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The economics of American higher education
426
Book Reviews
solid research. Institutions of higher learning, regardless of national origin, must continue to strive for excellence. Otherwise, they may go the course of a complacent athlete who no longer sees the need for training. Eventually, someone with more desire and better training habits overtakes a complacent combatant. ROBERT L. CR1ST
University of Virginia
Cost Containment for Higher Education: Strategies for Public Policy and Institutional Administration. WILLIAM BRAND SIMPSON. N e w Y o r k : P r a e g e r P u b l i s h e r s , 1991. p p . xvii + 255. P r i c e : $ 4 9 . 9 5 ( c l o t h ) . THE PUBLIC THROUGH their elected representatives are showing an increasing intolerance to the higher education community's repeated requests for ever larger subsidies coupled with ever higher tuition charges. Quality maintenance and the pursuit of equity are traditional counter arguments that have lost their resonance. With admissions plateaued or in decline revenue enhancement is at a standstill at many institutions. Hence cost containment is once again a subject of growing interest both inside and out of higher education. While trustees, administrators, faculty and policymakers continue to pursue the struggle for additional revenue, many are simultaneously searching for ways of doing the same, or preferably more, with less. Their present search for savings is more difficult than previous cost cutting iterations. Much of the slack has already been squeezed out of many operating budgets. Moreover, the magnitude of the containment required is unlikely to be attained by the application of short term fixes. Thus stickers on light switches, pruning the catalog or tinkering with faculty loads are unlikely to produce the desired long term result. The successful pursuit of long term cost containment will require a multifaceted approach extending beyond the single institution. Both the popular and professional presses have predictably responded with increased attention to much sought after but albeit slippery goals. With the bulk of contemporary higher education cost literature characterized as descriptive and focused on the short term, Simpson's contribution is a welcome addition. He offers a comprehensive, multi-tiered review of the broad spectrum of cost containment strategies that warrant consideration. His coverage is near cylopedic. Its breadth is unified by an ever-present regard for doing the right things in the long term. He rejects the more common focus on efficiency in resource consumption in the short term. The author addresses the obvious as well as the less apparent approaches to cost containment. Since many of the strategies visited are beyond the exclusive domain of individual constituencies or institutions, Simpson advocates an inclusive approach rather than confrontational in shaping cost containment strat-
egies. Thus all constituencies with perceived stakes in the enterprise should be involved. Inclusion is portrayed as a powerful tool in maintaining quality while containing cost. Simpson's discussion of cost containment is divided into 14 chapters. Each chapter presents a cluster of strategies that share a common locus or theme - - institution, interinstitutional, governmental or societal. The range of strategies visited at each point of convergence is similarly broad. Many strategies discussed are clearly beyond the control of the institution. For example, the first chapter entitled "Strategies of a Philosophical and Political Nature" briefly critiques strategies propelled by conservative and liberal social perspectives. Subsequent chapters include strategies best pursued in a national context. Some of which will surely evoke controversy. One that is both familiar but sure to prompt heated debate would establish rigorous preconditions for admission to post secondary education. Another less familiar approach but also likely to lead to controversy would require individuals who have borrowed for their education to share responsibility for their cohort's obligations as well as settling their own. Such an approach is obviously beyond the control of the institution and requires national legislation supported by massive consensus.
There is ample representation of strategies within the individual institution's influence. There are chapters discussing a range of cost benefit, operating costs and capital outlay strategies. Seventeen approaches to controlling faculty expenditures are presented. Included are the obvious such as freezes and attrition, early retirement, workload factors and the use of part-time faculty. His discussion of part-time faculty is characteristic of his approach to the numerous strategies presented throughout the book. Simpson considers t h e opportunity costs inherent in the strategies addressed. In the case of part-time faculty what the institution may gain in flexibility, it may lose in faculty loyalty as well as other intangible assets. Cost Containment for Higher Education should attract a wide readership among higher education students and practitioners. Both categories of readers will find Simpson's extensive bibliography an invaluable resource for negotiating the existing literature base as strategy sets tailored to specific environments are crafted. W. PATRICK LEONARD
Purdue University North Central
The Economics of American Higher Education. B y WILLIAM E . BECKER a n d DARRELL R . LEWIS ( e d s ) . B o s t o n : K l u w e r A c a d e m i c P u b l i s h e r s , 1992. p p . v + 349. P r i c e : U . S . $ 7 1 . 5 0 (cloth). IN RECENT YEARS a growing number of academic economists have been turning their attention to an industry that
Book Reviews is close to home - - higher education. This volume presents useful reviews of a number of literatures dealing with subjects of interest not only to economists but to all concerned observers of colleges and universities in the U.S. and elsewhere. After an introduction, by the editors, James Hearn provides a long and stimulating examination of the teaching role of American higher education. For all but a small minority of our 3500+ non-profit institutions, teaching is the premier function. However, in the popular mind, and in the minds of many faculty, research has been replacing teaching as the most important higher education activity. Hearn supplies a very interesting historical perspective on the image and the reality of the teaching role and discusses prospects for change. Edward Schuh and Vernon Ruttan next turn our attention to the research and service missions of the university. Their broad overview touches on questions dealing with the value of research in the natural versus the social sciences and the changing role of university public service. Shifting to the perspective of an individual student, William Becker focuses on the private financial returns to higher education, as do Kevin Murphy and Finis Welch. Mark Berger disaggregates earnings data by major and Elchanan Cohn and Terry Geske examine non-monetary returns. There is a large and important literature on educational returns and these four papers provide an excellent introduction. While the causes of variation in returns over time are largely ignored, important facts - for example, that the economic return to college increased between 1963 and 1971, fell between 1971 and 1979, and increased again after 1979 - - are covered in some detail. It is also very helpful to examine returns to different majors. Berger's analysis is especially noteworthy for its look at the variation in returns by major at different points in the ageearnings profile.
