Market Fail: UK Attempts at Marketisation Bring a Cascade of Troubles

Many articles over the past little while have been looking at the failure of government marketisation efforts in England. Following last year’s Browne Review (which recommended that university fee limits be lifted), the UK government dropped the policy bomb that universities had long feared—massive funding cuts (including 40% cuts to teaching), a drop from ￡7.1 billion to ￡4.2 billion, and a marketisation scheme to be implemented through raising the “cap” on tuition fees to ￡9,000 from ￡3,290. The idea was that universities would voluntarily differentiate their fee levels in order to capture different student demographics/groups, creating a quasi-market. However, when faced with the option of setting fees of "up to" ￡9,000, the majority of universities opted to charge the highest possible price. They did this in spite of the government’s threats to penalise them in various ways for inhibiting accessibility.

Why has the UK government's marketisation scheme failed so dramatically with regards to fee levels? Surely the less well-known universities knew that in claiming the maximum possible tuition, they would now be charging the same fee as heavyweights such as Oxford and Cambridge. The government assumed that universities would naturally want to compete for various student “markets”, relying on institutions to create an appropriate distribution. However, such a tactic doesn’t ensure that a market will emerge. That outcome still depends on the behaviour of individual institutions. Since universities operate in competition for prestige at least as much as for revenue (the two are closely connected), their “behaviour” as actors in a market is unlikely to mirror that of (e.g.) a pet food company or an automotive corporation. So the relationship between price and prestige is undoubtedly one factor in the equation; no-one wants to be a "low-cost provider".

In keeping with this logic, students do not behave like regular consumers when "shopping" for a university degree. They don't necessarily seek out what's affordable or reasonable in terms of cost; they are making an estimate on the future returns from their short-term investment, and education is not something that can be traded for a "better model" later on when one has more money to spend. Students are in a bind of their own, with those lacking present income being encouraged to take on debt in order to finance their future employability.

Lastly, it's very difficult to create “economies of scale” in education (in my opinion it can’t be done, but that’s a whole other blog post). Thus universities cannot easily expand enrolment while also keeping tuition low, offering "discount education"--though this has happened to a certain extent with for-profit, online providers, mostly in the United States.

Another important aspect of the UK government’s plan was to remove funding from teaching, already an under-valued aspect of university work (international rankings are based on research); and from what I understand, this funding was taken only from the arts, social sciences, and humanities. But it seems that that the very universities that depend most on those enrollments will now have to raise tuition even more to make up for the significant loss of revenue--more so than, say, a university focussed heavily on the sciences. Is the UK government asking students to pay more for degrees that they (the government) have demonstrably judged to be less valuable-? (NB, I don't personally believe that degrees outside STEM areas are less inherently valuable; but they are certainly less marketable according to the logic being employed.)

As it turns out, in most cases students will pay the same (increased) price for their degrees no matter where they choose to enroll; but clearly they won’t all be getting a better “product”. One reason is that the tuition money is replacing government funding that had been cut, rather than augmenting current income in order to increase “quality”. If the funding estimate of cost per student was considered insufficient to begin with, then it makes sense that universities would raise the level of tuition to the maximum possible (￡9,000). So it seems there might be a fundamental disagreement between universities and government about the “cost” of educating a student in a certain discipline or area of study (not a surprise).

On a more theoretical level, I don't believe it's possible for students to “receive” a uniform education since every person brings something different to, and takes something unique from, their educational experience.

Overall I think this is a good example of some of the problems with trying to marketise education as a “product” with an inherent economic/monetary value. Universities in Britain are now stuck between the proverbial rock and hard place: if they charge higher fees (i.e. above ￡6,000), they are more likely to be penalised by the government for inhibiting accessibility. The necessity for this stop-gap measure demonstrates the failure of the initial policy to establish the desired equilibrium. Such radical policy change within a short period is likely to have deep effects on the British universities, including changes to student decision-making and to the faculty workforce.

The absurdity of numbers?

