There are many ways to achieve prestige. One was to join an irrelevant league. ;-)</p>
<p>
But the Bible/US News dictates lies. </p>
<p>
But that state would look better than South Dakota because it has a state-of-the-art bridge, mirite? </p>
<p>
US News. And it’s not regardless of the size of the school. It’s always the size of the school. They want a certain ratio, they have a certain budget. None of them have the ratio they actually want. (10 profs : 1 student) So they have to make use. </p>
<p>
That’s why paying full price sucks. Who pays MSRP on cars anymore? Who buys Northface without getting some % off anymore? If you look at their “average debt” at graduation and average aids/students, average % receive fin aid, or whatever, the average students pay 20k/year to receive “80k/year education” That’s pretty good, mirite?<br>
Your example is like using an anecdote for statistic.</p>
<p>kwu, I’m trying hard to make mirite happens.</p>
<p>A curious argument. Would you apply that same logic to the pricing of other goods and services? My cell phone provider, for example, has very large sunk costs in building and maintaining its network. They’d have almost identical costs whether I sign up as a customer or not; the marginal cost to the provider of my joining the network is positive, but barely above zero. So I should be charged close to zero for my phone service? The cable company has high sunk costs in its network of cables, rights-of-way, transmission equipment, and so on; the marginal cost of running the cable from the alley to my house and letting the signal pass through it is positive, but close to zero. So I should demand a reduction in my cable/internet access bill to reflect only the marginal costs of providing service to me? Delta Airlines has very large sunk costs in equipment, facilities, and landing rights, and high fixed operating costs in operating airplanes on a fixed network at fixed times, whether or not they are occupied by paying passengers. It costs them very close to the same whether I occupy an otherwise-empty seat or not. So I should be charged only the marginal cost if I take that last unoccupied seat? </p>
<p>Or is there something unique to education that argues in favor of charging the last-admitted student only the marginal cost, instead of averaging those costs over the entire customer base as utilities, airlines, and other businesses do?</p>
<p>Hardly a curious argument at all. Obviously companies are simply going to charge whatever the market will bear, regardless of the costs to produce the good in question. If I can get people to pay $10 for a Pet Rock, of course I will do so. On the other hand, if I have to pay a million bucks to produce an item, yet nobody is willing to pay $10 for it, then that’s what I should sell it for (or else throw it away and receive nothing). The ultimate price is determined by market forces, nothing more. Customers don’t care how much it actually costs to produce something, nor should they. If I can charge more than what it costs to produce, then I make a profit. On the other hand, if I am forced to charge less than my production costs, then I take a loss. Either way, the customer doesn’t really care. That’s business. </p>
<p>But schools are different (or at least, are supposed to be). Schools are not supposed to be businesses and therefore are not supposed to be charging market prices. If they did, then Harvard could surely charge tuition in the millions and still fill all their seats. Schools are nonprofits (or so they claim), which means that schools are not supposed to be floating their tuition according to whatever the market will bear at any given time. Schools are supposedly providing a social service.</p>
<p>That only serves to highlight the issue at hand. Somebody argued before that Williams supposedly incurs a $100,000 cost per student to provide the education. So what? As a student (or his parent), I don’t care. Why should I? To extend your examples, I don’t care how much it costs my mobile phone company to license spectrum and construct their network. I don’t care how much it costs my cable provider to string coax around town and secure channel rights fees. I don’t care how much it costs my airline to purchase aircraft and secure airport landing rights. I don’t care about any of that. If they spend money foolishly and therefore lose money on serving me, hey, that’s their problem, not mine. If they go bankrupt, again, hey, that’s their problem, not mine. All I care about as a customer is receiving the highest quality product for as low of a cost as possible - preferably free if I can get it. If a company wants to stupidly provide me an excellent product for free, I’m very happy to take it. </p>
<p>That highlights my central point: colleges should not be able to argue that they are ‘supposedly’ providing a bargain just because their costs are ‘supposedly’ high. I don’t care one iota about the costs incurred by my cellphone provider or cable provider, so why should I care a whit about the costs of my college? No cellphone provider can argue that “well, it cost us a zillion dollars to build this network, so now you should be happy to pay us $X a month”. I don’t care how much it cost you: if you go bankrupt, that’s your problem, not mine.</p>