427
The next section of the book contains four essays on the impact of higher education on regional growth. Chapters by Tim Smith and Mark Drabenstott and by Larry Leslie and Sheila Slaughter review an intriguing literature while a piece by Rebecca Goodman and William Weiler contains a new empirical study of the in-state income and employment effects of federal research grants. Goodman and Weiler find that the total employment increase in Minnestoa is at least 250% of the direct employment of research personnel at the University of Minnesota. This section concludes with a chapter by Roger Geiger reviewing the literature on the link between private and university research. Of particular note is the discussion of new organizational arrangements that have appeared over the past few years. The volume ends with the issue of equity, as Melissa Anderson and James Hearn ask the critical question: What is the distribution of higher education benefits across socioeconomic, gender, and racial groups? Their literature review produces a mixed answer. By their criteria, gender and race have only small effects on college outcomes, although socioeconomic status continues to play an important role in whether a student receives the benefits that higher education has to offer. There are many aspects of the economics of higher education that this volume ignores - - educational production functions, student choice analyses, and institutional response models, among others. But anyone interested in such important issues as the monetary and non-monetary returns to higher education, the impact of higher education on regional growth, or the tension between teaching and research, will find much of interest in this volume. M O R T O N OWEN S C H A P I R O
University of Southern California
Book Reviews
solid research. Institutions of higher learning, regardless of national origin, must continue to strive for excellence. Otherwise, they may go the course of a complacent athlete who no longer sees the need for training. Eventually, someone with more desire and better training habits overtakes a complacent combatant. ROBERT L. CR1ST
University of Virginia
Cost Containment for Higher Education: Strategies for Public Policy and Institutional Administration. WILLIAM BRAND SIMPSON. N e w Y o r k : P r a e g e r P u b l i s h e r s , 1991. p p . xvii + 255. P r i c e : $ 4 9 . 9 5 ( c l o t h ) . THE PUBLIC THROUGH their elected representatives are showing an increasing intolerance to the higher education community's repeated requests for ever larger subsidies coupled with ever higher tuition charges. Quality maintenance and the pursuit of equity are traditional counter arguments that have lost their resonance. With admissions plateaued or in decline revenue enhancement is at a standstill at many institutions. Hence cost containment is once again a subject of growing interest both inside and out of higher education. While trustees, administrators, faculty and policymakers continue to pursue the struggle for additional revenue, many are simultaneously searching for ways of doing the same, or preferably more, with less. Their present search for savings is more difficult than previous cost cutting iterations. Much of the slack has already been squeezed out of many operating budgets. Moreover, the magnitude of the containment required is unlikely to be attained by the application of short term fixes. Thus stickers on light switches, pruning the catalog or tinkering with faculty loads are unlikely to produce the desired long term result. The successful pursuit of long term cost containment will require a multifaceted approach extending beyond the single institution. Both the popular and professional presses have predictably responded with increased attention to much sought after but albeit slippery goals. With the bulk of contemporary higher education cost literature characterized as descriptive and focused on the short term, Simpson's contribution is a welcome addition. He offers a comprehensive, multi-tiered review of the broad spectrum of cost containment strategies that warrant consideration. His coverage is near cylopedic. Its breadth is unified by an ever-present regard for doing the right things in the long term. He rejects the more common focus on efficiency in resource consumption in the short term. The author addresses the obvious as well as the less apparent approaches to cost containment. Since many of the strategies visited are beyond the exclusive domain of individual constituencies or institutions, Simpson advocates an inclusive approach rather than confrontational in shaping cost containment strat-
egies. Thus all constituencies with perceived stakes in the enterprise should be involved. Inclusion is portrayed as a powerful tool in maintaining quality while containing cost. Simpson's discussion of cost containment is divided into 14 chapters. Each chapter presents a cluster of strategies that share a common locus or theme - - institution, interinstitutional, governmental or societal. The range of strategies visited at each point of convergence is similarly broad. Many strategies discussed are clearly beyond the control of the institution. For example, the first chapter entitled "Strategies of a Philosophical and Political Nature" briefly critiques strategies propelled by conservative and liberal social perspectives. Subsequent chapters include strategies best pursued in a national context. Some of which will surely evoke controversy. One that is both familiar but sure to prompt heated debate would establish rigorous preconditions for admission to post secondary education. Another less familiar approach but also likely to lead to controversy would require individuals who have borrowed for their education to share responsibility for their cohort's obligations as well as settling their own. Such an approach is obviously beyond the control of the institution and requires national legislation supported by massive consensus.
