Abstract
Fifty years ago, Richard Musgrave put forward the notion of a “merit good”—one that despite its virtue would be undersupplied and under consumed in a free market economy driven by traditional notions of consumer sovereignty. Higher education is considered by many to be a merit good because they believe it generates highly desirable spin-off effects. If higher education has been a merit good, then that status appears to be disappearing. Declining state funding for higher education, increasing tuition rates and highly successful fund-raising by independent institutions have diminished public flagship universities, at least relatively. Consequently, their rankings have declined.
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Notes
All dollar values have been adjusted by the Higher Education Cost Adjustment (HECA) by the State Higher Education Executive Officers (SHEEOs) for higher education price inflation over time. HECA growth often has exceeded growth in the Consumer Price Index. The SHEEOs represent the top public higher education officer in each state and often hold a title such as Commissioner for Higher Education.
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Koch, J.V. The relative decline of a Musgrave ‘Merit Good:’ the case of public support of flagship public universities. J Econ Finance 32, 368–379 (2008). https://doi.org/10.1007/s12197-008-9040-8
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DOI: https://doi.org/10.1007/s12197-008-9040-8