Saturday, April 30, 2011

Price segmentation vs Social Engineering at U.N.L.

An old fight in a new battlefield: college tuition.

Apparently there's some talk of differentiated tuition for some degrees at the University of Nebraska in Lincoln. This gets people upset for all kinds of reasons. Let me summarize the two viewpoints underlying those reasons, using incredibly advanced tools from the core marketing class for non-business-major undergraduates, aka Marketing 101:

Viewpoint 1: Price Segmentation. Some degrees are more valuable than others to the people who get the degree; price can capture this difference in value as long as the university has some market power. Because people with STEM degrees (and some with economics and business degrees) will have on average higher lifetime earnings than those with humanities and "studies" degrees, there is a clear opportunity for this type of segmentation.

Viewpoint 2: Social Engineering. By making STEM and Econ/Business more expensive than other degrees, the UNL is incentivizing young people to go into these non-STEM degrees, wasting their time and money and creating a class of over-educated under-employable people. Universities should take into account the lifetime earnings implications of this incentive system and avoid its bad implications.

I have no problem with viewpoint 1 for a private institution, but I think that a public university like UNL should take viewpoint 2: lower the tuition for STEM and have very high tuition for the degrees with low lifetime earnings potential. (Yes, the opposite of what they're doing.)

It's a matter of social good: why waste students' time and money in these unproductive degrees? If a student has a lot of money, then by all means, let her indulge in the "college experience" for its own sake; if a student shows an outstanding ability for poetry, then she can get a scholarship or go into debt to pay the high humanities tuition. Everyone else: either learn something useful in college, get started in a craft in lieu of college (much better life than being a barista-with-college-degree), or enjoy some time off at no tuition cost.

I like art and think that our lives are enriched by the humanities (though not necessarily by what is currently studied in the Humanities Schools of universities, but that is a matter for another post). But there's a difference between something that one likes as a hobby (hiking, appreciating Japanese prints) and what one chooses as a job (decision sciences applied to marketing and strategy). My job happens to be something I'd do as a hobby, but most of my hobbies would not work as jobs.

Students who fail to identify what they are good at (their core strengths), what they do better than others (their differential advantages), and which activities will pay enough to support themselves (have high value potential) need guidance; and few messages are better understood than "this English degree is really expensive so make sure you think carefully before choosing it over a cheap one in Mechanical Engineering."

It's a rich society that can throw away its youth's time thusly.