A number of recent posts on Inside Higher Ed have highlighted national (U.S.) debates on post-secondary policy and its relation to Barack Obama's economic/policy plan. Obama has repeatedly emphasised the importance of education and research funding, even as the Tea Party have lobbied the Republicans to try to reduce funding. Meanwhile legislation has been introduced for the purpose of regulating private, for-profit career colleges, and it’s being battled every step of the way by the lobby groups associated with said colleges and by their political various allies.



All these developments relate in some way to the pressure to increase enrollments and "completion" rates—what some have referred to as the “completion agenda”—from post-secondary institutions. And that imperative is about developing a “knowledge economy”, so that the United States can remain competitive in the assumed global zero-sum game in which national prosperity is at stake.


In Canada, federal and provincial governments have taken up precisely the same strategy of pushing for more graduates, both in undergraduate and in graduate education (witness in Ontario the provincial Liberals’ goal to create 14,000 more graduate student spaces from 2002-3 levels, by 2010—see OCUFA, 2007).


Like others, I question the use of these kind of numbers as a means of gauging a nation's success at, or progress toward, developing a sustainable “knowledge economy”. Human capital may be available, but this doesn't mean that the “capital” will be put to use (i.e. that people, with their skills, will be able to find employment) in the immediate or near future. Are there sufficient job opportunities for those who make the “individual investment” in PSE, such that the investment will “pay off”?



The numbers conceal a potential over-production of graduates through the assumption that more college/university degrees automatically means more access to gainful employment for all those who graduate, as well as producing a more "innovative" workforce. (I've previously written posts about relative value vs. inherent value in education, and the policy implications.)

The focus on these numbers also hides the uneven quality of mass post-secondary education and the unequally shared burden of its increasing cost. For example, in the United States the for-profit career colleges often market to traditionally under-privileged groups who cannot access more prestigious institutions, but who ironically end up paying hefty tuition fees anyway—and finding themselves burdened with debt by the time their studies are over. It’s a debt they have trouble re-paying due to difficulties with obtaining appropriate employment after graduation.


Along with student “completion” comes the imperative to discover its causes, a search that has produced a whole range of new objects for measurement. One example is the project to measure levels of “student engagement” (gauged by the National Survey of Student Engagement, NSSE). Tests of student learning “outcomes”, and the development of standardised curricular goals, are also related to this process of environmental assessment.

Responsibility for failure must also be assigned, such as in this article where the author discusses reports that argue that “many American colleges are failing to graduate their students, at a time when the Obama administration and leading foundations are trying to ramp up the number of Americans earning a postsecondary credential.” So the university/college becomes a new target for critiques and for governmental interventions designed to ensure “quality” and positive “outcomes” for graduates.

In some ways, the obsession with numbers is really just a sign that education and its “products” are considered to be more important than ever—for their economic value—and thus they become, increasingly, sites of scrutiny for a plethora of “publics”, including not only governments but also parents, students, employers, and the media. But focussing on and rewarding outcomes, usually “completion” as either a proportion of the eligible age cohort or of the national adult population overall, means that institutions are more likely to implement “quick” technocratic fixes to what is generally a much deeper structural problem. Do we really need more graduates who are struggling to find work and to alleviate debts? How can we create a situation where these graduates are more likely to be solvent and employed upon, or shortly after, finishing their PSE courses?

A larger number of PSE graduates is only desirable, economically, if it produces the intended effect; but what we see instead could be an increase to the number of young people who are actually unable to participate fully in this economy even though they may technically possess the credentials for doing so. Unless this issue is addressed, the "production" of more PSE graduates is much less likely to benefit either the national economy or the individual graduates themselves.

Reference: OCUFA, 2007. Quality at risk: an assessment of the Ontario government’s plans for graduate education.

"What value for a degree?" Part 1: Relative Value

A friend of mine, who teaches at an English-speaking middle school in Hong Kong, recently asked me if I think too many people are going to college (university).

I think about this a lot, since completion and participation targets are often in the PSE news and in policy. I always find it a hard question to answer—partly because answer means asking ourselves about the purpose of a university education, and what precisely it is about university degrees that they are somehow assumed to equip young people with what it takes to succeed (economically) in the world. What is it that makes a university degree valuable and why is this important?

