"Wholesale Bankruptcies" in Higher Education: I'll Bet Against It
By Bryan Caplan
While I was vacationing in Orlando, the Economist ran an exuberant article on online education. Most of the piece is too vague to be wrong, but this passage calls for a bet:
Clayton Christensen, a Harvard Business School professor and author of
“The Innovative University”, predicts “wholesale bankruptcies” over the
next decade among standard universities.
Here’s my proposed $100 even-odds bet for Christensen: Out of U.S. News and World Report‘s top 200 “National Universities” of 2012 at least 190 will remain in business on January 1, 2023. I’m happy to negotiate these terms. My reasoning, to repeat, is that higher education is largely a form of signaling, not skill acquisition – and one of the traits that students signal is sheer conformity. And in our society, conformists go to brick-and-mortar universities. The first students to do otherwise mark themselves as non-conformists – and employers will accordingly frown upon them.
By the way, if this were any other industry, would the Economist consider the following figures a promising sign?
In October Udacity raised $15m from investors. It has 475,000 users.
In April two of Mr Thrun’s ex-colleagues, Andrew Ng and Daphne Koller,
launched a rival, Coursera, with $16m in venture capital. At first it
offered online courses from four universities. By August it had signed
up 1m students, rising to over 2m now.
The number of students is indeed impressive. But the dollars of venture capital raised are laughable. Pitiful. The obvious explanation is that venture capitalists see online education as a rival for blogs, Wikipedia, and other online infotainment, not actually-existing higher education. The only lunch online education might eat is the one that existing websites already provide for free to all mankind.