Hostname: page-component-586b7cd67f-gb8f7 Total loading time: 0 Render date: 2024-11-24T15:38:35.722Z Has data issue: false hasContentIssue false
  • English
  • Français

Historical Dimensions of the “Cost Disease” in US Higher Education, 1870s–2010s

Published online by Cambridge University Press:  10 November 2017

Bruce A. Kimball  and
Jeremy B. Luke
Get access Rights & Permissions [Opens in a new window]

Abstract

Among explanations for the escalating cost of higher education in the United States, two economic theories predominate: the revenue theory of cost and cost disease theory. Since its formulation in the 1960s, distinguished economists have concluded that cost disease theory has convincingly been proven to explain cost escalation in higher education. This article examines three historical dimensions of the cost disease in higher education from the 1870s to the 2010s. First, we explain how the scholarship on the cost disease in higher education has developed over the past 50 years. Second, we concurrently analyze the historical data and the reasoning presented by economists in support of the view that cost disease theory explains cost escalation in higher education. This analysis concludes that the scholarship over the last 50 years provides little validation for that explanation. Finally, we present historical research on cost trends in US higher education from 1875 to 1930. This formative period in US higher education witnessed enormous growth in the national economy. Due to the growth in productivity, cost disease theory would expect costs in higher education, a personal services industry, to rise sharply relative both to costs generally and to the national income. But this historical research reveals that the per capita cost of higher education grew very slowly over this period. These findings consist with our analysis of cost disease scholarship. We therefore conclude that there is little validation that cost disease theory explains cost escalation in US higher education from the 1870s to the 2010s, though it may explain some periods within that span.

Type
Articles
Information
Social Science History , Volume 42 , Issue 1 , Spring 2018 , pp. 29 - 55
Copyright
Copyright © Social Science History Association, 2017 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Alsalam, N. (1995) The Cost of Higher Education: Findings from The Condition of Education of Education 1995. Washington, DC: National Center for Education Statistics.Google Scholar
Archibald, R. D., and Feldman, D. H. (2008) “Explaining increases in higher education costs.” Journal of Higher Education 79 (3): 268–95.Google Scholar
Archibald, R. D., and Feldman, D. H. (2010a) “Why do higher-education costs rise so much more rapidly than prices in general?” Change 40 (3): 25–31.Google Scholar
Archibald, R. D., and Feldman, D. H. (2010b) Why Does College Cost So Much? New York: Oxford University Press.Google Scholar
Baum, S., Kurose, C., and McPherson, M. (2013) “Overview of American higher education.” The Future of Children 23 (Spring): 30.Google Scholar
Baumol, W. J. (1967) “Macroeconomics of unbalanced growth: The anatomy of urban crisis.” The American Economic Review 57 (3): 415–26.Google Scholar
Baumol, W. J. (1993) “Social wants and dismal science: The curious case of the climbing costs of health and teaching.” Proceedings of the American Philosophical Society 137 (4): 612–37.Google Scholar
Baumol, W. J. (2012) The Cost Disease: Why Computers Get Cheaper and Health Care Doesn't. New Haven, CT: Yale University Press.Google Scholar
Baumol, W. J., and Blackman, S. A. B. (1983) “Electronics, the cost disease, and the operation of libraries.” Journal of the American Society for Information Sciences 34 (3): 181–91.CrossRefGoogle Scholar
Baumol, W. J., and Blackman, S. A. B. (1995) “How to think about rising college costs: A primer for planners about higher education's ‘cost disease’ and its future effects.” Planning for Higher Education 23 (4): 1–7.Google Scholar
Baumol, W. J., and Bowen, W. G. (1966) Performing Arts—The Economic Dilemma. New York: The Twentieth Century Fund.Google Scholar
Baumol, W. J., and Marcus, M. (1973) Economics of Academic Libraries. Washington, DC: American Council on Education.Google Scholar
