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Universities:Excellencevequity|TheEconomist

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Excellencevequity

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TheAmericanmodelofhighereducationisspreading.Itisgoodatproducing
excellence,butneedstogetbetteratprovidingaccesstodecenteducationata
reasonablecost,saysEmmaDuncan
Mar28th2015| Fromtheprintedition

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stagnation.Inthecaseofhighereducation,whichhasbeendominatedbyAmerican
universitiessincetheearly20thcentury,youwouldbequitewrong.Itgrewslowlyforthe
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veryoddaboutthemarket.Inthecaseofhighereducation,youwouldberightonboth
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Americagavetheworldthemodernresearchuniversity.TheAmericaneliteimportedthe

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modeloftheOxbridgecollegeinthe17thcenturytogiveitsroughsonsapolish.In1876the
trusteesoftheestateofJohnsHopkins,abankerandrailroadmagnate,decidedtouse

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whatwasthenthelargestbequestinhistorytomarryuptheOxbridgecollegewiththe
researchuniversity,aninstitutiontheGermanshaddevelopedatthebeginningofthe19th
century.Bothprivateandpublicuniversitiesadoptedthemodel,andHarvard,Yale,

Mostcommented

Princeton,CaltechandtherestofAmericastoprankemergedastheprimemoversofthe

worldsintellectualandscientificlifeshortlyafterwards.
Theseinstitutionshaveproducedastartlingnumberofthe
inventionsthathavemadetheworldsafer,morecomfortable
andmoreinteresting.Imaginelifewithoutpoliovaccinesand

Specialreport
Excellencevequity

heartpacemakersormunicipalwaterpurificationsystems.

Topoftheclass

Orspacebasedweatherforecasting.Oradvancedcancer

Apearlinthedesert

therapies.Orjetairliners,wroteabunchofAmericas

Mixandmatch

businessleaderstoCongressin1995,pleadingwiththe

Aflaggingmodel

governmentnottocutresearchfundingtouniversities.Since
then,thoseinstitutionshavealsopoweredthedigital
revolutionthathasimprovedlifeineverycorneroftheplanet.

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http://www.economist.com/news/specialreport/21646985americanmodelhighereducationspreadingitgoodproducingexcellence

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4/19/2015

Universities:Excellencevequity|TheEconomist

Americaledtheworld,too,increatingmasshighereducation.

Sources&acknowledgments

Thattransformationwasdriveninpartbytheeconomysneed

Reprints

forhigherskillsandinpartbysocietysdesiretogivethemen
whofoughtinthesecondworldwarachancetobetter
themselves.Americathusbecamethefirstcountryinthe

Relatedtopics

worldinwhichthechildrenofthemiddleclasseswentto

Collegesanduniversities

college,andcollegebecameapassporttoprosperity.

Education

Givenitssuccess,itishardlysurprisingthattheAmerican
approachtohighereducationisspreading.Masseducation

Highereducation
UnitedStates

hastakenoffallovertheworld.TheAmericanstyleresearch
universityisthegoldstandard,andcompetitionamongnationstocreateworldclass
researchuniversitiesasgoodasAmericasisintensifying.Spendingonhighereducationis
rising:acrosstheOECD,from1.3%ofGDPin2000to1.6%in2011.Provision,financing

