The college cost disease


When I was a boy, families put aside money in a college fund for their children’s higher education. A generation later it was called a second mortgage. Today we call it the college debt crisis. College debt in the country is now higher than credit card debt. The Economist reports that, since the 1980s, the price tag for attending college has increased 440 percent, almost twice the rate of growth in healthcare costs. Something has to change. And, of course, it will.

Economist William Baumol explains this in part by what he calls “the cost disease,” the resistance of some industries to the introduction of significant cost-reducing efficiencies on account of their labor-intensive nature. Assembly lines and robotics have reduced the cost of an ordinary car for an average American worker from 4,700 hours of labor in 1908 to 1,365 hours today. But it takes the same number of people the same length of time to perform Handel’s Messiah as it did 250 years ago. Baumol calls an industry “stagnant” where growth in productivity is between low and flat.

Falling costs of production allow wages to rise. But because wages in the rest of the economy are rising at a pace commensurate with the growing efficiencies of more “progressive” industries, the relative cost of what the stagnant industries produces goes up disproportionately. This is one reason college tuition has been rising so much faster than the rate of overall inflation.

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Consider again the Handel example. Though music performance is a “stagnant” industry, there are still concert halls, albeit priced out of the reach of most music lovers. But technological changes allowed people to hear music on the radio and records, then CDs, and now on MP3 players and the internet, though purists can still get their Beethoven and their Bruce Springsteen in person. The iPod will never replace the live concert, either in sound quality or overall experience, but the iPod brings music to people who would never otherwise experience it and in a form sufficient for their needs.

So how is higher education like music? The proper way to learn is dialogically from a master, face-to-face in a small circle with leisure among students of similar interest and ability for discussion and reflection. It’s labor intensive and can’t be rushed. But there are few people whose circumstances permit that kind of learning. So scholars write books. Colleges and universities can now offer some courses online to serve hurried degree-seekers, students hampered by children and full-time jobs, internationals, and people of marginal economic means.

As people come to see how injurious it is to begin a modest professional life with a mountain of college debt, they will turn in ever-greater numbers to the electronic alternative. And if the intimacy of the classroom is relatively unimportant to them, perhaps given their particular course of study, then all the more so.

I have not been to a concert in years. I am quite satisfied with the “Sunday Baroque” that comes out of my bedside radio-alarm clock. But there will always be some—more worthy than I—who will to pay the price to take in the real thing. The same is true of a college education.

D.C. Innes
D.C. Innes

D.C. is associate professor of politics at The King's College in New York City and co-author of Left, Right, and Christ: Evangelical Faith in Politics (Russell Media). Follow D.C. on Twitter @DCInnes1.


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