This post builds on Michael’s recent post.  I focus on two changes to the incentive system.  Al Roth shared the 2012 Nobel Prize (with my colleague Lloyd Shapley) for his work on mechanism design.   This subfield offers some clues for how to achieve our worthy goal of a better education at a relatively low cost.
1.  The University of Chicago’s Booth School of Business gives each MBA student a fixed amount of “currency” to bid on enrolling in classes.  Prices adjust so that the aggregate demand for each class equals the total capacity for the class (perhaps 60 people).  Professors receive a bonus and recognition if their course prices are high.   Students face key tradeoffs.  Do they pay a high price to take a class with Cochrane, Fama, or Goolsbee but then must enroll in “Average Joe” sections for their other courses?  Or, do they substitute away from superstar teachers and enroll in a set of very good classes?  Why can’t the UC campuses adopt some version of this?  Intro and intermediate classes have several sections.  At the upper division level, departments offer multiple electives that could be bench-marked relative to each other.   Today, the UC has an inefficient enrollment system that maximizes “mismatch”.  Each quarter, there are dozens of students signing up for my class  and then dropping out while dozens of other students send me sad emails about why they have always wanted to take my class but again they are locked out.  A price system would allocate the scarce resource efficiently as my classes would enroll the students who want to be there.   The time averaged market prices (perhaps over 3 years)  would give Deans the material they need to evaluate teacher quality.  An economist would allow students to buy more of the “course bidding currency” but I have the feeling that the RBC would oppose this.
2. A second idea for improving UC undergraduate teaching is to allow the campuses to set their own tuition.  Weak teaching institutions would charge a lower tuition price.  Each professor at the UC would be required to post a lecture (chosen at random by Oakland) to YouTube so that potential students could judge “the goods”.  The UC President’s Office could conduct some random audits where “students” sit in lectures and listen.  While of course academic freedom must be protected, such accountability audits would increase Professor effort.  With floating tuition, Deans would be incentivized to nudge Department Chairs and to invest more in Ph.D. graduate students who might have some skills as Teaching Assistants.  Department  Chairs would think harder about new faculty hires,  the assignment of incumbent professors to classes and the attributes of new admits to their Ph.D programs.   Rules matter!
The first-come-first-serve system causes all sorts of problems, including students being forced to enroll as 5th years. Is the currency allowances only good for one term, or can you save up?
Most of my teaching is in lecture formats, where enrollment caps are set by the *classroom size*, not by me or by some course-related resource. If the class is in high demand, it probably means that it should be moved to a bigger classroom, assigned more TAs, or offered more frequently. In this case, the “bonus” system seems to send a mixed signal—yes, it gives you an incentive to have a good teaching reputation so everyone wants to take it, but it also gives you an incentive to resist increasing the *supply* of seats in your class. Why would I agree to teach *two* quarters of Awesome Studies 101, when restricting it to *one* quarter means I get a price bonus?)
Two thumbs up on this:
The University of Chicago’s Booth School of Business gives each MBA student a fixed amount of “currency†to bid on enrolling in classes.
Gee, you flipping think?
I mean, we could maybe imagine some sort of system where better grades, participation in campus activities, or community service could yield a marginal reward in course-bidding-currency (though the latter two would massively prejudice against students who have to support themselves with part-time work, which in any case also affects grades). But institution yet another way in which the rich have not merely more money but also more educational opportunity than the poor, even at the same school? Why would you even mention such a notion, save to exclude it far more forcefully than merely noting the dirty hippies in the comments wouldn’t like it?
Tuition already varies from school to school, though not in a way that obviously correlates with the relative prestige of the campus; some examples:
UC Berkeley $15,222 in-state, $38,100 nonresident
UC Irvine 22,878 in-state, $36,924 nonresident
UCLA $14,498 in-state, $37,376 nonresident
UC Merced $13,070 in-state, $35,948 nonresident
UC Riverside $13,869 in-state, $36,747 nonresident
It’s possible I’ve misunderstood some web pages (those are from different universities’ differing pages), but the obvious lessons are that (1) different U of C campuses can already set their own tuitions, at least within market ranges; (2) they don’t do so to correlate price with quality or prestige; and (3) Irvine hates Californians, unless I’ve misunderstood their web page.
Variation across campuses is due to campus-based fees passed by student governments to fund their own projects. I wonder if (average) financial aid awards vary by campus, though. I’m pretty sure they do.
