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This article is interesting, but it makes the fundamental error of assuming that the primary product of an R1 research university is education for undergraduate

This article is interesting, but it makes the fundamental error of assuming that the primary product of an R1 research university is education for undergraduates, which it is not. The primary product of an R1 research university is research, largely performed by Graduate Students, Postdoctoral Researchers and Professional Researchers. All of these are paid a salary of some form, some market-rate, others less-so. That's where the cost is, along with actual costs of instruments, libraries, consumables and buildings necessary for cutting edge research. Most of the funding for that comes from research grants and you can see how it represents a huge fraction of the budget in his charts. Unfortunately, all of the expenditure data that the Education department puts out combines both R1 and non-R1 institutions, so it's hard to see just how different the top 120 schools are from most of the rest. If you have expenditure data segmented by research intensity, I would love to see it. The undergraduate education is part of the university, but not the primary part. (At UChicago, grad students still outnumber undergrads!) If you want to see what the finances of an institution that primarily educates undergraduates looks like, go to one of the Liberal Arts colleges, or non R-1 state schools, like any of the Cal States in California, or non-flagship schools in other states.

throwawayjava 8y ago
> go to one of the Liberal Arts colleges, or non R-1 state schools, like any of the Cal States in California, or non-flagship schools in other states. ...and look at the instructor's salaries. PhD's from top universities who could easily make 300k+ in the private sector but instead take positions that pay 60k-70k. Even with tenure, that's a labor of love. Blaming highly paid admins would be great, except that university presidents at teaching colleges are the highest paid (reminder: branch campuses and liberal arts colleges never have Div 1 sports programs) and still make $50k-100K less than a green phd out of a top 10 CS program (200k is good money for a president of a branch campus or liberal arts college -- and remember, that's typically a person with 30+ years experience and a uniquely positive track record). I worry about what will happen to the American teaching college (public or private) over the next 50 years if the current war on college -- which this article typifies -- wins out in the public mind. If you doubt a single word of this feel free to reply to this comment. I'm extremely familiar with both markets. When I say that (even tenure-track) CS teaching requires a 200k paycut, I really do know what I'm taking about.
- secabeen 8y ago
  I don't doubt any of it. The CS market is an outlier though, so I wouldn't make too many arguments based entirely on that. For someone with a decent degree in a biological or physical science, the pay cut for a tenure-track position compared to industry is not that bad. (The work-life balance and employment market may be worse, but that's a whole 'nother issue.)
  - throwawayjava 8y ago
    > with a decent degree in a biological or physical science Mathematics is as close to "humanities" as the STEMs get in terms of compensation and employment options for PhDs, and even top 10 mathematics PhDs can make 2x in the private sector with at least 2 years fewer opportunity costs. Basically the only fields where what you're saying is true are the humanities and social sciences, but those aren't expanding programs or cost centers. Work-life balance is one of those things that you would think would better in academia, but is often actually not. The broader point is that outside of R1, prices mostly reflect the fact that for most students education doesn't scale very well and experienced human labor is more expensive than ever. Those are self-reinforcing, for obvious reasons. Case-in-point: the would-be educator who can't afford a 200k pay cut because of the loans they took out for their own education.
    - secabeen 8y ago
      Yeah, I think we largely agree. At just a 2x pay cut, and the potential to be an tenured scholar, there are plenty of people who want to try for it. It's also close to the height of the job market right now, with unemployment very low. That pay disparity may go down quite a bit during the next recession. >The broader point is that outside of R1, prices mostly reflect the fact that for most students education doesn't scale very well and experienced human labor is more expensive than ever. Those are self-reinforcing, for obvious reasons. Case-in-point: the would-be educator who can't afford a 200k pay cut because of the loans they took out for their own education. The challenge here is that for the 85% of students getting an education from a public school, is the increase in tuition costs they've seen due to increases in expenditures (which I haven't seen any supporting data for), or a decrease in state funding of tertiary education (which is wide-spread)?
hkmurakami 8y ago
The top priority of a R1 research university is its ongoing existence in perpetuity. A lot of its decisions make more sense under that lens.
- sgte537 8y ago
  Continued existence is a prerequisite for ongoing production of research, no?
cjmb 8y ago
Good points, and thanks for reading! You're definitely right that "educating undergrads" is not the "primary purpose" of these institutions. I definitely did not & do not believe that. If that came through in the essay, I apologize for being inaccurate. If anything, I expected the response to be that I was assuming the primary product of a research university was Investment Returns, which is at least closer to a point I tried to make. Regarding Research: "Research" in the abstract is -- I believe -- considered a tax-deductible expense in America, and the IRS treats it pretty favorably and that's probably for the best. However, engaging in "research" to some capacity does not -- to the very best of my knowledge -- allow you to claim a full tax-shield on the Investment Profits of $10 billion+ merely by virtue of the fact that you engage in "research" (compare: Big Pharma, which actually has to write off expenses in order to reduce taxes, or Google or Boston Dynamics). That is VERY different from how Education works today. To be a University is to be a Charity operating in the Education space. Additional Revenues and Expenses in Research areas are not important for this designation. Once the designation is established, the returns on your Investment Profits (invested in both the open and closed markets) are tax-free, forever. That's a pretty big deal in the finance world as it relates to your ability to accumulate capital and build Wealth. Whatever the "primary purpose" of that Wealth might be, the fact remains that (at MIT) that Wealth has grown 1,500% over the last 25 years, while the operating budget has grown ~250%. I believe that is somewhat noteworthy, and I could not avoid noticing how critical the Education-Charity tax-shield was to this compound growth. The question I tried to raise was: "if your Education was affordable, would we allow the service provider to be considered a Charity?" Regarding finances & more data: every institution named in this essay has it's 2017-full-year financial report linked, which I spent some time going over to better understand revenue sources (i.e. to understand the truly minimal importance of Tuition) and expenses (to understand the nature of the costs involved). Sadly that data doesn't appear to segment anything by "research intensity", but it usually pulls research out at least research in all forms. And you're right, that Research usually dominates both "Instruction" and "General & Administrative" in terms of spend. (Quick example here: https://web.mit.edu/facts/financial.html https://web.mit.edu/facts/financial.html, the other institutions have their fully detailed reports linked in the bullets at the start of the essay )
- gnicholas 8y ago