The focus for students, parents and governments is significantly economic, in policy and in practice—something that has become more the case over time as universities have moved towards “massification” (expansion) and more emphasis on private sources of funding (including tuition).

The benefits of post-secondary (and particularly university) education are expected to increase both the prosperity of individuals and the competitiveness of the national economy. So why is it important to question both the "graduation imperative" as economic policy, and the "accessibility" ideal as progressive social policy?

While in the past it was true that people who earned university degrees then went on to have more economic success, this was partly because university education was an elite education. No more than 5 to 10% of the population had a degree, so it was a valuable thing to have. Higher education usually meant training to be part of an elite; for example, the traditional “liberal education” was training for a small, privileged group who would become the “leaders of society” in law, politics and business.

In a sense, we’re now saying that as many people as possible should have an education of this kind, which means that by definition a university degree ceases to be “elite” in the way described, or to provide any value based on scarcity. This doesn’t mean there is no other kind of value—only that a degree will no longer provide the benefits of a scarce commodity (to the extent that it did in the past). It also means that universities are and will be using more tactics to explicitly demonstrate the value of what they offer (marketing, advertising).

In a system in which we rank and label people, a lack of obvious comparative value creates a problem, since we need to differentiate in order to allocate. If in the past the university degree acted as a filtration mechanism or a stamp of elite approval, it was the case that you had to have money, family/social connections, and/or a lot of smarts and savvy to get one. But how does this “filtering” happen when everyone gets a degree?

The cynical (or perhaps realistic) answer is that a relatively “elite” group will still form, and it does; filtration still happens because our system is driven by a capitalist economic model that works as a hierarchy driven by competition. People are ranked (using grades, for example), and it’s understood that this is more or less a zero-sum game. And some people still start out with far, far more than others when it comes to securing the highest spots in that ranking.

Yet most education systems are premised at least to some extent on the concept of meritocracy, the idea that people succeed based on “merit” or “excellence” alone, rather than through forms of extrinsic (often material) advantage. Though we have plenty of examples to support the idea that meritocracy functions fairly—e.g. working-class kids who “make good”—the wealthier and well-connected students still tend to get the best jobs in the current climate, no matter how many others may have university degrees. And from the inside, it tends look like this is because of differences in cultural, social and economic capital, rather than "merit" alone.

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Coming up soon, in Part 2! Does education have an inherent value in this context? Human capital, personal 'investment', and unequal/unexpected 'returns'.

A Source of Revenue?

I finally got around to reading Daniel Wolfe's article about internationalisation, but this is what confuses me, and always has, regarding the recruitment of international students to Canada...

"I think the reasons for internationalization are many, and bringing in extra tuition revenue is one of them, undeniably (international undergraduates, other than exchange students, pay increased tuition to reflect the fact that there is no government operating funding provided for international enrolment)."

If the government isn't contributing any funding towards supporting these students, then surely the extra tuition we charge them doesn't really count as "extra" because it's money that the government would have provided (had they been domestic students)? So in effect we charge them more because they cost more? Unless they are really scalping these students and adding huge amounts to their tuition (i.e. a lot more than what the government would provide), then this doesn't sound like a revenue stream to me. But perhaps that is what they're doing--I'm not sure (please answer in the comments if you know!).

International students often require special resources above and beyond what domestic students usually need, so there are other costs that detract from this "profit" as well.

And if Canadian university expansion occurs to accommodate more international students, what will happen if and when those students' "source countries" develop the capacity to educate locally? Unless of course we just want to keep exporting our Western Brand™ of university education and never expect those countries to develop their own "knowledge infrastructure". I just get the sense that we're trying to use these students to shore up gaps in future cohorts that we know are going to decline, because of demographic trends. We are still treating these students as a "market" and markets fluctuate; are we actually planning for that or are we just heading into further financial sketchiness?

The Proof of the Pudding

Throughout the first few weeks of September, we've seen a number of reports released, both in the U.S. and Canada, discussing and describing (quantitatively) the positive outcomes that students generate from obtaining university credentials. These reports have appeared at roughly the same time as the international university "rankings", which were unleashed around the middle of the month--along with OECD education indicators and Statistics Canada reports on tuition fees and national education.