“An economist would allow students to buy more of the “course bidding currency†but I have the feeling that the RBC would oppose this.”
An economist who doesn’t think the student has a contract with the university to offer him or her an education and access to credentials on a basis of equality with other students, perhaps?
In traditional fairgrounds, nobody pays to enter and customers pay for the rides. In Disneyland and similar establishments, I understand customers pay once to enter but then the rides are free (popular ones are allocated by queuing). Paying for both strikes me intuitively as a scam.
It is perhaps worth noting that in Disneyland and similar establishments, you can now pay a surcharge for special admission that wafts you past the hoi polloi in their queues.
… also, that disputed claim about thoroughly disgusting people hiring disabled people to serve as their companions at Disney World, as apparently parties containing disabled people do not have to wait in queues.
I beat this kind of crap in the 1960s through quirks in the system. I could “audit” classes for a small fee. I did all of the course work and took the tests. Then I would “challenge” the class and usually have to take the final exam again. Cost a couple of dollars. I got credit for the overfilled classes without a problem.
Is it possible that there could be demand based on perceived ease of grading, rather than quality of teaching? In such a case, does that create an incentive for professors to make their courses easier rather than more useful?
I think the basic problem is that students receive more than one thing from a class: knowledge (useful for other classes / future work / personal satisfaction) and credentials (useful for awards / grad school admission). It is far from clear to me that demand for courses would all be based on the former and not the latter.
I’m not really sure how a point system such as Chicago’s would work in practice. I would imagine that this can make course planning hell for students if points are a scarce enough resource to make allocation matter (or be pointless — no pun intended — otherwise). I mean, even most of my graduate courses were dictated by factors other than which professor is offering them (limited options to choose from to begin with, research interests, prerequisites). My undergraduate options were even more narrowly circumscribed. In short, while this system seems a decent idea to manage supply/demand constraints, I am less than convinced that demand is primarily a function of the lecturer’s quality (which would be necessary for it to be used as a basis for evaluation).
As for using tuition to regulate, I don’t see any evidence that this would work. We already essentially have this at the national level, and it’s still not as though hiring committees seem to care one whit about teaching credentials.
> We already essentially have this at the national level, and it’s still not as though hiring committees seem to care one whit about teaching credentials.
I’d guess that would be because they don’t consider teaching to be the main function of the university, measuring teaching ability isn’t easy, and isn’t the main thing on which an institution’s reputation is based. But I just read an interesting and possibly relevant article, which touches on teaching elsewhere:
The $4 Million Teacher
tl;dr version. Korean High School students, looking for an edge on standardized tests, pay for help via evening schools, and get to pick which teachers interest them. One teacher is so popular that 150,000 students each year pay to use his videos (think Khan Academy, only not free). In this case, the only that seems to matter is the reputation of specific teachers. Institutions fire teachers who aren’t able to get students.
It’s a radically different model than we use in the US, where students rarely get to choose their teachers. Not sure how that would work at the university level, but it would sure incentivize better teaching lower levels, assuming parents paid attention (which they often do).
NYU Law also has a bidding system for courses, and it seems to work pretty well.
The point of mechanism design is to solve problems. What are the problems Matthew is trying to solve? I think the answer to that reveals why people are so hostile to these ideas.
Let’s take the UC system first. If you’re an economist, and so a hedonist fixated on nothing but your own short life and its pleasures, charging wildly different prices per campus may seem like a great idea. But to normal people, the goal of the UC system is not ONLY to educate this generation of students, it is to be a permanent and ever improving feature of California. Ever-improving requires some help to get started (ie substantial transfers across the UC system), and help that lasts a long time — over at least a generation or two. This is simply a fact about the timescales at which universities operate, acquire reputation, build up an alumni base, and so on. Switching to charging a high price enshrines a system where every college is locked in its place forever, and no new colleges ever get built again.
Next class pricing. What is the problem we are trying to solve here? Matthew (and commenters) bounce all over the place here but are never explicit.
There is one (very minor) problem for which this is a fair solution — we have a non-obligatory but very popular class taught by a charismatic teacher, which is already at its largest capacity possible. The current way of deciding who gets in is random, the new way of deciding who gets in will essentially take into account “degree of wanting the course”.
But I put it to you that that is a rare situation.
