Monday, July 8, 2013

A (very) quick response to SRBP

A (very) quick response to this SRBP post before I go out of town.

Ed seems not to have read my previous post very carefully, because he hasn't really responded to the methodological problems with the FCPP study he quoted.  Instead he links to another study by Institute Economique de Montreal (IEM) that uses the same methodology!  The IEM report also explicitly says: 

"These results obviously do not mean that increasing tuition fees in a given province will lead to a rise in enrolment rates, but they do suggest that the opposite cannot be maintained either, namely, that higher fees will necessarily reduce enrolment rates."

I do not dispute this conclusion.  All that these two reports demonstrate is the obvious fact that tuition rates are not the sole or dominant factor in determining university enrolment.  This is consistent with the Stats Can report I referenced on Saturday, that geography plays an very important role ( e.g. Nova Scotia has high enrolment rates in part because it has universities scattered all over the place near where people live) as well as many other factors.

I also agree (and said explicitly in the previous post) that the effect of tuition increases is fairly small (i.e. that demand is inelastic).  The point I am trying to make is that if we are going to have an intelligent debate about the cost and benefits of maintaining low levels of tuition, we shouldn't pretend that the costs are zero.  Both the FCPP study and the IEM study not well designed to measure this cost and in fact are almost laughably primitive in their methods.  I can't help but suspect that these studies were chosen not for the quality of their analysis, but because they reach the desired conclusion.

One nice thing about the IEM report is that it does include a chart showing how enrolment has varied through time.  It shows that the large tuition increases in Ontario in the '90s were associated with a decline in enrolment from trend.  Indeed, enrolment levels seem to have been set back about five years relative to the underlying trend of increasing enrolments.  Does this have nothing to do with the tuition hike?  

The one sophisticated study that SRBP links to did find that large increases in tuition for professional degrees lead to drops in enrolment,  a result he calls " in a penetrating insight into the obvious ". Why he thinks that this is obvious but that smaller tuition increases would not affect enrolment is unclear.

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