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andcontroleverywhereismovingawayfromtheEuropeanmodel,whereeverythingis
donebythestate,towardstheAmericanone,inwhichtheprivatesectorprovidesalarge
partoftheeducationandindividualspayformostoftheirtuition.
ButjustastheAmericanmodelisspreadingaroundtheworld,itisstrugglingathome.
Americasbestuniversitiesstilldomoretopclassresearchthananyothercountrysthe
problemliesingettingvalueformoneyontheteachingside.Testssuggestthatmany
studentsdonotlearnenoughthesedays.Theyworklessthantheyusedto.Theaverage
performanceofAmericasgraduates,comparedwiththoseofothercountries,islowand
slipping.Highereducationdoesnotincreasesocialmobilitybutreinforcesexistingbarriers.
Atthesametimecostshavenearlydoubledinrealtermsinthepast20years.The
enrolmentrateisfalling.Technologyoffersthepromiseofmakingeducationbothcheaper
andmoreeffective,butuniversitiesresistadoptingit.
Thisspecialreportwillarguethattheproblemsspringinpartfromthetensionsattheheart
ofhighereducationbetweenresearchandteaching,andbetweenexcellenceandequitybut
thattechnologyandbetterinformationcanhelpmaketheteachingsideofthebusiness
moreeffective.America,havingexporteditsmodeltotheworld,couldlearnsomelessons
fromothercountriesabouthowtoimproveitsownsystem.
Howmuchistoomuch?
Everybodysgettinsogoddameducatedinthiscountrytherellbenobodytotakeawaythe
garbageYoustandonthestreettodayandspit,youregonnahitacollegeman,says
KellerinArthurMillersplay,AllMySons,writtenin1946.HighereducationinAmerica
startedtospreadfromtheelitetothemassesasearlyasthe19thcentury,withthe
establishmentofthelandgrantuniversities,butgotitsbiggestboostwiththe1944GIbill
thatpaidservicementogotocollege.
WhathappenedinAmericathenhappenedinEuropeandJapaninthe1960sand1970s,in
SouthKoreainthe1980s,andisnowhappeningtheworldover.Studentnumbersare
growingfasterthanglobalGDP.Sohungryistheworldforhighereducationthatenrolment
isgrowingfasterthanpurchasesofthatultimateconsumergood,thecar(seechart1).The
globaltertiaryenrolmentratiotheproportionoftherespectiveagecohortenrolledin
universityincreasedfrom14%to32%inthetwodecadesto2012thenumberof
countrieswithanenrolmentratioofmorethanhalfwentupfromfiveto54overtheperiod.
SubSaharanAfricaistheonlypartoftheworldwheremassificationisnotmuchin
evidenceyet.
Somecountries,suchasSouthKorea,whereprettymucheverybodygoestouniversity,
haveprobablyreachedsaturationpoint.Othersarestillseeingphenomenalgrowth.In
China,studentnumbersgrewfrom1mto7min19982010.Inthedecadeto2009,Chinese
universitieshirednearly900,000newfulltimefacultymembers.Thecountrynowproduces
moregraduatesthanAmericaandIndiacombined,andby2020aimstoenroll40%ofits
youngpeopleinuniversities.
Allovertheworldlabourmarketchanges,urbanisationanddemographyhavefuelledthe
boom.Theknowledgeeconomyhasincreasedthedemandforworkerswithwellfurnished
minds.Whenpeoplegotoliveincities,universitiesbecomemoreaccessiblesomore
peopleattendthem.Risingnumbersofyoungpeoplehavefuelledtheboom,and
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especiallyinArabcountriescombustible
politicsincreasetheneedtooffer
opportunitiestoteenagers.
Inmostcountriesthenumberof18to24
yearoldswillshrinkinthenexthalfcentury,
butthedemandforhighereducationseems
likelytomorethancounteractthat
demographiceffect.SimonMarginsonof
UniversityCollegeLondonsInstituteof
Educationreckonsthatthetendencyto
growthofparticipationinhighereducation
appearstohavenonaturallimitoncea
countrysGDPperpersonrisesabove
$3,000.
Thelawsofsupplyanddemandsuggestthatthisvastincreaseinthenumberofgraduates
