One criticism of Graduate Winners was that I should have paid more attention to OECD comparisons. I am wary of ‘OECDitis’– taking OECD averages as normative when they are merely descriptive. In my view, higher per student public spending on higher education in some other countries reflects their overall political and economic systems, and does not make their higher education systems better.

But could higher per student spending make their higher education systems worse? I don’t think this is automatically the case. But I think high per student spending creates a greater risk of what I call the paradox of public spending: it may increase demand, but it also tends to decrease supply. Even big-spending European social democracies have budget constraints (as they are very painfully finding out). So if they can’t control spending by making students pay more, they control spending by reducing the number of students.

The figure below uses figures from OECD Education at a Glance showing average student fees at public institutions and overall higher education attainment rates. The Nordic countries tend to combine low fees and reasonably high attainment, but many other European countries have free or very cheap higher education and relatively low attainment.

Overall the higher fee countries have higher attainment than low fee countries (correlation of .35 between fees and attainment).

I don’t know enough about the particularities of each country to confirm my paradox. But given it is easier politically to control numbers than to increase fees (because the losers are less obvious, and less prone to rioting), it is likely that politicians in many OECD countries have capped supply of higher education, and reduced their rates of higher education attainment.

As expected, my Graduate Winners report generated plenty of controversy. Two of the university lobby groups put responses on their websites (Universities Australia here; Innovative Research Universities here). A couple of VCs added hyperbole to the sober complaints of their representative organisations:

Administrators and students alike have hit out, with Central Queensland University vice-chancellor Scott Bowman likening it to a “funding regime of which North Korea would be proud”.

Australian Catholic University vice-chancellor Greg Craven slammed the report’s focus on numbers while failing to recognise the wider community value of higher education. “This seems to be a calculator with a personality disorder,” Professor Craven said.

One common criticism was that Graduate Winners does not count every possible public benefit of higher education (though it has the most detailed empirical analysis of this issue yet published in Australia, it is true that not every public benefit claim was investigated). But you would struggle to realise from just reading the lobby group reaction that Graduate Winners also has generally very positive news about graduate prospects. The vast majority of graduates do well financially out of their degrees, and enjoy other non-financial benefits as well. And there was no criticism for not pursuing this issue further.

In other words, the VCs appear to think that total course cost increases of between $7,000 and $19,000 for most courses would have disastrous effects and must be loudly fought, but lifetime benefit, including financial gains from their services averaging hundreds of thousands of dollars, were not worth mentioning.

I think this one-sided reaction reflects the history of higher education in Australia, and mindsets that have not changed despite the underlying realities having substantially shifted.Read More »