Screwed up incentives in higher education

(…) They should be treated like rock stars and paid accordingly

Mike Silagadze posted an essay on the “pretty badly broken” higher education system, concluding that the university incentives are the root problem. Mike’s company Top Hat Monocle is an innovator in education productivity — so they are squarely facing the challenge that reducing costs while increasing quality of outputs is not generally a goal of university administrators. I like Mike’s essay so much that I wrote a long-winded three-part comment:

Really excellent essay! It’s clear that you have first hand battlefield experience. And you have identified the central issue — the incentives in research universities are completely wrong for the achievement of teaching excellence. If you want to radically improve the outputs you must change the incentives. I purposely said improve the outputs because that must be the focus of efforts to improve teaching. We can debate the definition of outputs (critical thinking, problem solving, analytical competence, argumentation, leadership, negotation skills, powerful peer networks …), but to make progress we must agree that we care about outputs NOT inputs. Public school administrators, teachers unions, and yes university administrators are mostly focused on inputs: which can be oversimplified to “give us more money and we promise to do better”. Focusing on outputs also clarifies the importance of cost-effectiveness or productivity — better outputs for less inputs.

What is the primary incentive that motivates the university administration? It is clearly to get control of more money — every year more money in absolute. Every year more money per student. Every year more money per academic. Money allows her to buy what she wants: prestige, to attract the clever and monied students, some of whom may become powerful politicians. Not as good, but a successful business person can also be useful as a source of money. Money to buy the clever academic who is also a proven grant-getter.

Where is the incentive to innovate? E.g., to work with Top Hat Monocle, towards technologies that can dramatically improve productivity?

Where is the incentive to recruit the world-class teacher? To grant tenure to the great teacher who is not a great grant-getter?

I don’t believe it is possible to change the institutional incentives from within. The similarly broken public schools can’t be fixed from within. No doubt you know or know of ex-Stanford economist Paul Romer, who gave up his tenure to launch education technology startup Aplia. Paul is co-revolutionary with you, with Top Hat Monocle. A favorite quote:

“In the old model, a teacher had to be so engaging that he inspired students to put in the effort that is necessary for learning,” Romer explains. “The problem is that that is not a scalable model. There simply aren’t enough inspiring teachers and inspirable students.”

“What we have right now is a reputational model for universities rather than an outcome model,” Romer says. “The presidents at the elite institutions know that if the competition were to be based on some credible measure of output or value added, they would lose.

So Paul and Aplia focused on productivity issues — e.g., we know students who do more homework do better. But how can we assign more homework without increasing inputs (labor).

A related example: thinking about how to create economic growth where it is desperately needed, Paul Romer realized that we are not going to change North Korea’s, Zimbabwe’s or Congo’s rules (from within). His solution is Charter Cities — briefly that involves creating a new “charter city” with “good rules” near enough to one of these broken states that migration (escape) is feasible.

If I am correct that we do not have the power to reorient the institutional incentives that motivate university administrators, then what policy changes would be effective to revolutionize learning? Some ideas:

1.Redirect the subsidies to the consumers of the product — the students. Do not pass the subsidy through the administration. Force the administration to earn the FULL price of their education product from their customers.

2. This is really subordinate to #1 because it will automatically happen once #1 is implemented: compensate teachers on results/outputs. You got this exactly right in your essay

(…) They should be treated like rock stars and paid accordingly

You are probably already familiar with examples where free enterprise is unleashed in the education market. E.g., South Korean private tutoring …education innovation in free market for tutoring where top teachers earn multi-million USD compensation:

(…) To compete with the free online schools, Megastudy hires teachers with followings that rival those of pop stars. Some teachers lose their contracts if their popularity ratings drop. Last year, one Megastudy teacher generated 10 billion won (nearly $8 million) in online sales and pocketed 23 percent as his share.

Your point about separating grad- from undergrad-school is excellent. I do believe that structure follows naturally from free market competition for customers. Because, success in the grant-getting process has little bearing on high productivity delivery of education outputs. Obviously it’s not impossible, but just unlikely, for a great researcher to be a great teacher. Certainly the incentives are absent, as the efforts invested on the teaching goal rather directly subtract from what she can invest in research results. In eight years of undergrad- and grad-school I had only one great teacher who was a great researcher. But I say great because he motivated me to change direction toward computer science (he was actually a mathematician teaching Philosophy of Science 🙂

Bill Gates has a pretty good grasp of the importance of what you are doing at Top Hat. He also understands the root incentive problem. Have you approached either Gates or the Gates Foundation?