Bowen, H. R. (1980) The Costs of Higher Education: How Much Do Colleges and Universities Spend per Student and How Much Should They Spend? San Francisco: Jossey-Bass Publishers.Google Scholar
Bowen, W. G. (1968) The Economics of the Major Private Research Universities. Berkeley, CA: Carnegie Commission on Higher Education.Google Scholar
Bowen, W. G. (2012) The “Cost Disease” in Higher Education: Is Technology the Answer? The Tanner Lectures, Stanford University, October 2012. Stanford, CA: Stanford University.Google Scholar
Bradburd, R. M., and Mann, D. P. (1993) “Wealth in higher education.” Journal of Higher Education 64 (4): 472–93.Google Scholar
Bradley, G. (2004) “Contingent faculty and the new academic labor system.” Academe 90 (1): 28–31.CrossRefGoogle Scholar
Breneman, D. W. (1996) Testimony before the Subcommittee on Postsecondary Education, Training and Lifelong Learning of the House Committee on Economic and Educational Opportunities (Report 104–62, 104 Congress, 2nd session). Washington, DC: Government Printing Office: 96.Google Scholar
Breneman, D. W. (2001) “An essay on college costs,” in Study of College Costs and Prices, 1988–89 to 1997–98. Vol. 2. Washington, DC: National Center for Educational Statistics: 13–20.Google Scholar
Brinkman, P. T. (1990) “Higher education cost functions,” in Hoenack, S. A. and Collins, E. L. (eds.) The Economics of American Universities. New York: State University of New York Press: 107–28.Google Scholar
Bureau of Economic Analysis (2015) Table 2.4.4. Price Indexes for Personal Consumption Expenditures by Type of Product. Last revised on August 6, 2015. Washington, DC: US Department of Commerce.Google Scholar
Clotfelter, C. L. (1996) Buying the Best: Cost Escalation in Elite Higher Education. Princeton, NJ: Princeton University Press.CrossRefGoogle Scholar
Donoghue, F. (2008) The Last Professors: The Corporate University and the Fate of the Humanities. New York: Fordham University Press.Google Scholar
Ehrenberg, R. G. (2000) Tuition Rising: Why College Costs So Much. Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
Erwin, A., and Wood, M. (2014) The One Percent at State U: How Public University Presidents Profit from Rising Student Debt and Low-Wage Faculty Labor. Washington, DC: Institute for Policy Studies.Google Scholar
Frank, R. H. (2012) “The prestige chase is raising college costs.” New York Times, March 10.Google Scholar
Fredrickson, C. (2015) “There is no excuse for how universities treat adjuncts.” The Atlantic, September 15.Google Scholar
Geiger, R. L. (1986) To Advance Knowledge: The Growth of American Research Universities, 1900–1940. New York: Oxford University Press.Google Scholar
Geiger, R. L. (1993) Research and Relevant Knowledge: American Research Universities since World War II. New York: Oxford University Press.Google Scholar
Geiger, R. L. (2004) Knowledge and Money: Research Universities and the Paradox of the Marketplace. Stanford, CA: Stanford University Press.CrossRefGoogle Scholar
Getz, M., and Siegfried, J. J. (1991) “Costs and productivity in American colleges and universities,” in Clotfelter, C. T., Ehrenberg, R. G., Getz, M., and Siegfried, J. J. (eds.) Economic Challenges in Higher Education. Chicago: University Chicago Press: 259–392.Google Scholar
Goldin, C. D. (2006a) “Table Bc935-949: Current-fund revenue of higher education institutions, by source of funds: 1889–1994,” in Carter, S. B. et al. (eds.) Historical Statistics of the United States, Millennial Edition. Cambridge: Cambridge University Press.Google Scholar
Goldin, C. D. (2006b) “Table Bc968-975: Property value, endowments, and liabilities of higher education institutions: 1889–1994,” in Carter, S. B. et al. (eds.) Historical Statistics of the United States, Millennial Edition. Cambridge: Cambridge University Press.Google Scholar
Goldin, C. D., and Katz, L. F. (1998) “The origins of state level differences in the public provision of higher education, 1890–1940.” The American Economic Review 88 (2): 303–8.Google Scholar
Goldin, C. D., and Katz, L. F. (1999) “The shaping of higher education: The formative years in the United States 1890 to 1940.” Journal of Economic Perspectives 13 (1): 37–62.Google Scholar
Goldin, C. D., and Katz, L. F. (2008) The Race between Education and Technology. Cambridge, MA: Harvard University Press.Google Scholar
