Abstract
During recent years the Higher Education (HE) sector in Britain has come under government pressure to reduce the scale of its operations and change the nature of its product. Much of the justification for this change has been provided by “new right” economists [1] who have concluded, on economic grounds, firstly that state supply of HE should be limited to investment in human capital and secondly that additional state finance is justified only to the extent of the value of the external benefits bestowed upon society.
It is the purpose of this article to review the conventional economic assessment of HE and examine the policy implications of the economists' analysis. In particular it is suggested that resource redirection within HE is difficult because of the bureaucratic properties of educational institutions. The article concludes that what is required is a methodology to evaluate quality of output and a uniform method of calculating course costs within and between institutions.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Agnello, L. J. and Hunt, J. W. (1976). “The impact of a part-time graduate degree and early career earnings on late career earnings,” Journal of Human Resources 11: 209–218.
Anderson, C. (1965). “The social status of university students in relation to the type of economy: An international comparison,” Transactions of the Third World Congress of Sociology, Vol. 5.
Arrow, K. J. (1973). “Higher education as a filter,” Journal of Public Economics 2: 193–216.
Bacon, R. and Eltis, W. (1975). Britain's Economic Problem: Too Few Producers. London: MacMillan.
Bailey, D. and Schotta, C. (1972). “Private and social rates of return to education of academicians,” American Economic Review 62: 19–31.
Becker, G. S. (1964). Human Capital New York: National Bureau of Economic Research.
Bereiter, C. (1974). Must We Educate? Englewood Cliffs, NJ: Prentice Hall, Inc.
Blaug, M. (1970). An Introduction to the Economics of Education. Harmondsworth: Penguin.
Bourdieu, P. and Passeron, J. C. (1964). Les Heritiers. Paris: Minuit.
Breton, A. (1974). “Student unrest and the yield on human capital,” Canadian Journal of Economics, VTI No. 3.
Breton, A. and Wintrobe, R. (1975). “The equilibrium size of a budget-maximising bureau,” Journal of Political Economy 83: 195–207.
Brown, W. W. (1980). “The structure of pay bargaining in Britain” in F. Blackaby (ed.), The Future of Pay Bargaining. London: Heinemann.
Carnoy, M. and Marenbach, D. (1975). “Returns to schooling in the United States 1939–1969,” Journal of Human Resources No. 10.
Cohn, E. (1979). The Economics of Education. Cambridge, MA: Bellinger.
Craven, B. M. and Dick, B. and Wood. B. (1983). “Differential Costs and Advanced Further Education.” Newcastle Polytechnic. Paper presented to NAB Database Committee, April.
Crombag, H. M. (1978). “On defining quality of education,” Higher Education 7: 389–403.
Daly, A. (1982). “The contribution of education to economic growth in Britain: A note on the evidence,” National Institute Economic Review, May.
Dahrendorf, R. (1967). “Crisis in German education,” Journal of Contemporary History. Vol. 2, No. 3: 139–147.
Dore, R. (1976). The Diploma Disease. London: Allen and Unwin.
Downs, A. (1957). An Economic Theory of Bureaucracy. New York: Harper and Row.
Foster, E. and Rodgers, J. (1979). “Quality of education and student earnings,” Higher Education 8: 21–37.
Fredland, J. E. and Little, R. D. (1980). “Long run returns to vocational training: Evidence from military sources” Journal of Human Resources, XV (1): 49–66.
Freeman, R. B. (1976). The Overeducated American New York: Academic Press.
Freeman, R. B. (1977). “The decline in economic rewards to college education,” Review of Economics and Statistics, No. 59.
Freiden, A. and Leimer, D. (1981). “The earnings of college students” Journal of Human Resources, Vol. XVI, No. 1.
Galbraith, J. K. (1969). The New Industrial State Harmondsworth: Pelican.
Geiger, R. L. (1980). “The changing demand for higher education in the seventies: Adaptations within three national systems” Higher Education 9: 255–276.
Gould, A. (1981). “The salaried middle class in the corporatist welfare state,” Policy and Politics 9 (4): 408–418.
Harberger, A. (1971). “Three basic postulates for applied welfare economics: An interpretive essay,” Journal of Economic Literature (September) pp. 785–797.
Hartley, K. (1981). “Defence - a case study of spending cuts” in C. Hood and M. Wright, Big Government in Hard Times. London: Martin Robertson.
Johnson, H. G. (1973). “The university and social welfare,” Minerva 1: 30–52.
