Democracy, meritocracy, and the rise of higher education (a review of Peter Mandler’s The Crisis of Meritocracy)

Peter Mandler’s title, The Crisis of the Meritocracy, led me to expect another, yet another, critique of allocating too much status, power and wealth on the basis of academic ability. But Mandler’s book is much more interesting than that. It is a rich history of post-WW2 education in Britain, highlighting how public attitudes and public policy interact, with neither ever fully controlling the other.

Meritocracy’s original antonym was aristocracy or other class-based systems of allocation. It aimed to restrict the role of inherited privilege in distributing social goods for which ability is relevant. Meritocracy matches people with education and jobs based on their demonstrated skill, achievement, or evidence-supported potential. This version of meritocracy remains commonly accepted, despite disagreements over exactly what counts as merit and how much other criteria should influence merit-based decisions.

Although meritocratic practices increased the average competence of workers, hopes that meritocracy would create a more egalitarian society have not been fulfilled. Mandler cites the early 20th century Christian socialist RH Tawney’s belief that, due to God’s providence, ability was randomly spread. If that was so, meritocracy would over a few generations dissolve the associations between family background and life outcomes.

Continue reading “Democracy, meritocracy, and the rise of higher education (a review of Peter Mandler’s The Crisis of Meritocracy)”

Remembering the Menzies we forgot (a review of The Forgotten Menzies)

Robert Menzies is, of course, far from forgotten. Despite his death in 1978 he remains a live presence in Australian politics. The Liberal Party he helped found lauds and fights over his legacy. Even Labor politicians invoke Menzies.

Stephen Chavura and Greg Melleuish’s book title, The Forgotten Menzies, nicely plays on the name of Menzies’ famous ‘forgotten people’ radio talk while alluding to one of their own key points. Australia’s longest-serving prime minister’s political achievements are well-remembered, but his worldview has faded from memory. It no longer aligns neatly with contemporary beliefs, complicating attempts to enlist him in current political debates.

Menzies was, as we all are, a person of his time. He was born in 1894 in Jeparit, a Victorian country town. His family were shopkeepers and evangelical Presbyterians. Chavura and Melleuish describe this as a world of ‘cultural puritanism’, in which independence, sturdiness, freedom, Godliness, duty and domesticity where all important values.

Continue reading “Remembering the Menzies we forgot (a review of The Forgotten Menzies)”

The longer-term effects of upfront discount rates

Rajat asks about deferral trends over time. The figure below is the percent of total student liabilities deferred 1989-2009.

Source: Higher Education Report 2009.

As you can see, the trend is consistent with discount rate having an effect. When it increased in 1993 from 15% to 25%, more people paid up-front and the deferral rate dropped. When the discount decreased from 25% to 20% in 2005, the deferral rate increased, ie fewer people considered it worth paying upfront.

The data is also consistent with the effect building over time. Continue reading “The longer-term effects of upfront discount rates”

Should the upfront student contribution discount be halved?

According to media reports this morning, the government is planning to cut the discount on student contributions paid up-front from 20% to 10%.

According to The Age’s version of things, ‘the government will justify the cut on the grounds that the benefit goes mostly to wealthy families.’

But contrary to common impressions, the discount was not intended as a benefit to anyone other than taxpayers. Because it is very expensive to lend money at zero real interest, students paying up-front can save the goverment money. In a couple of scenarios I did last year, for male arts and law graduates earning median incomes in professional or managerial jobs, it was slightly cheaper for the federal government to pay the discount than to pay the interest subsidy on the HELP debt.

However, the economics of the discount depend on how long students would otherwise take to repay. For quick repayers (or people who would pay upfront anyway), the government would be better off not giving the discount. If students are going to repay slowly, the discount looks like a better deal for taxpayers. Another factor is that up-front payment removes the risk of non-repayment.

Whether or not halving the discount makes financial sense for the government depends on the behavioural response. Continue reading “Should the upfront student contribution discount be halved?”

Why are English uni students going to be charged so much?

To great controversy, England is lifting the cap on university fees to £6,000, with charges up to £9,000 if access measures are put in place. To the government’s unpleasant political surprise, most are going to the full £9,000 from 2012. This is similar to the experience in Australia in 2005, when universities were permitted to charge up to 25% more than the previous HECS rates (except in education and nursing). Pretty soon all were charging the maximum fee.

While not all these fees are rip-off prices, given the cuts to tuition subsidies, I don’t think this is a very good outcome. Even on zero subsidy, in some courses £9,000 in income would translate into significantly more than cost, if Australian costs are any guide. So what’s going wrong?

