Why Do Institutions of Higher Education Reward Research While Selling Education?"

One of the initial motivations for this blog was to ensure that prospective Chinese students wanting to study abroad made sure that they invested wisely in the highest quality education at the top Universities.

To that end, the side bar on the right lists some of the top courses in the UK.

The Universities listed tend to be the "best" Universities in terms of research. That raises the question of why or if the best research Universities offer the best education.

My advice holds. A degree from a "top" University is a signal of the quality of the student (given these Universities are often harder to get into). If a student is to invest heavily in human capital accumulation then the returns need to be maximised. Employers are far more likely to take students from the well known "top Universities".

The following paper sheds light on this interesting topic.

Why Do Institutions of Higher Education Reward Research While Selling Education?"

NBER Working Paper No. w14974

DAHLIA REMLER, City University of New York - Baruch College - School of Public Affairs, National Bureau of Economic Research (NBER)
Email: Dahlia_Remler@baruch.cuny.edu
ELDA PEMA, Naval Postgraduate School
Email: epema@nps.edu

Higher education institutions and disciplines that traditionally did little research now reward faculty largely based on research, both funded and unfunded. Some worry that faculty devoting more time to research harms teaching and thus harms students' human capital accumulation. The economics literature has largely ignored the reasons for and desirability of this trend. We summarize, review, and extend existing economic theories of higher education to explain why incentives for unfunded research have increased. One theory is that researchers more effectively teach higher order skills and therefore increase student human capital more than non-researchers. In contrast, according to signaling theory, education is not intrinsically productive but only a signal that separates high- and low-ability workers. We extend this theory by hypothesizing that researchers make higher education more costly for low-ability students than do non-research faculty, achieving the separation more efficiently. We describe other theories, including research quality as a proxy for hard-to-measure teaching quality and barriers to entry. Virtually no evidence exists to test these theories or establish their relative magnitudes. Research is needed, particularly to address what employers seek from higher education graduates and to assess the validity of current measures of teaching quality.

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