<p>PS. If you subscribe to pure neoclassical economics, then it is always true that prices should always be eventually driven down to marginal costs, which would equal nearly zero in the examples provided, as perfect competition would compete away all higher prices and hence all rents. For example, if the market for mobile phone service was truly perfect, then the prices would truly be driven down to near zero (marginal cost) through competition as firms would be perennially undercutting one another. Like I said, once a network is built, that fixed cost is sunk so you might as well lower your prices to attract as many customers as you can (or else your competitors will do the same to steal all customers from you). </p>
<p>The reason why this does not happen is obviously because the market is notperfect. Wireless is an oligopoly: there are usually no more than 4-6 providers in any given area. Similarly, cable is almost always a *monopoly<a href=“i.e.%20how%20many%20cable%20providers%20does%20a%20given%20customer’s%20house%20have%20to%20choose%20from?%20%20Probably%20only%20one.”>/i</a> Or at best, if factoring in satellite TV and FiOS, then cable is at best an imperfect oligopoly. It is that softened competition that allows prices to rise above marginal cost.</p>
<p>^ completely illogical argument, Sakky. If you’re arguing that the last marginal student should be charged only the marginal cost of her education, then you must be committed to the proposition that earlier-admitted students should be required to pay a much higher rate. If Williams had only 1 student, it would cost $200 million/year to provide a Williams education to that one student. As a non-profit but fiscally responsbile instituion, Williams would have to charge that first student $200 million/year (or at least $100 million, assuming they could get the rest out of their endowment). Of course, no one would pay $100 million, much less $200 million, so even as a non-profit Williams would be forced to reckon with market forces. If Williams adds a second student, it reduces the average cost to $100 million–but the marginal cost of the second student approximates $0, so according to your theory the second student is being overcharged if required to pay anything. But Williams probably couldn’t attrat even two students at that price. So they add a third, and a fourth, and so on—at each stage, reducing the average cost per student, even though up until the point of congestion, the marginal cost of each additional student approximates $0.</p>
<p>So tell me, sakky—if we’re going to charge the last student only the marginal cost of her education, then what are we gonig to charge the first student admitted? The full fixed costs of running the college? And if not that, how WOULD you pay for it? Colleges and universities may be non-profits, but they can’t afford to just give the stuff away. Like the rest of us, they have finite resources.</p>
<p>Completely illogical argument, for once again, billclintonk, you have misunderstood what I have said. To clear up the issue: *** I have never once argued that colleges should price at the marginal cost.** * In fact, I have emphatically argued that they should not.</p>
<p>However, what I have argued is that the ‘costs’ of providing a college education are irrelevant to the pricing, so why do people keep bringing it up? For example, as a student, I don’t give a hoot what Williams’s or UM’s costs are. Why should I? If they lose money on educating me, that’s their problem, not mine. </p>
<p>In other words, it is entirely illogical for colleges to argue that they somehow ‘need’ to charge $X to me just because it somehow ‘costs’ them $Y to educate me. Why is that a relevant marketing strategy? I don’t care what it costs Comcast to provide me with my cable service, so why do I care what it costs a college to educate me? Just because Comcast spends a billion dollars on fixed cost infrastructure does not mean that I am now obligated to pay $60 a month for their service. If I can get the same service from somebody else for a penny a month, I’m going to choose that over Comcast.</p>
<p>If it helps you, here’s a summary of my posts on this thread:</p>
<ul>
<li><p>There is no such thing as the ‘average’ cost of a research university to provide undergraduate education, because there is no such thing as the ‘average’ cost of a joint product. </p></li>
<li><p>Even if we could somehow calculate the true average cost of undergraduate education, that is not the relevant cost anyway - what would be more relevant is the marginal cost. After all, sunk cost is sunk.</p></li>
<li><p>And even the marginal cost is irrelevant from the point of view of the students. All that matters to the students is the quality of the education they get at the price that they are being charged, which is not necessarily related to the cost to provide that service. </p></li>
</ul>