Gordon, R. J. (2016) The Rise and Fall of American Growth: The US Standard of Living since the Civil War. Princeton, NJ: Princeton University Press.Google Scholar
Halstead, D. K. (1975) Higher Education Prices and Price Indexes [for the US Office of Education]. Washington, DC: Government Printing Office.Google Scholar
Hanes, C. (2006) “Table Cc125-137: Wholesale price indexes for historical comparisons, by commodity group: 1860–1999,” in Carter, S. B. et al. (eds.) Historical Statistics of the United States, Earliest Times to the Present: Millennial Edition. New York: Cambridge University Press.Google Scholar
Jencks, C., and Riesman, D. (1968) The Academic Revolution. Chicago: University of Chicago Press.Google Scholar
Johnstone, D. B. (2001) “Higher education and those ‘out of control’ costs,” in Study of College Costs and Prices: 1988–89 to 1997–98. Vol. 2. Washington, DC: National Center for Education Statistics: 22–27.Google Scholar
Johnstone, D. B. (2005) “Financing higher education: Who should pay?,” in Altbach, P. G. et al. (eds.) American Higher Education in the Twenty-First Century, 2nd ed. Baltimore: Johns Hopkins University Press: 369–92.Google Scholar
Jones, S. S., Heaton, P. S., Rudin, R. S., and Schneider, E. C. (2012) “Unraveling the IT productivity paradox—Lessons for health care.” New England Journal of Medicine 366 (June 14): 2243–45.Google Scholar
Kimball, B. A., and Johnson, B. A. (2012) “The inception of the meaning and significance of endowment in American higher education, 1890–1930.” Teachers College Record 114 (10): 1–32.Google Scholar
Kimball, B. A., and Luke, J. B. (2016) “Measuring cost escalation in the formative era of US higher education, 1875–1930.” Historical Methods: A Journal of Quantitative and Interdisciplinary History 49 (4): 198–219.Google Scholar
Lasher, W. F., and Greene, D. L. (2001) “College and university budgeting: What do we know? What do we need to know?,” in Paulsen, M. B. and Smart, J. C. (eds.) The Finance of Higher Education: Theory, Research, Policy, and Practice. New York: Agathon: 501–42.Google Scholar
Leslie, L. L., and Rhoades, G. (1995) “Rising administrative costs: Seeking explanations.” Journal of Higher Education 66 (2): 187–212.Google Scholar
Lewin, T. (2013) “Gap widens for faculty at colleges, report finds.” New York Times, April 8.Google Scholar
Lewis, D. L., and Dundar, H. (2001) “Costs and productivity in higher education: Theory, evidence, and policy implications,” in Paulsen, M. B. and Smart, J. C. (eds.) The Finance of Higher Education: Theory, Research, Policy, and Practice. New York: Agathon: 133–92.Google Scholar
Massy, W. F. (1989) “Budget decentralization at Stanford University.” Planning for Higher Education 18 (2): 39–55.Google Scholar
Massy, W. F. (1991a) “Improving productivity in higher education: Administration and support costs.” Capital Ideas 6 (1): 2–12.Google Scholar
Massy, W. F. (1991b) “Improving academic productivity: The next frontier.” Capital Ideas 6 (2): 2–12.Google Scholar
Massy, W. F. (2003) Honoring the Trust: Quality and Cost Containment in Higher Education. Williston, VT: Anker.Google Scholar
McCusker, J. J. (2001) How Much Is That in Real Money? A Historical Commodity Price Index for Use as a Deflator of Money Values in the Economy of the United States, 2nd ed. Worcester, MA: American Antiquarian Society.Google Scholar
McPherson, M., and Shapiro, M. O. (2001) “Issues of cost and price in higher education: Observations on needed data and research,” in Study of College Costs and Prices: 1988–89 to 1997–98. Vol. 2. Washington, DC: National Center for Education Statistics: 75–86.Google Scholar
Millett, J. D. (1952) Financing Higher Education in the United States. New York: Columbia University Press, Commission on Financing Higher Education.Google Scholar
National Center of Educational Statistics, Digest of Education Statistics (1996) “Table 348: Value of property and liabilities of institutions of higher education: 1899–1900 to 1993–94 [in thousands].” https://nces.ed.gov/programs/digest/d96/d96t348.asp (accessed December 4, 2015).Google Scholar
