A Cost-Benefit Analysis of UT Professors, Sans Cost or Benefit


The University of Texas thinks its professors are worth their weight in salary, but it misses the point on faculty productivity. The Texas Tribune:

Despite the arguments of critics in recent months, Marc Musick, the University of Texas at Austin's College of Liberal Arts associate dean of student affairs, makes the case in a new faculty productivity report that his institution provides "an incredible return on investment for the state."

Using data from the 2009-10 academic year made public by the University of Texas System this summer, Musick found that UT professors generated revenue of more than twice their compensation of $257 million in state funds for salary and benefits. By combining the amount of money paid by the state via a student enrollment-based formula and external funding for academic research, Musick concluded that the UT faculty generated about $558 million in total revenue for the university.

Unfortunately, Musick's report, which UT published this month, never gets to the heart of what it means to get a return on taxpayer investment in higher education. Professors are bringing more money to the University of Texas than they are paid in salary and benefits. Good for UT. But so what?

Musick's conclusions do not take into consideration the source of the revenue professors win for UT. It's reasonable to assume that a substantial portion of the research grants which account for the majority of this revenue are actually federal funds—the paper even indicates as much:

They are also expected to receive federally funded research grants, and those awards are tracked by the data set.

Fields such as those in natural sciences or engineering have access to federal organizations that are able to give billions of dollars in grant funds to researchers around the country.

In such cases, the professors' great financial accomplishment is nothing more than finding a way to spend taxpayer dollars that have already been collected. Does anyone fear that money might go unspent?

Similarly, the study does not consider the impact of government subsidized student loans, which artificially inflate tuition rates and drive up admissions, skewing enrollment revenues upward.

The report also does nothing to assess the value of any of the research performed by professors, but simply takes it in good faith that the results are worth whatever price tag they run up.

Bonus irony: the numbers used to show revenue earned through grants are actually based on data showing research expenditures rather than actual money received, requiring an (unsubstantiated) assumption that expenditures are directly correlated to revenue.

In fairness to Musick, who freely admits the report's limitations, measuring the highly variable, subjective benefits created by professors against the myriad costs that go into producing them is no easy task. Cato's Neal McCluskey (who deserves credit for the link) points out in an interview at Education News:

No one, at least designated by government, should do the follow up. Whether or not one major worked out better than another is largely a subjective matter, based on the happiness derived from it by the student. So the doctor might hate his job but make a lot of money, while the theatre major might make a meager sum but be very fulfilled. Who is to say other than each person who is better off (though federal measures would say the doctor is because financial outcomes are so much easier to measure than psychological.)

You just keep illustrating how hard in reality it is to do something as easy-sounding as measuring productivity. How do you measure books versus articles? Teaching quality? Interviews with policy dorks such as yours truly? And the list goes on.

This is not to say, though, that you don't try to measure productivity and reward or punish faculty members accordingly. You probably do, but you must leave it up to individual schools to try different things. Basically, when you don't have one, clear answer to a problem, the best thing you can do is decentralize and let lots of different approaches be tried. Those that work better will tend to attract faculty and students, those that work worse will be left behind, and the better options will bubble up to the surface.

The entire interview, which prefaces a Cato conference on higher education this Friday, is here.

Reason on higher education here, here, and here.