shouldreducethereturnoninvestmentinadegree,andtosomeextentthatseemstohave
happened.Byandlarge,thereturntohighereducationishigherinpoorcountriesthanin
richones(seechart2),exceptintheMiddleEast,wherehighenrolmentcombinedwithlow
growthhasledtohighgraduateunemployment.HarryPatrinos,theleadeducation
economistattheWorldBank,reckonsthatglobalisationhasincreasedthechancesforwell
qualifiedpeopleinpoorcountriesofgettingagoodjob.
Intherichworld,eventhoughnearlyhalfof
youngadultsaregraduatesandnumbers
arecontinuingtorise,thegraduatepremium
(thewagedifferencebetweenthosewithand
thosewithoutdegrees)hasremainedhigh
enoughforittobeworthgoingtouniversity.
Partoftheexplanationmaybecredentialism
insomerichcountries.Themorepeople
havedegrees,themoreemployerswillinsist
onrecruitinggraduates.Inmanycountries
jobssuchasteachingandnursing,which
didnotrequireadegree30yearsago,are
nowreservedforgraduates.Whenjusta
smallelitewenttouniversity,plentyof
decentjobswereavailabletothosewithonly
secondaryschooling.Thatisnolongertrue.
Butchangesinthelabourmarketalsohelptoexplaintheevergrowingpressuretogeta
degree.AutomationhascreatedwhatClaudiaGoldinandLawrenceKatz,twoHarvard
academics,havecalledaracebetweeneducationandtechnologywhichonlythosewith
plentyofeducationwillwin.Asautomationdepresseswagesatthebottomofthepile,
inequalitygrows,andthemoreunequalsocietybecomes,theriskieritisnottohavea
degree.Forallthestoriesofuniversitydropoutswhobecamesoftwarebillionaires,non
graduateshavelittlechanceofjoiningtheranksoftheprosperousfew.
Asfirstdegreesbecomestandard,morepeoplearegettingpostgraduatequalificationsto
standoutfromthecrowd.InbothAmericaandBritain,14%oftheadultworkforcehavea
postgraduatedegreeanddespitetheincreaseinsupply,thepostgraduatepremiumhas
increasedinbothAmericaandBritain,especiallysince2000.Therewasatime,pointsout
StephenMachin,professorofeconomicsatUniversityCollegeLondon,whena
postgraduatedegreedepressedwagesbutthatwaswhenmathsPhDsworkedmainlyin
academia,notinthefinancialsector.
Althoughindividualsenjoydecentreturnstotheirinvestmentinhighereducation,itisless
clearthatsocietyasawholedoes.Thebigquestioniswhetherthegraduatepremiumisthe
consequenceofhigherproductivityorofestablishingapeckingorder.Ifuniversities
increasepeoplesproductivity,thensocietyshouldinvestinhavingmoregraduates,butif
theyaremerelyamechanismforsignallingtoemployersthatgraduatesareclevererthan
http://www.economist.com/news/specialreport/21646985americanmodelhighereducationspreadingitgoodproducingexcellence

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Universities:Excellencevequity|TheEconomist

nongraduates,thenitshouldnot.Andsincelittleeffortgoesintomeasuringwhether
universitiesactuallyeducatepeopleamattertowhichthisspecialreportwillreturn
societydoesnotknowwhetherinvestingineducationisworthwhile.
Evenifthesocialreturnsoninvestmentinhighereducationwerepoor,therewouldbea
strongpoliticalargumentforthestatetoprovideaccesstoit.Ifpeopleneedadegreetoget
ahead,thendemocraticgovernmentsmustoffereverybodywithsufficientbrainsachance
ofgettingone.Themarketalonewillnotlendmoneyatareasonableratetostudentswho
canprovidenosecurity,soevengovernmentsthatrelyheavilyonprivatefinancetendto
offerloanstostudents.
Butaccesstohighereducationisnotbinary.Someprovisionisexcellentandsomeisnot,
andthereturnstolowqualityhighereducationarepoor.Sotheambitionexpressedby
prettymuchallgovernmentseverywheretowidenaccesstogoodqualityhighereducation
conflictswithanotherglobalforce:competitiontocreatethebestuniversities.
Fromtheprintedition:Specialreport

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