National Center of Educational Statistics, Digest of Education Statistics (1999) “Table 360: Value of property and liabilities of institutions of higher education: 1899–1900 to 1995–96 [in thousands].” http://nces.ed.gov/programs/digest/d99/d99t360.asp (accessed December 4, 2015).Google Scholar
Nordhaus, W. (2008) “Baumol's diseases: A macroeconomic perspective.” B[erkeley] E[lectronic] Journal of Macroeconomics 8 (1): 1–37.Google Scholar
Olson, J. E. (1997) “The cost-effectiveness of American higher education: The United States can afford its colleges and universities.” In John C. Smart (ed.), Higher Education: Handbook of Theory and Research 12: 195–242.Google Scholar
O'Neill, J. (1971) Resource Use in Higher Education: Trends in Outputs and Inputs, 1930 to 1967. Berkeley, CA: Carnegie Foundation for the Advancement of Teaching.Google Scholar
Paulsen, M. B. (2001) “Economic perspectives on rising college tuition: A theoretical and empirical exploration,” in Paulsen, M. B. and Smart, J. C. (eds.) The Finance of Higher Education: Theory, Research, Policy, and Practice. New York: Agathon: 193–263.Google Scholar
Schrecker, E. W. (2010) The Lost Soul of Higher Education: Corporatization, the Assault on Academic Freedom, and the End of the American University. New York: Free Press.Google Scholar
Snyder, T. D., ed. (1993) 120 Years of American Education: A Statistical Portrait. Washington, DC: National Center for Education Statistics.Google Scholar
Smith, C. W. (2000) Market Values in American Higher Education. Lanham, MD: Rowan and Littlefield.Google Scholar
Sutch, R. (2006) “A gross national product and gross domestic product: 1869–1929,” in Carter, S. B. et al. (eds.) Historical Statistics of the United States, Earliest Times to the Present: Millennial Edition. New York: Cambridge University Press: 184–91.Google Scholar
Swensen, D. F. (2009) Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment, rev. ed. New York: Free Press.Google Scholar
Thelin, J. R., and Trollinger, R. W. (2014) Philanthropy and American Higher Education. New York: Palgrave MacMillan.CrossRefGoogle Scholar
Thompson, K. (1994) “Marginalized near the center: Part-time faculty and the need to reform and refinance the university.” Anthropology of Work Review 15 (1): 18–20.Google Scholar
To, Duc-Le (1987) Estimating the Cost of a Bachelor's Degree: An Institutional Cost Analysis. Washington, DC: Office of Educational Research and Improvement, US Department of Education.Google Scholar
Toutkoushian, R. K. (2001) “Trends in revenues and expenditures for public and private higher education,” in Paulsen, M. B. and Smart, J. C. (eds.) The Finance of Higher Education: Theory, Research, Policy, and Practice. New York: Agathon: 17–38.Google Scholar
Triplett, J., and Bosworth, B. (2003) “Productivity measurement issues in service industries: Baumol's disease has been cured.” Federal Reserve Bank of New York Economic Policy Review 9 (3): 23–33.Google Scholar
US Bureau of Education (1932) Biennial Survey of Education, 1928–30. 2 vols. Washington, DC: Government Printing Office.Google Scholar
US Commissioner of Education (1875) Report of the Commissioner of Education [for 1875]. Washington, DC: Government Printing Office.Google Scholar
US Commissioner of Education (1896) Report of the Commissioner of Education [for 1894–95]. 2 vols. Washington, DC: Government Printing Office.Google Scholar
US Commissioner of Education (1900) Report for the Year Ended June 30, 1899. 2 vols. Washington, DC: Government Printing Office.Google Scholar
US Commissioner of Education (1917) Report for the Fiscal Year Ended June 30, 1916. 2 vols. Washington, DC: Government Printing Office.Google Scholar
van Vught, F. (2008) “Mission diversity and reputation in higher education.” Higher Education Policy 21 (2): 151–74.CrossRefGoogle Scholar
Veysey, L. R. (1965) The Emergence of the American University. Chicago: University of Chicago Press.Google Scholar
Winston, G. C. (1998) A Guide to Measuring College Costs (Discussion Paper 46). Williamstown, MA: Williams College, Project on the Economics of Higher Education, Williams College.Google Scholar
Winston, G. C. (2001) “Higher education costs, prices, and subsidies: Some economic facts and fundamentals,” in Study of College Costs and Prices: 1988–89 to 1997–98. Vol. 2. Washington, DC: National Center for Education Statistics: 117–28.Google Scholar