There is ample representation of strategies within the individual institution's influence. There are chapters discussing a range of cost benefit, operating costs and capital outlay strategies. Seventeen approaches to controlling faculty expenditures are presented. Included are the obvious such as freezes and attrition, early retirement, workload factors and the use of part-time faculty. His discussion of part-time faculty is characteristic of his approach to the numerous strategies presented throughout the book. Simpson considers t h e opportunity costs inherent in the strategies addressed. In the case of part-time faculty what the institution may gain in flexibility, it may lose in faculty loyalty as well as other intangible assets. Cost Containment for Higher Education should attract a wide readership among higher education students and practitioners. Both categories of readers will find Simpson's extensive bibliography an invaluable resource for negotiating the existing literature base as strategy sets tailored to specific environments are crafted. W. PATRICK LEONARD
Purdue University North Central
The Economics of American Higher Education. B y WILLIAM E . BECKER a n d DARRELL R . LEWIS ( e d s ) . B o s t o n : K l u w e r A c a d e m i c P u b l i s h e r s , 1992. p p . v + 349. P r i c e : U . S . $ 7 1 . 5 0 (cloth). IN RECENT YEARS a growing number of academic economists have been turning their attention to an industry that
Book Reviews is close to home - - higher education. This volume presents useful reviews of a number of literatures dealing with subjects of interest not only to economists but to all concerned observers of colleges and universities in the U.S. and elsewhere. After an introduction, by the editors, James Hearn provides a long and stimulating examination of the teaching role of American higher education. For all but a small minority of our 3500+ non-profit institutions, teaching is the premier function. However, in the popular mind, and in the minds of many faculty, research has been replacing teaching as the most important higher education activity. Hearn supplies a very interesting historical perspective on the image and the reality of the teaching role and discusses prospects for change. Edward Schuh and Vernon Ruttan next turn our attention to the research and service missions of the university. Their broad overview touches on questions dealing with the value of research in the natural versus the social sciences and the changing role of university public service. Shifting to the perspective of an individual student, William Becker focuses on the private financial returns to higher education, as do Kevin Murphy and Finis Welch. Mark Berger disaggregates earnings data by major and Elchanan Cohn and Terry Geske examine non-monetary returns. There is a large and important literature on educational returns and these four papers provide an excellent introduction. While the causes of variation in returns over time are largely ignored, important facts - for example, that the economic return to college increased between 1963 and 1971, fell between 1971 and 1979, and increased again after 1979 - - are covered in some detail. It is also very helpful to examine returns to different majors. Berger's analysis is especially noteworthy for its look at the variation in returns by major at different points in the ageearnings profile.
427
The next section of the book contains four essays on the impact of higher education on regional growth. Chapters by Tim Smith and Mark Drabenstott and by Larry Leslie and Sheila Slaughter review an intriguing literature while a piece by Rebecca Goodman and William Weiler contains a new empirical study of the in-state income and employment effects of federal research grants. Goodman and Weiler find that the total employment increase in Minnestoa is at least 250% of the direct employment of research personnel at the University of Minnesota. This section concludes with a chapter by Roger Geiger reviewing the literature on the link between private and university research. Of particular note is the discussion of new organizational arrangements that have appeared over the past few years. The volume ends with the issue of equity, as Melissa Anderson and James Hearn ask the critical question: What is the distribution of higher education benefits across socioeconomic, gender, and racial groups? Their literature review produces a mixed answer. By their criteria, gender and race have only small effects on college outcomes, although socioeconomic status continues to play an important role in whether a student receives the benefits that higher education has to offer. There are many aspects of the economics of higher education that this volume ignores - - educational production functions, student choice analyses, and institutional response models, among others. But anyone interested in such important issues as the monetary and non-monetary returns to higher education, the impact of higher education on regional growth, or the tension between teaching and research, will find much of interest in this volume. M O R T O N OWEN S C H A P I R O
University of Southern California