Tag Archives: Higher education

But what’s it for? An alternative to the monetarist valuation of University education

When an academic starts talking about the University system, you know straight away that there is a risk of the discussion becoming so self referential a reader would need an endoscope to appreciate the arguments. Having last week laid out a critique of the statistical underpinning of the recent Grattan Institute report on University funding (More Pennies for your thoughts – 28/09/12), however, I find myself compelled to do just that, in the spirit of addressing the essayist’s dilemma of “well its all very well to criticise, but what’s your alternative?”

So if I would pull down the monetarist temple that Andrew Norton, higher education programme director at the Grattan Institute, wants to build on the foundations of our Universities, what would I have us put in its place, and why?

Norton argues that fee increases would not impact on the decisions of individuals to attend University because:

“…a financially-based motivation cannot explain why so many students with good ATARs [scores in Australia’s University entrance examinations] choose humanities and performing arts, which have relatively poor employment and income outcomes.”

I suspect the inference drawn here is correct – University students in Australia, including the more intellectually gifted among them, often choose courses on the basis of personal interest or intellectual curiosity. Personally I hope this long continues…but I don’t think Norton sees things the same way. Rather, he seems to see this as an anathema – clever students with the potential to make money for themselves choosing to do something without an obvious net cash benefit? Like a Vulcan anthropologist on Star Trek, unable to understand this strange propensity of humans to undertake study that is not in some way to their immediate and personal financial advantage, Norton effectively proposes an experiment whereby we massively increase the economic cost on the individual, and then see how many people still behave ‘inefficiently’ in choosing to study on the basis of silly little things like social conscience or a desire to broaden themselves intellectually.

I have a number of intelligent and talented friends who have chosen to attend University later in life for reasons other than economic enrichment. One, after a youth spent traveling and teaching in Asia, chose to study for an education degree so he could apply his acquired wisdom to the inspiration and development of Australian school students. Another, a recent arrival in this country herself, is completing a degree in social work because she wants to help the disadvantaged and disenfranchised in our society. Would we really be better off as a nation if these people were to take courses in business management instead? Or give up their dreams of study to work waiting tables in a cafe?

Entangled with this question of why we undertake University education is the issue of exactly what the benefit is that we take from the experience. Norton argues that the value derived from a University degree arises from the combination of training – extra capacities graduates gain at university that they could not otherwise obtain – and signaling – in the form of a credential that distinguishes them in the labour market.

The concept here of being ‘distinguished’ in the labour market is particularly interesting in the context of drives to increase the uptake of tertiary education in our already relatively educated and well-trained population. It may have been true that a university degree was a significant badge of merit – a ticket, perhaps, to the inner circle of a stratified meritocracy – at the time of Australian Federation, when the 2,652 University students in the country represented around 0.2% of the young adult population. Or even on the eve of World War 2, when 14,000 students accounted for around 1% of the equivalent group. That badge begins to lose its lustre though as the University participation figure nudges 30% in the first decade of the 21st century (on the back of 757,000 students), and the Australian government is targeting 40% degree qualification in the adult workforce by 2015.

If you’re at the bottom end of that 30-40%, its unlikely you’re going to see much of a premium on your employment worth from that particular line in your CV. In the comically evil words of Buddy Pine/Syndrome in the Pixar movie ‘The Incredibles’ – “When everyone’s super – no-one will be”.

So what of training? Does university make people smarter? I would say no – it certainly gives an opportunity to apply intellect, but I doubt a graduate is any more gifted in terms of naked intelligence than they were the day they matriculated. Does it provide skills that will be useful in the workplace? Sure – but wouldn’t working for three to five years do that too? Or job-specific training? Seriously, if your primary interest is a desire to develop work skills and business acumen – and I can’t stress this enough – the best path I could recommend would be to get a job, apply yourself with rigor and passion, and seek guidance and advice from figures in the industry who you respect and admire.

Outside of the handful of specific professional University degrees (we’re talking law, medicine and their ilk, and perhaps technical science fields to some extent), I seriously doubt there are many learning experiences at University that could not be replicated – even bettered – through professional experience and mentoring. Major companies routinely employ top graduates as the core talent of their future workforce – and then what? They don’t say “right graduate boy (or girl), off you go to work”. No, they induct their new hires, retrain them, and teach them how to do a job – sometimes over a course of years.