The real, the common situation, is what lurks in Matthews throwaway words: “The time averaged market prices (perhaps over 3 years) would give Deans the material they need to evaluate teacher quality.” And we’re back in the land of the economist who refused to learn from human history, no matter how many times he was taught it. We’ve been through this a dozen times in different professions. There ARE situations where monetary incentives will result in the behavior you want, for example the manufacturing of piecework which is easily subject to quality controls. But in more complicated situations calling for judgement, for balancing off alternatives, for situational behavior, the best alternative appears to be the maintenance of a strong professional ethic and the cultivation of pride in the profession. Or, to put it differently, once we institute Matthew’s regime and all that goes along with it, what stops the rampant pandering to the class, the easy course material, the grade inflation?
Likewise for the second part of the issue. Students think the only purpose of universities and professors is to give them a degree. But society is larger than students, and we have universities as well as colleges because we value the generation of new knowledge. In an ideal world, the same professors who are great at generating new knowledge would also, in their copious free time, be master teachers. In the real world, this is not so often the case and judgement and balance is called for. Those running the university have to decide whether it makes sense to retain people who have shown substantial skill on one side or the other of this divide, and they already have substantial information to make this call. Adding an exact number to the “quality of teaching” side of the ledger is not going to change the people available or their mix of skills; all it is going to do is provide more ammunition to short-term yahoos to complain and thereby hollow out the universities by replacing researchers with teachers.
Finally we have Matthew’s claim that “Each quarter, there are dozens of students signing up for my class and then dropping out while dozens of other students send me sad emails about why they have always wanted to take my class but again they are locked out.” This is a stupid and unfortunate situation and obviously one that should be changed, but Matthew does not address the issue of WHY it is occurring. Presumably the dozens of students who drop out of his class have problem with acquiring accurate information about Matthew’s class, and/or lack self-awareness as to their interests and capacities. How would Matthew’s pricing suggestion change that?
So: HOW EXACTLY will students make more informed decisions about classes in the new world? What information will be available for them to use? Why will the decisions being made based on crypto currency be better than the decisions being made today based on the very real currency of time?
How could things be improved? Matthew’s underlying assumption appears to be something along the lines of “Since it costs students ‘nothing’ to enroll for classes then drop out, they are doing so willy-nilly with zero thought paid to what classes they sign up for.” I strongly doubt this assumption, which comes across as very much like the “if MRIs are free, people will spend their free time getting MRIs rather than watching TV” claim of a certain segment of the population.
As a starting point for improving things, I’d like to see an analysis (performed by people with competence in the area, rather than armed with strong theoretical bias, perhaps anthropologists) of what classes people choose to take, why they choose to take them, and whether there is a strong remorse at the end of the course, end of the university career, and ten years after graduation, for taking those classes and not others.
Let’s start with some real knowledge about why students are making the decisions they are making (parents? what peers say? vague ideas culled from movies and TV? pre-requisites imposed by the university?) and whether those decisions are even sub-optimal before we start monkeying with the system.
Is it common for students to go through a pattern of hating at the time to be forced to study World History (or whatever) but five years later to be grateful they were forced to do so?
Is it common for them to take Freshman Econ as an elective and then, ten years later, to consider it to have been the biggest mistake they made at college considering the opportunity cost?
WHY do “dozens” of students choose to start Matthews course the drop out, and why should we believe that those who could not enroll would have stuck with it more so than those who dropped out? Does UC, for example, not provide preferential enrollment for students as they get closer to graduation, so that if you REALLY want the course you basically will reach a point in your trajectory through the U where you’re guaranteed to get it?
Which gets me to where we started. What is the university for, and what are the REAL problems with the course choices students are making? We need to answer that question before blindly claiming that money or crypto money or pseudo money or shadow prices or expressed utility or bidding or any of the other paraphernalia in the economist’s toolkit are actually relevant to the solution.
Economists are all hedonists…?
“Switching to charging a high price enshrines a system where every college is locked in its place forever, and no new colleges ever get built again.”
I don’t understand the logic that gets you here. When businesses charge high prices, that’s an opportunity for a new business to start up and undercut them. Are you saying that the UC system needs to prevent that?
“There is one (very minor) problem for which this is a fair solution — we have a non-obligatory but very popular class taught by a charismatic teacher, which is already at its largest capacity possible”
Why is that the only problem for which differential charging is fair? What about the classes that might be required? And why is that minor? I am aware of cases in which students have had to go for an additional year because they were locked out of required classes? Is the “fair” solution to bump somebody who has less of a need for the course, but who has already registered - and will consequently have to replan their entire schedule? I don’t think you have the data to proclaim it rare.