<p>In other words, all of the discussion of the costs of providing education is *** triply*** irrelevant from the point of view of the students. It’s not my problem if a school loses money on educating me. I don’t care, nor should I. Hence, any logic that rests on the notion that colleges are somehow ‘offering bargains’ because they are pricing at lower than their supposed costs is complete nonfunctional.</p>
<p>Well, I’ll agree with this statement. Which is exactly why I think it’s outrageous that the US News ranking is based in part on a ranking of expenditures per student, rewarding the schools with the highest cost structure—let’s call that the “Williams Model,” since their annual budget of $200 million to educate 2,000 students works out neatly to $100,000 per student per year. In so doing, the US News formula punishes schools that are able to achieve economies of scale and provide a quality education at a lower unit cost. Dumb, dumb, dumb, and at the margins it only gives schools an incentive to increase their unit cost, i.e., to become less efficient at what they they do. </p>
<p>I have no doubt that Williams provides a high quality education. But so do lots of schools that do it for a lot less than $100,000 per student per year. And the fact that Williams spends more than its competitors—i.e., is less efficient—should not merit a higher ranking.</p>
<p>Except we have told your repeatedly that this is not the case, that U-M is a constitutionally autonomous body. It does not exist “at the pleasure of the taxpayer;” in fact it is occasionally the object of criticism because the public has so little say/control over the place. Also, it is increasingly the subject to speculation about the effect of telling the taxpayers to keep their money and existing without them.</p>
<p>If you know of some relationship between U-M and the state that the rest of us do not understand, then please share that information. Otherwise, I suggest using another example.</p>
<p>hoedown,
Do you mean that U Michigan’s “constitutionally-autonomous” nature is an operating reality, ie, that the folks who make up the governing Board truly have the power to do whatever they want with the school, regardless of what the state’s residents might desire. </p>
<p>Also, who actually has ownership of the physical plant of the school?</p>
<p>No, it does exist at the pleasure of the taxpayer. As explained by billclintonk and others have said repeatedly, if the taxpayers really wanted to abolish UM by amending the state constitution, they could in fact do so. Now, would that be difficult? Of course. Is it likely to happen anytime in our lifetimes? Of course not. But the point is, it could happen.</p>
<p>Contrast that with a private school. The taxpayers of Massachusetts couldn’t simply ‘decide’ to abolish Harvard or MIT by amending the state constitution. {They might be able to pull the schools’ tax exempt status, but they couldn’t abolish the schools entirely.} </p>
<p>
</p>
<p>Actually, if you know of some relationship between the state taxpayers and their complete inability to change the state constitution, then please state it. Otherwise, I suggest that you choose a different example. The general consensus on this thread is that the taxpayers have the power to abolish UM through their power to change the constitution.</p>
<p>The physical plant of the school is owned by the University of Michigan, an autonomous legal entity recognized as such by the state constitution from the time Michigan became a state right down through the present day. Unusual, perhaps, but why is that so hard to understand? The Harvard Corporation owns Harvard’s physical plant. The University of Michigan owns the University of Michigan’s physical plant. Same ownership relationship. </p>
<p>While legally autonomous, the University IS ultimately answerable to the citizens of Michigan. Its Board of Regents and President are state constitutional officers. The Regents are directly elected by the voters on staggered eight year terms, as prescribed by the state constitution. The President is appointed by the Board of Regents, as also prescribed by the constitution. If the people of the state of Michigan don’t like the way the Regents and the President are operating the University, they have a constitutionally prescribed means of redress: vote out the Regents and elect new ones. Note, though, that staggered eight-year terms are designed precisely to insulate the Regents from momentary whims of the electorate; it would take a long and arduous sustained campaign to force through a change in University policy through the ballot box, which is why it’s never happened. The state legislature and the governor have nothing to say about it; in fact, the state constitution specifically exempts the universities governed by constitutionally created boards of control (Michigan, Michigan State, and Wayne State) from any manner of control by the other branches of the state. </p>