So what am I saying here – is University a waste of time and money we should be steering kids away from? No – on the contrary, I see university education as a huge and life enhancing benefit to the individual that everyone should aspire to undertake at some point in their lives. With my heart on my sleeve I say that this experience should be freely available to anyone on the basis of their intellectual and emotional readiness to benefit from it – but with an economic realist hat on (albeit one tilted at a deliberately subversive angle), if society cannot afford the luxury of free education, the individual should pay, and should value and appreciate the opportunity their money is buying. So far I suspect Norton is nodding his head in agreement and mumbling “that’s what I said” – but where I think our perspectives really start to diverge is that I am not convinced that the benefits derived from University education are financial, and I think to sell it as such is dishonest and degrades the university experience.

“But…but…” stutters my inner Norton, his eyes widening in incredulous disbelief, “If you discount the economic benefits of a degree, what are you left with? Three (or four, or five) years of lost earnings and opportunity for career progression. Why on Earth would anybody choose to do that?”

University education is a sensational opportunity if – and this is the critical caveat – if you want to learn and to invest of yourself (your time, your energy, your intellectual capital) in doing that. It’s an opportunity to interact with and benefit from the wisdom and experience of brilliant and creative people, a chance to get exposed to new and challenging ideas. A chance to think deeply about who you are, who you can be, and how our society operates – what our values are, and what they should be. Yes, I’m approaching this from a biased perspective in that I would happily admit to valuing philosophical novelty and intellectual discourse above a newer car and a designer watch. But as long as I’m open about that perspective – and don’t try to pretend my views are some kind of universal truth you’d be crazy not to appreciate – you can judge for yourself the validity and relevance of my comments.

When it comes down to it, how many graduates in my own field of geology does does society ‘need’? The current situation in Australia is somewhat anomalous – with a rampant resource sector almost desperate enough to hire anyone able to differentiate a rock from a hard place – but any reader with the barest grasp of history should appreciate that this white-hot demand is a temporary aberration. Here’s the thing though, I still think more people – as many as possible – should study geology. Fundamentally, I’m not training people to log drillcore, or even to design mineral exploration programmes – although my teaching will place you in an intellectual space where both of these things will be supported – I’m trying to engage people in understanding the processes that shape the Earth.

At the recent quadrennial International Geological Congress meeting in Brisbane, I attended a public forum in which mining and resource ministers from several countries – including our own – were addressing the future resource needs of a growing global population. We shouldn’t lose sight of the fact that decisions – important, far-reaching decisions – are being made by governments all around the world today about this sort of issue – how to balance economic and social needs against environmental quality, traditional land use, and other amenity values. These decisions will affect you, me, our kids – all of us – long into the future. Do you really want to base your views on these issues on what Alan Jones says? Or Tony Abbott? Or Bob Brown for that matter? Seriously, if you want to engage in these debates and hold the decision makers to account, understanding the function of Earth systems should concern you deeply. I want to see an educated population able to, in that finest of Australian political traditions, “keep the bastards honest”.

Therein lies the true benefit of University education to an open and democratic society – producing an intellectually engaged, thoughtful populace ready and able to debate values and issues of significance from myriad perspectives, and contribute the societal wisdom needed to steer our nation, and indeed our planet, through the challenges of the future.


More pennies for your thoughts? University fees and the Grattan report

“Graduates…have attractive jobs, above-average pay and status. They take interesting courses and enjoy student life. I think they are getting a bargain compared with their lifetime earnings potential.”

So says Andrew Norton, higher education programme director at the Grattan Institute, in his recent report ‘Graduate Winners: Assessing the public and private benefits of higher education’. Norton’s principle thesis is that graduates, rather than society as a whole, are the beneficiaries of higher education – and should therefore pay more, potentially much more, of the true costs involved in providing that education.

Discussion around the funding of higher education is important. Indeed, I would agree with Norton that a university education provides graduates (and even those students who do not graduate) with significant opportunities and benefits, so it is fair to question the degree to which an individual should contribute to the costs of that educational experience. But to follow the accounting approach laid out in the Grattan report is to cede an argument that should be philosophical and sociological to the realm of economics. It’s like the old logical fallacy “So have you stopped beating your wife yet?” By adopting the neat rhetorical device of comparative earnings, Norton and others like him are attempting to make the debate about quantifying the benefits graduates accrue, rather than what a University education is really for.