The strategy here seems straightforward enough; after all, at the beginning of the school year, it's not primarily students but rather their parents--in many cases--who are concerned about whether the college or university experience is going to be "worth the investment". (I would argue that the parents should also look to their own departing children if they want to know the answer to that question-!) It's a great time to capture an audience for the debate, since students beginning their last year of high school at this time (most of them still living at home) will also be searching for relevant information about possible PSE options.

These articles are reports stir up the debate about public vs. private funding of PSE, about the rising proportion of university revenue generated by tuition from students and families, and the cost to the state of educational expansion. They also pitch university education primarily in terms of its economic value--not only to individuals, but also to the state (since educated people are "human capital"). Education correlates with increased income over one's lifetime, with better health (saving taxpayer dollars), and with inter-generational class mobility. These arguments, along with those citing tough times for the government purse, are frequently used to support a pro-tuition-increase position both in the media and in policy debates.

All these points may seem valid enough until we consider the fact that while students may all technically pay the same amount in tuition (say, at a given university or in a particular program), they don't all receive the same "product". And universities generally advertise to them as if the same product is really on offer to everyone. Which it certainly isn't--the costs alone (which exceed tuition) are borne in entirely different ways by different students, a point briefly raised by Charles Miller as quoted in this article. If my parents pay for my tuition and living expenses, then what costs am I absorbing over the period of a 4-year undergraduate degree? How does this compare to a situation without parental support? Low-income students are less likely to have family help and more likely to take on a large debt burden; they are less likely to have savings accounts and personal investments, less likely to be able to purchase cars and condos when their student days are done.

Aside from the variation in economic circumstance, students also bring differences in academic ability and social and cultural capital to their degrees, which means that development differs for each person and so does their overall capacity for career-building.

Not only does university have different "costs" for different people; it also has highly variable outcomes. Some students will land solid jobs and find themselves upwardly mobile after completing a bachelor's degree. Others may continue to a Master's or even a PhD and discover that gainful employment impossible to find, for a variety of reasons. There's also the question of whether students obtain jobs in their chosen fields--or within a particular income range, for that matter. And once they do find employment, earnings differences by gender (for example) still persist to the extent that women in Canada still earn significantly less than what male employees take home for equivalent work.

Another form of quantitative justification, the rankings game is an attempt to make the intangible--the "quality" of education, or of the institution--into a measurable, manipulable object. Part of the yearly ritual is the predictable squabble over methodology, which generates much commentary and debate, particularly from those institutions that have found themselves dropping in the international league tables. This quibbling seems ironic given that all the rankings are embedded in the same general global system of numeric calculation, one that feeds international competition and now constitutes and entire industry that rides on the backs of already overburdened and under-funded university systems. While the public may rail against the supposed over-compensation of tenured professors (salaries represent the universities' biggest cost), institutions continue to engage in the international numbers game, pumping money into the yearly production of "free" data that are then made inaccessible by the ranking organizations (who profit from their use).

Education reports, with their quantitative indicators of the economics "benefits" of higher education, are a part of the same overall tendency to assess, to compare, to normalize and standardize. Earnings-related numbers often provide rhetorical support for policy agendas that involve higher tuition fees, since proving the "private" benefits of education means that we can charge the user or "consumer" of education for access to these (eventual) benefits.

Rankings and statistics serve as a means of informing risk assessment--for governments, when funding is increasingly based on "performance", and for students, when it's about choosing the "better" university. But no numbers can truly gauge or alter the inherent risk of education and knowledge, the ineffability of the paths we take to discovery, the serendipities of fortune and temperament that can lead one person to the gutter while another may hit the heights of achievement. Students have moments of inspiration, they meet undistinguished professors who never publish but turn lives around. They form unexpected friendships and stumble on opportunities, skewer themselves on pitfalls both obvious and unseen.

In other words we cannot ac/count for this most joyful and painful side of our educative experience--the unknown element which is frequently the most formative one; and the more we attempt to inject certainty into this process, the more we set ourselves up for disappointment. This doesn't mean there's no use for numbers, for evaluations and assessments, for attempts to improve our universities. But sensible decision-making, whether by students or by governments, will always involve more than a measurement.