Friday, February 14, 2014

Economics of Higher Education

The Economist on the new economics of higher education.  This is something that university management from the Vice Chancellor down needs to take seriously.  The traditional campus education has a lot to offer the student but the threats are real.

A good read for all academics and students

 Massive open online forces [Economist]

"Having invested in the production of a course, a provider’s incentive is to sell it to as many students as possible. After the initial cost is covered each additional unit sold is pure profit. A low price maximises registrations and profit. But as prices converge towards marginal cost, there will be little scope for undercutting the competition. Instead MOOCs are likely to compete on quality, Mr Tabarrok reckons. Higher production costs are a small price to pay to attract much greater numbers of students. Such markets often evolve into winner-take-all, “superstar” competitions. The best courses attract the most customers and profit handsomely as a result. In this respect online education may more closely resemble information industries such as film-making than service industries such as hair-cutting."

However, when reading this article it is worth having in the back of your mind where the "economist is coming from" -  "The publication belongs to The Economist Group, half of which is owned by Pearson PLC via the Financial Times."  Not surprisingly then they include the following paragraph:
"The market for textbooks already fits this description. New textbooks are costly to write and design but can be reproduced fairly cheaply. Not surprisingly, only four introductory economic texts account for half of the American market, according to Mr Tabarrok. Indeed, says Tyler Cowen, a co-founder of Marginal Revolution University, it is possible that textbook publishers are better equipped than universities to develop MOOCs profitably."
Watch out for the Pearson MOOC coming soon.   This is not to say they do not have a good point.

On the plus side, traditional redbrick universities such as the University of Birmingham should always be an attractive locations to study and there are many good arguments in favour of a traditional eduction but there is no doubt that the MOOC (massive open online courses) threat is real and is a threat that is likely to grow in the next decade.

The economist do get it spot on regarding the next generation of superstar "lecturers".  However, it must be noted that superstar lecturers are not always the same people as "superstar" researchers.

Traditional univresities need to be able to attract and perhaps more importantly retain the best of both if they are to continue to flourish.

                                               {Redbricks at the University of Birmingham}

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