For all it’s careful analysis and sound-bite friendly calculations though (quotable statistics are a much easier sell than philosophical nuances, after all), when you look behind the numbers, Norton’s study is founded on what may be a less than secure foundation – the assumption that the higher lifetime earnings (and other benefits in relation to the general population) of graduates arise explicitly because of the degree they have obtained. But hang on a second, let’s unpack that assumption – because what Norton seems to be doing here is committing the schoolboy error of a equating correlation to causation.

How so? Well, are the higher earnings of graduates truly related to their University education, or are both simply related to another controlling variable? Since the 1950s, by way of analogy, both atmospheric CO2 and obesity levels in Australian society have increased sharply. To imply a causative relationship would be to suggest that in some way atmospheric CO2 causes obesity – as if we’re all just making our own carbohydrates directly through photosynthesis, perhaps – whereas in reality both are symptomatic of the common controlling variable of increased wealth.

In essence, the problem for Norton here – as he himself recognises in the inner workings of the report – is that the comparison between graduates and non-graduates is not unbiased. Yes, there are wonderful success stories of prodigiously driven, inspirational individuals who forgo the graduate path to achievement – stand up and take a bow Richard Branson and Steve Jobs – but in general, merit-based entry criteria mean that it is a brighter, more ambitious, and more self motivated cadre that undertake University education. If we also assume that career and business success correlates strongly to the same aspects of intelligence and drive, then it should not be a surprising observation that graduates are in the top bracket of career earners. How, then, do we calculate how much of the extra earning of graduates should be attributed to their University education, and how much to their innate ability?

Now here’s where I’m eternally grateful to Norton because, like a magician revealing how the illusion is performed, he tells us how it’s done. Admittedly in an appendix where an over-worked education reporter with a filing deadline to meet isn’t exactly likely to stumble across it. He assumes a number. Empirical basis? Scientific calculation? Theoretical underpinning? Nope. An arbitrary 10%. We’ll just assume University graduates enjoy a 10% earnings advantage due to their innate ability, and the rest of their career success is the result of their University experience.

Now, yes, this assumption is critical to make the calculations tractable so Norton can come up with his headline-grabbing $600,000 lifetime earnings differential…but the flip side is that the modeling is then simulating an artificial system rather than the behaviour it purports to capture. It’s like the old joke about a physicist charged with figuring out how to increase the milk production of a herd of cows, whose solution begins “First, assume a spherical cow…”

Norton does allow in the appendix for alternative calculations with an ability premium of up to 40%…but why stop there? Why not 50%? Or 100%? Or maybe they start with a premium of 150% but all that ‘student life’ they enjoy actually stunts their achievement. Okay I may be guilty of reductio ad absurdum here – but the point is that the ability premium has no innate basis – it exists only for that convenient mathematical purpose. There is no way we can resolve whether 10, or 20, or 200% is the appropriate figure to use. Like a Chinese high speed train project then – the Grattan analysis is built to look impressive and modern, but laid on potentially insecure foundations.

Why is that important? Surely the comprehensive modeling and calculations Norton undertakes are sufficiently robust that the conclusions of the report can’t be undermined by this one trivial simplification, can they? I’m not so confident on that score.

Let me illustrate by way of a detour through my own professional back yard. Physicist William Thomson (later Lord Kelvin) – a towering scientific intellect acknowledged as one of the greatest exponents of thermodynamics of the 19th Century – ‘proved’ in 1862 that the Earth was somewhere between 20 and 400 million years old. Earth scientists of the day thought that figure far too young to account for the global history evinced by the geological record, but none could fault his calculations. Indeed, Thomson’s calculations were accurate – brilliant even – and still stand as a valid construction. But they produce the wrong result. Out by a factor of at least 10, with the Earth’s actual age – should you be interested – now measured to around 4.54±0.05 billion years. How can this be? Because Thomson based his workings on the simplifying assumption that the Earth lacks an internal heat source, when in actuality radioactive decay has been continuously pumping out heat throughout geological history.

Although numbers may look good when quoted in a nice banner headline, any calculation, no matter how exquisitely conceived and accurately undertaken, is only useful if the underlying assumptions are true.

The relationship between higher education and society is a social compact that should be open for ongoing discussion, and as a part of that, we should be debating how Universities should be funded. In that context, the Grattan report should be seen as an important contribution, offering a coherent and well argued monetarist view of how the University system should operate. But it is nothing more than that. And if you think the economic modeling Norton presents should be privileged over other philosophical and sociological viewpoints in the discussion of the University system…I have a friend in Nigeria who would like to talk to you about a fortuitous windfall he’d like your help with.