Talked about the bennett hypothesis the possibility

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talked about the Bennett Hypothesis the possibility that federally subsidized loans increase tuition prices. Next, I talked about two alternative theories explaining the persistent increase in college tuition: namely, decreased state funding, and increased competition among schools. In this post, I discuss Baumol s cost disease and Bowen s rule. These aren t quite alternatives to the other theories I ve explored, but rather complements, as they help us better understand the effects of decreased funding and increased competition. Baumol s Cost Disease Baumol s cost disease has to do with the lack of productivity growth in service industries. These industries have had difficulty replacing human labor with capital labor. For example, a teacher can only teach a handful of students, and that has not changed much in the past hundred years (MOOCs aside). Baumol provides two reasons why productivity growth is not rapidly rising in these industries. First, these jobs cannot be standardized. While we have standards for what teachers must learn and what licensing they must receive, there is no such thing as a standard student. Teachers must adapt to their student s way of learning; one student may excel with little help while another needs tutoring. Even a standardized curriculum like the Common Core will not standardize the teaching profession. Second, quality is, or is believed to be,
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correlated with human involvement. This is very apparent in education. A teacher who turns on a PowerPoint and leaves the room won t win any teaching awards, but a teacher who
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  • Fall '19
  • Bowen

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