Richard Vedder, Sounding Reasonable
By Arnold Kling
The more evidence that I see that I believe is creditable and meaningful, the more I am convinced of the following:
* Too many students, not too few, are going to college;
* College and universities are extremely inefficient, and at the marginal public spending on them more likely lowers rather than raises economic growth;
* The federal financial aid programs have contributed to raising higher education costs, lowering efficiency, and increasing corruption within higher education –and done precious little good, sending few more kids to college than would have gone anyway (which, given the first point, is not all bad);
Thanks to Peter Klein for the pointer.
One of the signs that someone is being unreasonable is that they make mutually contradictory attacks without realizing it. For example, in “Sicko,” Michael Moore at one point describes public schools as an example of something that shows we can trust government provision of services and at another point shows lousy public schools as an example of how bad America is compared to other countries.
I confess to having thought of Vedder as a bit like Moore. But the quote above shows that Vedder is careful about trying to limit self-contradiction. In fact, the entire post is reasonable.A recent article on Vedder’s research says,
Its major finding, that increased state appropriations for higher education actually correlate with lower economic growth, is counter to both established understanding and conventional wisdom.
The study, also sponsored by the Center for College Affordability and Productivity, will have its critics, to be sure. The primary author, Richard Vedder, has defended his work from other economists in the past. He has made a name for himself — and earned a spot on the Spellings Commission — by criticizing colleges as too expensive and poorly run. But Vedder, a distinguished professor of economics at Ohio University, the director of the college affordability center and a visiting scholar at the American Enterprise Institute, believes he has found “startling enough” results that others will want to try to look at the issue themselves — a development he’d welcome.
The study says,
We used a data set encompassing observations for all 50 states for each year over the 46 years from 1960 through 2005. Most of the statistical models run have far more than 1,000 observations. We incorporate lags to acknowledge the fact that money spent today may take years to have a pay-off — students for example, take four, five or even six years to get through school. Research monies similarly may have long term pay-offs. We also looked at economic growth over a short time horizon (five years), as well as longer periods (10 or 15 years). We incorporated a large number of non-higher education variables into our model to at least partially control for the considerable non-educational determinants of income growth over time.
The results are intriguing. In general, the model’s explanatory power is greatest for longer time lags. Consequently, we will talk mainly about equation three in the table, which looks at economic growth over a 15-year time horizon and relates it to state appropriations made 15 years previously, to allow generously for the lagged impact of appropriations.
There is much that can be said about the results. Most importantly, however, in all three equations (and dozens of other equations not presented here) we obtain a negative relationship between state and local higher education expenditures and economic growth. In two of the equations, the results are statistically significant at the 1 percent level.