The Tuition Paradox

This post and Joseph's follow-up has gotten me thinking about a strange aspect of the economics of higher education in recent decades.

At the risk of oversimplifying, undergraduates are primarily paying for instruction and evaluation. The school will teach the student a body of knowledge and a set of skills and will provide the student with a quantitative measure (backed by the reputation of the school) of how well he or she mastered that knowledge and those skills.

The costs associated with providing those services is almost entirely labor driven. While there are exceptions (particularly involving distance learning), most instructors use minimal technology and many just rely on the white board. This is not a criticism (A good teacher with a marker always beats a bad teacher with a Powerpoint), but the costs of a service that can be provided with simple facilities and little or no specialized equipment will always be labor driven.

Twenty or thirty years ago, when you took an undergraduate class you were likely to be taught by a full-time faculty member, not someone with a high salary but reasonably well paid professional with good benefits and excellent job security. These days you are far more likely to be taught by a badly paid adjunct with no benefits or job security.

In other words, when you take into account inflation, the cost to universities of providing instruction and evaluation have dropped sharply while the amount universities charge to provide these services has continued to shoot up.

I'm not say that this is all a scam or that administrators are out there stuffing their pockets, but I do think there's something wrong with this picture.