Surveying university student standards in economics

Economic Papers (Economic Society of Australia), June, 2005 by Peter Abelson

5 Policy Issues Relating to Student Standards

It is axiomatic for most economists that policies are required only when there are problems that markets cannot fix and when, following Adam Smith, the cure is better than the disease. In the words of one survey respondent: (8)

   If we can find a problem let's fix it. But we must
   identify the problem first. Romantic academics musing
   that standards were higher when we educated fewer
   people is not a problem. Are we satisfying the people
   who pay the bills; students, employers, parents,
   taxpayers? If not, then how not, then why not, and
   only then how do we fix it?

In other words, is there really a problem with student standards? And is there market failure?

Some survey respondents considered that there is no serious problem, as standards have improved. A weaker view would be that although average standards may have fallen, no one is disadvantaged because the stronger students achieve the same (or better) standards that they did previously. However, these do not appear to be majority views. Most respondents considered that standards have an objective basis, that standards have fallen in many universities and for many students, and that this is a matter for concern. I share this latter position. In my experience, the standards required of students have fallen and the resources are not available to provide separate classes for better students within the one department. A possible resolution of this would be implicit streaming of students via universities with each university serving a more homogeneous population. This would be a de facto market solution, but it is hard to tell whether this is occurring.

An important related issue is whether the market is efficient and can be relied upon to supply and determine efficient standards. As one respondent remarked:

   Let the market rule. Avoid credentialism and the
   temptation to centralise. Let everyone choose
   their own brain surgeon regardless of qualifications.

In my view this places too much faith in the effectiveness of market mechanisms and signals in the regulated university education sector. Another respondent, commenting on the variety of standards in Masters programs, noted that:

   The market is currently pretty poorly informed about
   these differences [in Masters programs]
   as often are the students themselves.

The critical questions are whether markets can recognise the differential qualities of degrees and whether this in turn affects the behaviour of university administrations, staff and students. The prices for courses in Australian universities are similar and send limited signals to students. While local employers may have a fair idea of the value of many degrees, overseas employers may not. In any case, it appears that many overseas students prize an Australian degree as a potential migration ticket for which the standard of the degree is largely immaterial. On the other hand, many academics including the writer believe that university administrations are largely motivated by revenue maximisation rather than by quality objectives. (9) Given price controls on degrees, revenue is maximised by maximising turnover. As Gare observed in his submission to the Senate Committee (2001, p. 165):