You’d assume that the bigger a college’s revenue is, the better. After all, more donations and tuition revenue means more financial aid, more money for teacher salaries, and better dorm rooms. A larger revenue seems like a win-win for colleges and students. But economist Howard Bowen has the opposite intuition. In fact, he has hypothesized that higher revenues lead to higher costs, and, therefore, higher tuition. His theory of Bowen’s cost disease attempts to explain the rising price of college this way. Bowen’s argument is roughly as follows. First, colleges are non-profits. This means that neither their trustees nor their shareholders can keep the difference between revenue and costs to buy nice cars or big houses. As a result, they don’t have an incentive to minimize costs in order to maximize said profits. Colleges additionally care a lot about improving their reputation - their most valuable asset - as it often determines whether they receive student tuition and
Our Fall 2017 Issue is finally here! Please contact email@example.com if you would like to pick up a copy. This is the 9th edition of The Columbia Economics Review. In the next several months, we will be working hard on events for the celebration of the decennial journal! https://issuu.com/columbiaeconreview/docs/fall_2017_final
This is the first in a series of articles examining different explanations for the rise in college costs In 1981, Columbia College tuition was $10,300 -- less than half of today’s tuition price , inflation-adjusted. While the cost of college has skyrocketed, clothing prices dropped -- since 1998, got 10% cheaper. This is symptomatic of a larger trend: as prices of goods have decreased, prices of services have increased. The Bureau of Labor Statistics reports that from 1950 to 2012 commodity prices have risen by 500%, while service prices have risen by 1400%. Are these trends related? Economist William Baumol thinks so. His theory, Baumol's cost disease, tells the following story. First, technology in the goods industry improves, making workers more productive. Let's look at an example to see the wage results of this. Imagine a worker who makes $7 an hour. Due to productivity increases, he now produces $10 of goods an hour. Thus he can demand a higher wage from his
https://issuu.com/columbiaeconreview/docs/cer_spring_2017 The Spring 2017 Issue has arrived! Click the link above to learn more about the bitcoin volatility, macroeconomic effects of corporate tax policies, and Federal Reserve regulations.
The Columbia Economics Review is proud to present the following article by Mohammed Rishad Karim, a student at Stuyvesant High School and the winner of our Fall 2016 High School Student Essay Contest. Among a number of impressive entries, Mohammed's analysis of John Kenneth Galbraith’s achievements was selected after extensive deliberation by our High School Essay Competition board.
Our Fall 2016 edition is here! Read on to find out about the decline of the agricultural sector in Puerto Rico, the social and economic effects of spending cuts vs tax increases, and contraception's effect on wages. Our hard copies will be here soon so hang tight and we'll let you know when you can pick them up. https://issuu.com/columbiaeconreview/docs/final_fall_2016
One of the major problems that students attending classes in Hamilton face is that they see unusually high traffic on stairways during the few minutes before and after class. This creates a bottleneck situation due to a large number of students competing for a tiny space (two narrow stairways) during specific time periods. Naturally, one solution would be to divert some of the students away from the two stairways by offering them alternative ways of transportation. The only alternative route would be the Hamilton elevator, which is equally congested and incredibly slow and inefficient. Some might argue that the school should increase capacity – building a new stairway. However, the extra capacity will not cause additional students to use the stairs because the total number of students taking classes in Hamilton is fixed. Moreover, this tactic can be rather difficult to implement, as the school is likely unwilling to spend extra money to renovate the building and build an entire new
Marijuana legalization has been a divisive issue in the United States for decades, yet it appears to have finally turned the corner. While marijuana is still prohibited under federal law, Alaska, Colorado, Oregon, and Washington - and last week, California, Nevada and Massachusetts - have all legalized the recreational usage of marijuana and the commercial sale of marijuana with a license. Foreign countries are also easing their stances on marijuana. Canada is poised to legalize the drug in spring 2017, opening itself up to a $5 billion-dollar industry. For college students, marijuana legalization may seem like a dream come true. In 2015, daily marijuana usage on college campuses reached its highest percentage since 1980, even as the consumption of alcohol, narcotics, and amphetamines declined. Moreover, the rapid growth and diffusion of small dispensaries in states that have legalized marijuana has removed barriers to access. Colorado, for example, has over 900 licensed
With U.S. presidential contenders such as Bernie Sanders proposing tuition-free education at public universities, I will examine a series of increasingly relevant education issues through an economic lens. Is it worth paying rising tuition bills at universities? What alternatives might one pursue to four years at an undergraduate institution and why? How much, exactly, is a bachelor’s degree worth? First, a monetary analysis. According to the College Board, in the 2015-16 academic year, the average cost of tuition and fees was about $32,000 at private colleges, compared to roughly $9,000 for state residents at public colleges. Out-of-state residents at public colleges fared significantly worse than their counterparts, with a price tag similar to private colleges at $24,000. At Columbia, this year’s sticker price was about $66,000-- more than double of the average private college! With the Fed’s decision to raise interest rates in December and economic instability abroad captured
In the first edition of our new video series, the Columbia Economics Review is proud to present Columbia students' musings on Bernie Sanders. Speaking directly from Low Steps and the College Walk, our peers weigh in on Sanders' presidential campaign, economic policies, and what it really means to be a democratic socialist.