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Price and quality in higher education
Erorromrcvof EdrrcnrronHevrew.Vol. 12. No. 1, pp 91-101, 1993
Pergamon Press Ltd. Printed in Great Britain.
Book Reviews
By JEFFREY L. GILMORE. Washington, DC: Office of Educational Research and Improvement, U.S. Department of Education, U.S. Government Printing Office, 1990. 121 pp. U.S.$7.00. Price
and Quality
in Higher
Education.
resources. On the other hand, high price-low quality institutions are highly tuition dependent and seem to spend a disproportionate amount of money on physical resources at the expense of things such as the library. While this strategy appears costly in terms of educational progress, it works well in terms of application rates, causing Gilmore to reach the depressing conclusion that a high price together with a resource allocation plan favoring physical appearances generates a positive reputation among students. Hence, Gilmore’s general conclusion is that while you tend to “get what you pay for”, it also “pays to shop around”. While the first set of results examined the connection between price and educational progress, the second set uses regression analysis with educational progress as a dependent variable and searches the list of plausible determinants for statistical significance. It turns out that things such as academic enrichment programs and student activities are effective in increasing educational progress while, interestingly, a higher percentage of full-time faculties hinders student attainment, especially at less selective institutions. Library books and journals, curricular diversity and athletic programs are not significant predictors of educational progress. Lastly, path analysis is used in an attempt to disentangle the direct, indirect and total effects of price, student ability and institutional characteristics on educational progress. Again, factors such as enrichment and activity programs have a positive effect, while an increase in the percentage of full-time faculties leads to a decline in educational progress. It is easy to quibble with any empirical investigation, especially one as ambitious as this study. Some readers may argue that the educational progress variable relied on so heavily by Gilmore leaves a lot to be desired. Others will no doubt question some of his decisions in terms of model specification and estimation (in particular, the inclusion of price as an independent variable along with various categories of expenditures and the use of path analysis despite obvious worries about simultaneous equations bias). Finally, Gilmore’s explanations for some of his “unexpected” findings will probably be seen as less than totally convincing. These complaints, however, should not take away from the value of Gilmore’s work. It is a serious and instructive piece of research that makes a major contribution to a small but important literature. I am sure that Gilmore would agree that scholarly returns to work in this area very likely justify further investments.
THERE HAS BEEN a great
deal of recent discussion of both quality and pricing of higher education. However, despite a substantial amount of rhetoric, there has been little in the way of serious empirical investigation. Jeffrey Gilmore, Research Associate, Higher Education and Adult Learning Division, U.S. Department of Education, has produced an important contribution to the literature. The study investigates two major topics: (1) the link between tuition and institutional quality and (2) the link between institutional effectiveness and a variety of institutional characteristics. The findings are quite illuminating. Following a highly instructive review of the relevant literature, Gilmore examines correlations between tuition and a long list of quality measures. He finds a significant positive correlation between tuition and numerous measures of quality, including educational and general expenditures, percentage of faculties with PhDs, library books, enrichment programs, curricular diversity, student housing, retention rates, reputation and percentage of students progressing to graduate schools. One surprise, however, is an insignificant correlation between price and faculty/student ratio. Gilmore next asks whether all colleges follow a similar pattern in terms of the price-quality association. He uses a composite educational progress variable (based on freshman G.P.A., sophomore retention and graduation) as his quality proxy and plots price against educational progress. In general, educational progress increases with price, and each of the 57 institutions in the high price category has an educational progress score above the national mean. On the other hand, only 24 of the 127 schools in the low price category perform above the mean. Roughly half the schools in the medium price category are above the mean. Gilmore concludes that, while it is true that higher priced institutions generally perform better in terms of the educational progress of their students, there is substantial variation within each price category. A closer look at those low priced institutions that do surprisingly well in terms of educational progress finds that they tend to be relatively small and to have relatively large endowments they apparently can “afford” to keep tuition low while providing considerable educational
MORTON OWEN SCHAPIRO
University of Southern California
91
Pergamon Press Ltd. Printed in Great Britain.
