the usual arguments about helping the less fortunate.

As for the argument that the burden of debt is heavier for those who enter lower paying occupations, this ignores the whole role of prices in allocating scarce resources, including expensively educated human beings. It would be an exercise in futility to print money if people s decisions were not to be influenced by it. After all, the money itself is not wealth— otherwise the government could make us all rich just by printing more of it— but is just an artificial device to provide incentives for economic behavior affecting the production of real wealth. If people are automatically to be enabled to make their choices independent of monetary considerations, then there has been an enormous waste of paper and ink in printing money.

Seldom is the argument made that nobody should have to take rates of pay into account when choosing among occupations. More usually, there is an assumption that some especially prescient third parties can determine which special occupations "really" meet society's "needs" and therefore should be subsidized through compulsory exactions from others. Such arbitrary choices made by third parties, who pay no price for being wrong, are considered to be either economically or morally superior to choices made by people who pay their own money for what they want and thereby determine which products, industries, and occupations will be remunerated to what extent.