Editors’ Publication of the Month: Higher Learning, Public Good

This month’s publication review was contributed by Stephen Minicucci, Director of Research Projects and Methodology, Consortium on Financing Higher Education (minisd@mit.edu). Steve reviews Higher Learning, Greater Good: The Private and Social Benefits of Higher Education, written by Walter McMahon and published by the Johns Hopkins University Press in 2009 (ISBN: 9780801884474).

Walter McMahon’s new book comes at a good time. His study is motivated by what he describes as a growing privatization of higher education, or what amounts to the same thing - declining levels of public investment. This use of the term privatization is refreshing, but it is somewhat different than we are used to from other public policy debates, so a few words on it below are appropriate. McMahon’s claim comes at the very moment when the United States is beginning to see the long-time advantage it has enjoyed in higher education erode and many of America’s competitors graduate more students from college than we do. In his first speech to Congress last February, President Obama alluded to the country’s stalled progress in higher education as “a prescription for economic decline” and called for “every American to commit to at least one year or more of higher education” (speech of 2/21/09).

What McMahon provides in this excellent study is a comprehensive set of economic tools with which to think about higher education public policy, and therefore, to evaluate the President’s goal. He works through a typology of the benefits of higher education—private and social, market and non-market, direct and indirect. We have a tendency to focus, to our detriment, on only one of these aspects: the monetary benefits that individual students gain through college. McMahon reviews the state of the literature as it pertains to this, but the great strength of the book is to outline how the benefits of post-secondary education extend far beyond these private economic gains and, especially, in giving the reader a toolkit for thinking about these other aspects. Besides raising their expected lifetime earnings, educating more citizens beyond high school can be expected to improve long-term health outcomes and overall levels of well-being for students, strengthen civic institutions, reduce crime, enhance democracy and political stability, and increase overall economic growth.

Back to privatization. This term is generally used to refer to the private provision of public goods, usually through an explicit public choice to outsource, as when your city hires contractors to pick up the trash. McMahon argues that the costs of higher education have shifted over time to fall more heavily on students and parents and that this, too, is a privatization. He is exactly right. As a society, we have undervalued the public goods nature of higher education and, as a result, have underinvested in it. McMahon estimates that slightly more than half of the benefits of higher education are public goods, but that three-quarters of the costs are borne by individual students and their families. (This figure is higher than many readers would have guessed because we routinely undervalue the time and lost earnings that students invest in their own educations.) This privatization is the central problem in higher education policy: not only does it lead to underproduction of the public good in question (an educated society); it also twists the mission of the academy toward market-oriented curricula and away from basic research.

This book should be of interest to institutional researchers, especially those working for public institutions. It provides a broad review of the literature in the economics of education and of “human capital” reasoning. The presentation within the chapters is broadly accessible to a numerate audience, and most of the technical material is placed in appendices. The book is fundamentally about public policy, and returns in the last two chapters to an extremely helpful review of current policy options, including a strong critique of the 2007 Spellings Commission report. The recurring theme of the book is information. Misinformation about the public benefits of higher education is the root source of the privatization problem. Getting better information out about the benefits of higher education is the best way to address this. This book certainly does this work for policy audiences (among whom I would count institutional researchers), but we still need books that can carry this argument to general audiences.

Many thanks to Steve for writing this book review.