<p>The legislature’s role is an extremely limited one–it can and does, and indeed is constitutionally mandated to “appropriate moneys to maintain” the University. In exchange, the University provides a steep tuition discount to Michigan residents. The state gets a fabulous bargain here because the value of the tuition discount far exceeds the legislature’s rather modest appropriations, which make up a very small fraction of the University’s overall budget. Given the state’s fiscal crisis, there has been some semi-serious talk in the legislature about simply ending the legislative appropriation and letting the University go fully private, i.e., charging a single uniform tuition to both state residents and OOS students, and eliminating the expectation that state residents would be privileged in admissions. From a certain perspective, this arrangement might actually be to the University’s advantage as it could downsize its undergrad population and become more selective in admissions while holding tuition revenue constant or perhaps even increasing it enough to offset the loss of state appropriations. Based on the language in the state constitution, however, I think there’s a pretty strong argument that the legislature can’t constitutionally do this. The language in the constitution is mandatory: “the legislature shall appropriate moneys to maintain the University of Michigan.” I doubt that a complete end to state appropriations would survive a legal challenge; for that matter, I’m not sure a reduction of the appropriation to a token level would survive, either. If that’s the case, then full privatization might require a constitutional amendment. But if that were to occur, I think the University would have a pretty strong argument that because it already owns the physical plant, the endowment, certain valuable intellectual property rights, certain valuable contracts, and other property, those things can’t simply be taken from it without compensation. As an autonomous legal entity that pre-dates Michigan’s becoming a state, the University might have property rights that are protected under the federal constitution. </p>
<p>Fortunately, however, none of that is on the table in the foreseeable future. The University isn’t asking for privatization, and the citizens of Michigan wouldn’t stand for it. They know what a terrific bargain they’re getting by having such a superb “public option” available to their kids.</p>
<p>bclintonk has addressed much of this, but there’s something at the heart of your question which brings up an important truth–and not just about U-M. The short answer your question is yes, because U-M’s Regents have, at times, acted in ways that a seeming majority of state residents do not approve of. </p>
<p>However, I don’t think that’s necessarily true of just U-M; even university governing bodies with closer ties to their respective state governments have done things that run counter to what residents desire. But I think therein lies the reason why you have things run by a specialized board. Your average voter (or group of voters) has a different sent of priorities and interests at heart. You need people who can act in the best interests of the long-term prospects of the institution (ever mindful of its mission to serve the state, now and in the future), even if that runs counter to the wishes and whims of the average state citizen.</p>
<p>^ OK, I see what you’re getting at, hoedown. Yes, the citizens did change University policy once through the ballot box. That’s when they voted in 2006 to amend the state constitution to prohibit the University of Michigan and other state colleges and universities from using race-based affirmative action in admissions, hiring, and contracting. Unfortunate, IMO, because it’s resulted in a pretty clear decline in URM enrollment—something that can become self-perpetuating because if URM enrollment declines then even some non-affirmative action URM admits may decide to go schools with larger URM populations, and many URMs, especially those from out-of-state, may decline even to apply, viewing the state as hostile to URMs. </p>
<p>This is a pretty touchy subject on all sides. I’m not sure the movement in favor of Prop 2 was really even so much about University policies per se as it was a symbolic flashpoint for a long-simmering white backlash against affirmative action in general, in an economically troubled state where a once-prosperous blue collar/middle class population has seen its standard of living kicked out from underneath it—not by affirmative action so much as by globalization, foreign competition, and the slow-wittedness of its business elite. Prop. 2 gave the frustrated white working class and middle class a target to swing at; they swung, and landed a blow to the University. </p>
<p>So yes, the voters can amend the state constitution. But it doesn’t happen often, and to my knowledge this is the only time in history the University has been the target of a state constitutional change.</p>
<p>That’s a very recent example, yeah. I think there are other things that U-M does that are out-of-sync with what John Q. Michigander might want. Tuition increases, for sure. Letting in nonresident students. Keeping “impractical” liberal arts programs. Doing research in obscure areas. The list goes on. You don’t run a university, even a public one, via mob rule. So the notion that boards sometimes do very unpopular things, things against the will of the taxpayers, should not cause anyone to clutch their pearls and reach for the smelling salts. That was my main point.</p>