“But in more complicated situations calling for judgement, for balancing off alternatives, for situational behavior, the best alternative appears to be the maintenance of a strong professional ethic and the cultivation of pride in the profession.”
I think it this statement that smacks of refusing to learn from human history. A strong professional ethic is a wonderful thing, but in how many professions is this currently strong enough so as to guarantee that all practitioners are experts and never trade off quality for convenience or short-term gain. In every population there is a range of abilities and professionalism, and knowledge of who is most adept is valuable to those choosing which ones to patronize. Pretending otherwise only instutitionalizes mediocrity.
“Or, to put it differently, once we institute Matthew’s regime and all that goes along with it, what stops the rampant pandering to the class, the easy course material, the grade inflation?”
Oh good, something on which we agree.
I’d suggest that the inherent problem here is that the provider of the teaching also assesses affectively how well he has done. In order to prevent this, you’d need an outside assessor who plays no favorites among the teachers. Interestingly, there is some movement in that direction, as ETS and others are attempting to create independent assessments. If that works, it could well be an answer to the problem. Rather than looking at a student’s grades, grad schools, professional school and employers could rely on the independent assessments to see how well their candidates know the relevant material. That would not only make it more obvious who the best teachers are, but provide an increases incentive to focus on teaching, as opposed to shuffling it off on low-paid adjuncts.
“I’d like to see an analysis (performed by people with competence in the area, rather than armed with strong theoretical bias, perhaps anthropologists) of what classes people choose to take, why they choose to take them, and whether there is a strong remorse at the end of the course, end of the university career, and ten years after graduation, for taking those classes and not others.”
I think that would be very interesting, but I doubt it would have the same benefits as assessing how well students who take certain courses from certain instructors actually master the material.
The discussion of incentives and whether bidding on courses will in fact align outcomes to the goals of the university educational mission is fascinating.
But I was struck by what is almost a throwaway line in Matthew’s proposal: “Each professor at the UC would be required to post a lecture (chosen at random by Oakland) to YouTube so that potential students could judge `the goods’….” and its implicit assumption that the “goods,” the essence of the teacher’s task, is a lecture. This is a narrow view of both the teacher’s role and model of education. In some disciplines, like law school’s use of the Socratic method, or some business schools, where case-based education dominates, even in large sections, it is not even an accurate description of what the classroom experience is like. And in many other settings, there is increased use of what has come to be called the flipped classroom, where the didactic part of the educational experience - viewing a lecture, reading the material - is done outside the classroom and classroom time is reserved for a wide range of interactive activities, addressing specific questions student’s have about the material, applications, small group exercises that may then be shared with the larger group. Lectures are performance, and can play a role in education, but fundamentally it should be the student who is focus of the educational activities, not the lecturer or instructor.
Matthew’s proposal values the educational experience created by each instructor on the basis of the ex ante beliefs of the prospective student. It’s not even clear that immediate end of class evaluations represent thoughtful and accurate assessment of the value of a class. So if we are going to more highly value the faculty’s role as teachers in the UC system, it would be good to invest more effort in accurately assessing who is being more successful in educating students and sharing how they achieve their success.
FWIW, to fill in on “fairground pricing”: originally Disneyland charged a modest fee to get in, but at the same time you bought tickets for rides, which were priced differentially by popularity (an “E-ticket ride” was a phrase for something worth doing; A tickets were for the ones that got you the Small World boat ride). At some point this system was replaced by a single entrance fee; if this still exists I do not know.
My own belief is that the best time for students to rate courses is 2-3 years later; right after the course is worse, but not as bad as the rating they would be giving before they take the course (which is what this scheme would amount to).
I’m stunned that in an entire post about “improving undergraduate teaching,” there is zero discussion of the professional development of graduate teaching assistants or faculty. So where is an account of faculty learning? What mechanisms are in place that encourage instructors to “improve their undergraduate teaching”? This entire discussion seems to assume that teachers teach at exactly the same level of competence throughout their careers. And simply taking student enrollment numbers, in the absence of completion rates or better yet assessments of learning, seems to assume that both students and faculty are operating with the same set of narrow motivations and incentives. As Handley notes, there are a bunch of assumptions here, explicit and implicit, that seem to go unexplained and unjustified.
What information does a market price provide that (much more detailed) student evaluations don’t? Deans presumably already have access to these.