Book Reviews
By JEFFREY L. GILMORE. Washington, DC: Office of Educational Research and Improvement, U.S. Department of Education, U.S. Government Printing Office, 1990. 121 pp. U.S.$7.00. Price
and Quality
in Higher
Education.
resources. On the other hand, high price-low quality institutions are highly tuition dependent and seem to spend a disproportionate amount of money on physical resources at the expense of things such as the library. While this strategy appears costly in terms of educational progress, it works well in terms of application rates, causing Gilmore to reach the depressing conclusion that a high price together with a resource allocation plan favoring physical appearances generates a positive reputation among students. Hence, Gilmore’s general conclusion is that while you tend to “get what you pay for”, it also “pays to shop around”. While the first set of results examined the connection between price and educational progress, the second set uses regression analysis with educational progress as a dependent variable and searches the list of plausible determinants for statistical significance. It turns out that things such as academic enrichment programs and student activities are effective in increasing educational progress while, interestingly, a higher percentage of full-time faculties hinders student attainment, especially at less selective institutions. Library books and journals, curricular diversity and athletic programs are not significant predictors of educational progress. Lastly, path analysis is used in an attempt to disentangle the direct, indirect and total effects of price, student ability and institutional characteristics on educational progress. Again, factors such as enrichment and activity programs have a positive effect, while an increase in the percentage of full-time faculties leads to a decline in educational progress. It is easy to quibble with any empirical investigation, especially one as ambitious as this study. Some readers may argue that the educational progress variable relied on so heavily by Gilmore leaves a lot to be desired. Others will no doubt question some of his decisions in terms of model specification and estimation (in particular, the inclusion of price as an independent variable along with various categories of expenditures and the use of path analysis despite obvious worries about simultaneous equations bias). Finally, Gilmore’s explanations for some of his “unexpected” findings will probably be seen as less than totally convincing. These complaints, however, should not take away from the value of Gilmore’s work. It is a serious and instructive piece of research that makes a major contribution to a small but important literature. I am sure that Gilmore would agree that scholarly returns to work in this area very likely justify further investments.
THERE HAS BEEN a great
deal of recent discussion of both quality and pricing of higher education. However, despite a substantial amount of rhetoric, there has been little in the way of serious empirical investigation. Jeffrey Gilmore, Research Associate, Higher Education and Adult Learning Division, U.S. Department of Education, has produced an important contribution to the literature. The study investigates two major topics: (1) the link between tuition and institutional quality and (2) the link between institutional effectiveness and a variety of institutional characteristics. The findings are quite illuminating. Following a highly instructive review of the relevant literature, Gilmore examines correlations between tuition and a long list of quality measures. He finds a significant positive correlation between tuition and numerous measures of quality, including educational and general expenditures, percentage of faculties with PhDs, library books, enrichment programs, curricular diversity, student housing, retention rates, reputation and percentage of students progressing to graduate schools. One surprise, however, is an insignificant correlation between price and faculty/student ratio. Gilmore next asks whether all colleges follow a similar pattern in terms of the price-quality association. He uses a composite educational progress variable (based on freshman G.P.A., sophomore retention and graduation) as his quality proxy and plots price against educational progress. In general, educational progress increases with price, and each of the 57 institutions in the high price category has an educational progress score above the national mean. On the other hand, only 24 of the 127 schools in the low price category perform above the mean. Roughly half the schools in the medium price category are above the mean. Gilmore concludes that, while it is true that higher priced institutions generally perform better in terms of the educational progress of their students, there is substantial variation within each price category. A closer look at those low priced institutions that do surprisingly well in terms of educational progress finds that they tend to be relatively small and to have relatively large endowments they apparently can “afford” to keep tuition low while providing considerable educational
MORTON OWEN SCHAPIRO
University of Southern California
91