The Economic History and Future of Higher Education

The first university opened up about 1000 A.D. in Milan, so we’ve got about 1,000 years of good data on how higher ed works and doesn’t. A little-known subfield of economics called cliometrics can help us use that data to figure out how things are going to change for colleges and universities.

Economist Eric Mason joined the Enrollment Growth University podcast to talk about the economic history and future of higher education and to help us understand how the field of cliometrics can paint an economic-specific understanding of higher education history.

What is Cliometrics and How Can It Help Us Understand Higher Ed’s Future?

Clio is the Greek goddess of history, so cliometrics is simply using economics to see our history and trajectory, and from that, to predict future events. 

“Cliometrics helps us understand how things have changed over time,” Eric said, “and we apply those models, those understandings to future events to get a better understanding of where they’re heading.”

The world already experienced a major technology change with the Industrial Revolution in the early 1800s, and seeing how technology changed the landscape of education back then could help us understand how education relates to advances in AI now. 

“It’s never going to be perfect,” Eric said, “but it could definitely help us to understand how AI and other technological advances are going to impact education going forward.”

Decreasing Student Confidence in the Value of Higher Ed

Education is more valuable than just the income you get from it. You get utility from knowing things. 

“There is economic data that shows people have decreasing confidence in (higher ed),” Eric said, “but investing in education means you’re not just going to get your money back, but you’re also going to get the added personal confidence in knowing your field.”

So while we are seeing a decline in confidence, that’s probably more a short-run event. As people realize the value of education over time, they’ll grow more optimistic. 

“I think there’s probably a small little bias,” Eric told us, “from people being upset with student loans. So I think that gives a more melancholy view of education, when in reality, it’s still a better return than throwing the money in the S&P 500.”

The Growing Disconnect Between Academia and Industry

Throughout human history, technology has never advanced as fast as it is today. Moore’s Law is really driving technology and innovation across the entire economy. So education adapts a lot slower than the private sector, which means that by the time that student transitions to work, more distance has passed. That’s going to continue to happen as technology gets faster and faster. 

“But I think the introduction of micro-courses and third party education products,” Eric said, “are going to help close that gap over time.”

For a thousand years, higher education has provided the skills needed, so would employers or employees be better off if they never got educated? No, they’d be worse off.

“There’s no perfect world,” Eric told us, “but you can’t discount the education and the skills the students and employees are getting when they come to the job. There’d be a bigger gap without higher education, not a smaller one.”

Skills Permutation and the Pace of Change

As we’re chasing the rapid clip of technological change, what does this unprecedented period of skills permutation we’re in mean for our traditional degree programs? How should they evolve?

“I get excited anytime somebody uses the word permutation,” Eric said. “We’re developing ultra-siloed skill sets. Don’t get me wrong … that’s good. It’s better to be an expert at one thing than a Jack of all trades.”

That’s the o-ring theory. You will make more money if you’re highly skilled at one thing — provided that one skill is marketable — than if you’re just okay at a bunch of things. Look at some of these programmers with Python, for instance, it’s amazing what they can do with these engineers who build these ultra precise pieces of equipment. 

“That’s all good,” Eric acknowledged. “But what we’re seeing is that, and it’s one of the things that I do think is a little bit of a flaw that’s in higher education, is that we’re training students to be so good at one thing that they’re losing a lot of the soft skills and broader strokes that are needed to get them to more easily adjust to a new system.” 

Instead, we should give them enough skill sets that they can work their way into a job and still maintain that super high discipline of that field. 

Look historically. As labor unions rose up and formal education rose up in the 1800s, the U.S. began introducing land grant colleges. Then, we adapted that mechanism so more people could go to college. As the population became more educated, technological innovation also ramped up so that in 110 years we went from the steam engine’s introduction to the airplane. 

Now, we need to focus on creating highly skilled people who also have the soft skills to understand the tertiary and secondary forces within their super siloed fields.

Next Steps for Ensuring Economically-Friendly Degree Programs

“Don’t be scared to break the mold,” Eric said. “I think the rise of night classes is awesome…stretching out bachelor’s degree programs to reduce the cost over time and to fit into more busy schedules. I also think I’m a big believer in vocational schools.”

This is not a winner-take-all scenario. Some micro-degree programs could partner with reputable online schools to increase the overall education and skills that an individual has and that an institution needs. 

“I don’t think there’s a lose-lose scenario there,” Eric said. “I think working across the industry is the best method going forward.”

 

This post is based on a podcast interview with Eric Mason from the City of Quincy, Massachusetts. To hear this episode, and many more like it, you can subscribe to Enrollment Growth University.

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