Johnson, H. G. (1974). “Cambridge in the 1950s,” Encounter (January).
Kiker, B. F. and Condon (1981). “The influence of socioeconomic background on the earnings of young men,” Journal of Human Resources XVI (1): 94–105.
Kogan, M. (1973). Comment on Niskanen's Bureaucracy Servant or Master? Institute of Economic Affairs.
Layard, P. R. G. and Psacharopoulos (1974). “The screening hypothesis and the returns to education” Journal of Political Economy 82 (5): 985–998.
Layard, P. R. G. and Verry, D. W. (1975). “Cost functions for university teaching and research,” Economic Journal 85: 55–74.
Leibenstein, H. (1979). “X-Efficiency: From concept to theory,” Challenge (September/October).
Mace, J. (1978). “Mythology in the making: Is the Open University really cost-effective?” Higher Education 7: 295–309.
McMahon, W. W. and Wagner, A. P. (1981). “Expected returns to investment in higher education,” Journal of Human Resources, Vol. XVI, No. 2.
Maxwell, L. (1970). “Some evidence on negative returns to graduate education,” Western Economic Journal 8: 186–189.
Merrett, S. (1966). “The rate of return to education: A critique,” Oxford Economic Papers, November.
Moyer, R. C. and Krethow, W. J. (1978). “The resource allocation decision in U.S. colleges and universities: Practice, problems and recommendations,” Higher Education 7: 35–46.
Niskanen, W. A. (1971). Bureaucracy and Representative Government. Chicago: Aldine.
Raymond, R. D. and Sesnowitz, M. L. (1963). “The returns to investment in higher education: Some new evidence,” Journal of Human Resources, No. 10.
Riley, J. G. (1979). “Testing the educational screening hypothesis,” Journal of Political Economy, Part 2, 87 (5): 227–252.
Robbins, Report (1963). Higher Education: Report of the Committee under the Chairmanship of Lord Robbins. HMSO: CMND 2154.
Rowley, C. K. (1969). “The political economy of British education,” Scottish Journal of Political Economy, 152–176.
Rowley, C. K. (1983). “The post war economic failure of British government: A public choice perspective,” in Agenda for Social Democracy. Hobart Paperback, No. 15, Institute of Economic Affairs.
Tarsh, J. (1982). “The labour market for graduates” Employment Gazette, May.
Thirlwall, A. P. (1978). “The UK's economic problem: A balance of payments constraint?” National Westminster Bank Quarterly Review, February.
Thompson, E. A. (1973). “Review of Niskanen's Bureaucracy and Representative Government” Journal of Economic Literature (September) pp. 950–953.
Thurow, L. C. (1975). Generating Inequality. New York: Basic Books.
Tierney, M. L. (1980). “An estimate of departmental cost functions,” Higher Education 9: 453–468.
Tullock, G. (1965). The Politics of Bureaucracy Washington: Public Affairs Press.
Turvey, R. (1963). “On divergence between social cost and private cost,” Economica.
Tyler, R. W. (1934). “Constructing achievement tests,” The Ohio State University. Quoted in C. M. Lindwall (ed.), (1964) Defining Educational Objectives University of Pittsburgh.
Weiner, M. J. (1981). English Culture and the Decline of the Industrial Spirit, 1850–1980. London: Cambridge University Press.
Weisbrod, B. (1964). External Benefits of Public Education. An Economic Analysis. Princeton, NJ: Princeton University Press.
Williams, G. (1978). “In defence of diplomas,” Higher Education 7: 363–371.
Williams, R. (1965). The Long Revolution. Harmondsworth: Pelican.
Williamson, O. E. (1963). “Managerial discretion and business behaviour,” American Economic Review 53: 1032–57.
Winch, D. (1971). “Analytical welfare economics,” Penguin Modern Economics. Harmondsworth: Penguin, pp. 199–200.
Ziderman, A. (1975). “The economics of educational policy,” in R. M. Grant and G. K. Shaw (eds.), Current Issues in Economic Policy. Oxford: Philip Allan, pp. 129–149.
Author information
Authors and Affiliations
Additional information
We are grateful to Professor C. K. Rowley, Dr. R. S. Thompson and P. Lee for helpful comments on an earlier draft. The usual disclaimer applies.
Rights and permissions
About this article
Cite this article
Craven, B.M., Dick, B. & Wood, B. Resource reallocation in higher education in Britain. High Educ 12, 579–589 (1983). https://doi.org/10.1007/BF00140381
Issue Date:
DOI: https://doi.org/10.1007/BF00140381