throwawayjava 8y ago

> go to one of the Liberal Arts colleges, or non R-1 state schools, like any of the Cal States in California, or non-flagship schools in other states. ...and look at the instructor's salaries. PhD's from top universities who could easily make 300k+ in the private sector but instead take positions that pay 60k-70k. Even with tenure, that's a labor of love. Blaming highly paid admins would be great, except that university presidents at teaching colleges are the highest paid (reminder: branch campuses and liberal arts colleges never have Div 1 sports programs) and still make $50k-100K less than a green phd out of a top 10 CS program (200k is good money for a president of a branch campus or liberal arts college -- and remember, that's typically a person with 30+ years experience and a uniquely positive track record). I worry about what will happen to the American teaching college (public or private) over the next 50 years if the current war on college -- which this article typifies -- wins out in the public mind. If you doubt a single word of this feel free to reply to this comment. I'm extremely familiar with both markets. When I say that (even tenure-track) CS teaching requires a 200k paycut, I really do know what I'm taking about.

secabeen 8y ago
I don't doubt any of it. The CS market is an outlier though, so I wouldn't make too many arguments based entirely on that. For someone with a decent degree in a biological or physical science, the pay cut for a tenure-track position compared to industry is not that bad. (The work-life balance and employment market may be worse, but that's a whole 'nother issue.)
- throwawayjava 8y ago
  > with a decent degree in a biological or physical science Mathematics is as close to "humanities" as the STEMs get in terms of compensation and employment options for PhDs, and even top 10 mathematics PhDs can make 2x in the private sector with at least 2 years fewer opportunity costs. Basically the only fields where what you're saying is true are the humanities and social sciences, but those aren't expanding programs or cost centers. Work-life balance is one of those things that you would think would better in academia, but is often actually not. The broader point is that outside of R1, prices mostly reflect the fact that for most students education doesn't scale very well and experienced human labor is more expensive than ever. Those are self-reinforcing, for obvious reasons. Case-in-point: the would-be educator who can't afford a 200k pay cut because of the loans they took out for their own education.
  - secabeen 8y ago
    Yeah, I think we largely agree. At just a 2x pay cut, and the potential to be an tenured scholar, there are plenty of people who want to try for it. It's also close to the height of the job market right now, with unemployment very low. That pay disparity may go down quite a bit during the next recession. >The broader point is that outside of R1, prices mostly reflect the fact that for most students education doesn't scale very well and experienced human labor is more expensive than ever. Those are self-reinforcing, for obvious reasons. Case-in-point: the would-be educator who can't afford a 200k pay cut because of the loans they took out for their own education. The challenge here is that for the 85% of students getting an education from a public school, is the increase in tuition costs they've seen due to increases in expenditures (which I haven't seen any supporting data for), or a decrease in state funding of tertiary education (which is wide-spread)?

hkmurakami 8y ago

The top priority of a R1 research university is its ongoing existence in perpetuity. A lot of its decisions make more sense under that lens.

sgte537 8y ago
Continued existence is a prerequisite for ongoing production of research, no?

cjmb 8y ago

Good points, and thanks for reading! You're definitely right that "educating undergrads" is not the "primary purpose" of these institutions. I definitely did not & do not believe that. If that came through in the essay, I apologize for being inaccurate. If anything, I expected the response to be that I was assuming the primary product of a research university was Investment Returns, which is at least closer to a point I tried to make. Regarding Research: "Research" in the abstract is -- I believe -- considered a tax-deductible expense in America, and the IRS treats it pretty favorably and that's probably for the best. However, engaging in "research" to some capacity does not -- to the very best of my knowledge -- allow you to claim a full tax-shield on the Investment Profits of $10 billion+ merely by virtue of the fact that you engage in "research" (compare: Big Pharma, which actually has to write off expenses in order to reduce taxes, or Google or Boston Dynamics). That is VERY different from how Education works today. To be a University is to be a Charity operating in the Education space. Additional Revenues and Expenses in Research areas are not important for this designation. Once the designation is established, the returns on your Investment Profits (invested in both the open and closed markets) are tax-free, forever. That's a pretty big deal in the finance world as it relates to your ability to accumulate capital and build Wealth. Whatever the "primary purpose" of that Wealth might be, the fact remains that (at MIT) that Wealth has grown 1,500% over the last 25 years, while the operating budget has grown ~250%. I believe that is somewhat noteworthy, and I could not avoid noticing how critical the Education-Charity tax-shield was to this compound growth. The question I tried to raise was: "if your Education was affordable, would we allow the service provider to be considered a Charity?" Regarding finances & more data: every institution named in this essay has it's 2017-full-year financial report linked, which I spent some time going over to better understand revenue sources (i.e. to understand the truly minimal importance of Tuition) and expenses (to understand the nature of the costs involved). Sadly that data doesn't appear to segment anything by "research intensity", but it usually pulls research out at least research in all forms. And you're right, that Research usually dominates both "Instruction" and "General & Administrative" in terms of spend. (Quick example here: https://web.mit.edu/facts/financial.html https://web.mit.edu/facts/financial.html, the other institutions have their fully detailed reports linked in the bullets at the start of the essay )

gnicholas 8y ago