Without being expert on English higher education, the mistake appears to me to be partially deregulating prices while regulating supply. In the UK as here in 2005, when the government restricts supply to well below demand it’s a licence to increase prices. If people want a degree, they will have to take what is offered even if it is over-priced (though we are yet to see if in practice demand will dip in the UK). Uncapping supply and letting new entrants into the system would create more pressure to keep fees down. Continue reading “Why are English uni students going to be charged so much?”

Our ‘over-enrolled’ universities

Some Vice-Chancellors will be relieved that tertiary education minister has issued a media release talking up the promised demand-driven funding system. It is an obvious savings measure for a cash-strapped government, with no parliamentary approval required for delay and few punters having any idea what it is.

Data released by Evans’ office (though not in the link above) can be compared to funding agreement data to see university ‘over-enrolment’ levels. Under a phase-in to the demand-driven system, universities can receive government tuition funding up to 10% more than their agreed amount for 2010 and 2011 (up from 5% under the previous government). For students enrolled above that, they get the student contribution amount but not any direct Commonwealth tuition subsidy.

Though we can’t directly extrapolate from student numbers to $ amounts, 23 universities have hit 10% undergraduate over-enrolment, and 7 have hit 20% undergraduate over-enrolment. Australian Catholic University is a staggering 41% over-enrolled. Across the whole system, over-enrolment is at 13%.* Continue reading “Our ‘over-enrolled’ universities”

Dubious ideas submitted to the higher education funding review, part 3

Of all the dubious ideas likely to be submitted to the higher education funding review, the most dangerous because most likely to be accepted is that deregulated supply – from next year, the Commonwealth is scheduled to abolish the controls that currently tell unis how many students to take and broadly what disciplines they will be in – should be combined with capped prices.

That however is the message of the higher funding review submission of the Innovative Research Universities lobby group.

For them the price per discpline would be simplified version of the current ‘cluster’ funding model, with many disciplines given the same funding rate, and a flat maximum student price.

It would be a blunter price mechanism than now when we need a sharper one. Continue reading “Dubious ideas submitted to the higher education funding review, part 3”

Dubious ideas submitted to the higher education funding review, part 2

It is quite plausible that there are public benefits from higher education on top of the private benefits accruing to graduates themselves. And there is an at least theoretically plausible argument that, in some cases, these public (and private) benefits may be under-produced if higher education was simply left to the market. This is a conventional market failure argument used to justify public subsidy of higher education.

But is it the case that taxpayers should fund public benefits even if there is no market failure? That seems to be the claim made in the Universities Australia submission to the higher education funding review. They tell us that:

McMahon [an American academic] concludes that the value of external benefits (excluding equity funding which is separate) to wider society beyond those appropriated privately through education by the former students themselves ranges from a lower bound estimate of public benefit of 37% to an upper bound estimate of 61% as a share of the total returns to education. Fifty per cent is close to the midpoint estimate. Universities Australia believes this can serve as a reasonable benchmark for discussion of the public: private benefit shares of higher education.

Later in the submission they call for this to be the basis for public funding: Continue reading “Dubious ideas submitted to the higher education funding review, part 2”

Dubious ideas submitted to the higher education funding review, part 1

With submissions to the higher education base funding review due on Thursday, some organisations are starting to put their ideas out into the media. I thought I would start an occasional series on dubious proposals made to the review (though I suppose this is just a more specific version of what this blog has been about since it started).

Behind the AFR‘s paywall is a story about the Australian Technology Network’s submission. They are suggesting that graduates who work in areas of skills shortage get a discount on their HELP debt repayments.

But generally where there are skills shortages the market deals with financial incentives: the pay goes up. And why should taxpayers rather than employers fork out when staff get more expensive?

The only example given is a rather sexist one, that female engineers should be given an added incentive to stay in the profession. The Beyond Graduation survey, of graduates three years out, found that engineering graduates were already earning good money (median salary $75,000) and had the second highest rate of income growth since their first job (63%). If there is a problem with women in engineering, I doubt it is money. A female engineering graduate isn’t likely to earn more doing something else. Continue reading “Dubious ideas submitted to the higher education funding review, part 1”

The increasing pass rate for international students

With renewed debate about ‘soft marking’ (Club Troppo here, my original post here, Catallaxy here), I revisited a post from last year about pass rates for international students.

Back then, I noted that international student pass rates had increased since 2006 after a long period of stability. In previous analysis I had taken stable pass rates as prima facie evidence that there probably wasn’t widespread or systemic increases in soft marking of fee-paying students as unis had become more reliant on their fees. But after 2006 that seemed to be changing.

We now have another year of data (appendix 4), which shows that domestic and international student pass rates are converging. The figures are for commencing undergraduate students, and the figures represent units passed/ (units passed + units failed + units withdrawn).

Continue reading “The increasing pass rate for international students”