Magazine article Chicago Policy Review (Online)

Higher Education in the Digital Age: A Conversation with Michael Lovenheim

Magazine article Chicago Policy Review (Online)

Higher Education in the Digital Age: A Conversation with Michael Lovenheim

Article excerpt

Michael Lovenheim is an Associate Professor in the Department of Policy Analysis and Management at Cornell University, and a member of the Human Capital and Economic Opportunity (HCEO) Global Working Group at the University of Chicago. His research focuses on public finance and labor economics, particularly on the economics of education and issues in local taxation and regulation.

Since its inception, online education has faced heavy skepticism, if not downright opposition. A recent study by David Deming, Michael Lovenheim, and Richard Patterson finds that students benefit from the education quality improvements that traditional brick-and-mortar institutions make in response to the disruptive threat posed by their online competitors. Michael Lovenheim, one of the coauthors of this study, speaks to the challenges and future of online degree programs and higher education. Read more about his group’s research here.

What motivated you to study online degree programs and their effect on the higher education market?

There has been a massive increase in the provision of higher education online. People talk about it as a potentially disruptive force, and there are a lot of theoretic reasons to believe that is a valid argument. Most students go to college close to their homes, which gives local colleges a lot of market power. However, the expansion of online learning offers an opportunity to inject more competition into higher education and impacts the quality of services offered by brick-and-mortar schools. Another motivation is that a lot has been written about concerns regarding how good these online schools are. It is important to understand the entire set of effects these online programs have.

Given rising college tuition costs and college premiums on income, how do students benefit from a more competitive market?

Market competitiveness leads to higher-quality education services for a given price. Without competition, there are very low incentives for colleges to (1) allocate resources in an efficient manner and (2) provide services that people actually want or need in different economies. I think these are the two main mechanisms where competition in postsecondary education markets could benefit students. What we see is that, due to online competition, there is a shift towards instructional spending. This is consistent with the idea that competition is inducing schools to spend more on teaching, which should theoretically help students.

There is a lot of literature on how increasing spending does not improve education outcomes in K-12. Is this also the case in higher education?

What is interesting is that most of the evidence we have suggests that more spending does increase student outcomes in higher education, but it is much less clear in K-12. A good amount of work has been done, using different sources of variation, identification strategies and data. They all point to resources and spending being important drivers of higher education productivity.

What is the distinction between higher education and K-12 that makes higher education more responsive to spending?

First, there is no compulsory higher education, so the sets of students are different. The second difference is that there is more competition in higher education, even in places where there is little of it. Students can choose to attend college anywhere they want without staying at home. …

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