More Information… (and more Understanding)?

So the IFS have finally published their research that links HMRC tax data to students, courses and institutions. As Nick Hillman has already written this was originally hoped for in 2012 when new tuition fees were being introduced. Nick also describes their findings as ‘underwhelming’ establishing as it does that some graduates earn more than other graduates, that some men earn more than some women, that the rich earn more than the poor and that some types of courses and institutions ‘outperform’ others by these measures eg lawyers and doctors earn more than nurses or artists.

Is anyone really surprised by this?

Really?

Oh come on…

Even though there will inevitably be many more instalments in this type of research and even though it is difficult to argue against there being more detailed information about courses, institutions and earnings in the public domain, it is much more important to consider how we – and perhaps more significantly, policymakers – understand and use this information.

Some commentators have expressed shock and others have asked which institutions are those unidentified but clearly offering poor value for money. Students have a right to know don’t they? Well yes they do. But they must also understand much more about some of the reasons that explain such differential outcomes. To put it another way, there is a duty to explain as well as to inform.

We know that this is a government that wishes to use and accelerate the role of markets in higher education. More competition, more consumer choice and more information to underpin these as well as significant changes to regulatory structures and processes. We also know that this is a government that wants to create more social mobility and that higher education represents one of their key levers with which to achieve it. We await a white paper and legislation that will further address and entrench these objectives into our higher education system.

This is surely where we begin to encounter problems. Not because of the information itself but because of what policy decisions are taken as a result of the information. This is potentially true at both the institutional level as well as for politicians and policymakers. So to improve ‘outcomes’ and therefore standing or prestige in the market, universities might choose to recruit more rich people – especially men. Or they may choose to offer more law and medicine degrees and move or open a campus in London and the South East where earnings are higher. Perhaps even more of a university’s graduates might be encouraged to seek such careers in London and the South East as an alternative? All rational conclusions and even if partly fanciful, many elements of these ideas can already be found in individual university strategies.

There may be no fixed number of firms or jobs to employ such people or to accommodate such provision, but there are risks of oversupply, labour market bottlenecks and overheating, congestion and inadequate skills or labour supply in other less well paying occupations and sectors. Never mind that such occupations can be much more expensive to resource and to teach. Never mind that these  – science, engineering, health – may be more economically or socially significant in the longer term.

And what of the rest of the country? Or the other parts of the higher education market? Where wages are lower, higher paying sectors and occupations in shorter supply but where most of our universities tend to be (just about). The rest of the UK aka ‘Not London’… Or the rest of the economy aka ‘not law or medicine’?

Recent LSE research from Anna Valero and John Van Reenan has found that opening up a new university can add 4% to a region’s income as well as 0.7% to national income. Now that really is quite surprising. More surprising than the IFS research anyway? The impact may be greater in areas where incomes and productivity are lower as ‘the university effect seems to be related to increasing the supply of skilled graduates who raise productivity in the firms they work in.’ Productivity is also improved as ‘universities boost innovation (as measured by an increase in patenting)’.

That is why it’s good to have universities – from both the Russell Group and others – all over the UK including Wales, Northern Ireland, Scotland as well as the North East, the North West, the East and West Midlands and the South West. It’s also good news for each of those regions when graduates and academics stay in those places and help grow the economy – even if the wages are lower and the sectors and occupations different.

But while we are at it let’s say exactly the same thing about those universities in the same place where many more (most?) of their students come from these areas and stay afterwards. Step forward the Universities of Teeside, Wolverhampton, Bolton, Plymouth, Huddersfield and many more. Spare a thought too for those institutions who do a similar job in less fashionable and less economically successful parts of London. UEL, South Bank, Greenwich and others. Or the arts institutions based in parts of the country where there is less arts funding and fewer jobs? Or, if you prefer, think of any of those universities in the IFS research that you might have thought are the ones offering lower returns or poor ‘value for money’.

Economic growth, improving productivity and closing the gaps between the economic performance of London and the South East and other regions are all government policy too. Even if they doesn’t quite square with the vision of a single higher education market based on applicants making unconstrained choices on perfect information. It is what the ‘powerhouses’ and the ‘engines’ are all about.

So let’s think about market(s), about returns and about social mobility for just a little bit longer? We might, as the Prime Minister and others hope, succeed in getting more poorer students into the very best universities and then into the highest earning professions based largely in London. But unless your conclusion is that we should also move all universities and their graduates to the highest earning places and sectors, we are going to need a much more nuanced view and much broader ambitions. We will also need to think rather more deeply and carefully about how we measure or rank our universities.

So what else do we need to understand better? Besides geography, economic conditions, sectors and occupations? Maybe a little about confirmation bias? Perhaps we can just start here. Check prejudices, but think, understand and explain what this evidence is really telling us?

 

The IFS report can be downloaded here:

http://www.ifs.org.uk/publications/8235

A blog about the LSE research can be seen here: http://blogs.lse.ac.uk/politicsandpolicy/the-more-universities-in-a-country-the-faster-its-economic-growth/

 

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