Paying More for More Valuable Degrees

The NYTimes has an article on an interesting higher ed policy issue: whether colleges should charge more for some degrees than others. Most don't, but there's any argument to be made that this is unfair: some degrees--like engineering--are both more valuable in the job market and more expensive to provide in terms of equipment and labor. By contrast, an education degree is both less lucrative and less costly. Why should teachers implicitly subsidize the education of engineers who suck up more college resources and then turn around and make twice as much money out of school? The flip side argument is that we don't want short-term costs to influence long-term life decisions (particularly since people tend to be quite econonmically irrational about such things), or to warp college curricula around limited considerations of economic value.

A key question to answer, then, is the extent to which student choices of major are influenced by variations in price. If demand for given majors is relatively inelastic, then colleges could probably differentiate up to a point without significant negative side effects and thus make pricing more efficient and fair. On this point, the Times reports:

At the University of Kansas, which started charging different prices in the early 1990s, there are signs that the higher cost of majoring in certain subjects is affecting the choices of poorer students.

“We are seeing at this point purely anecdotal evidence,” said Richard W. Lariviere, provost and executive vice chancellor at the university. “The price sensitivity of poor students is causing them to forgo majoring, for example, in business or engineering, and rather sticking with something like history.”

This is maddening. The program has been in place for 15 years and all they have is "purely anecdotal" evidence? How about some actual evidence? Universities know precisely what decisions their students make in terms of selecting courses and majors. For most of them, they have detailed financial records. At an institution the size of the University of Kansas, they have tens of thousands of cases to study. Isn't there an economist or PhD candidate on staff who could answer this question? One of the remarkable--and disquieting--things about universities is how they so infrequently apply their tremendous capacities of analysis and inquiry to themselves.