Jeannie Azzopardi
OMDE 606
Monday, November 06, 2006
Assignment 2
Horses of a Different Color:
Methodological Issues in Comparison of Cost Effectiveness between Distance Teaching Universities and Conventional Universities
Introduction
Comparing the cost effectiveness of distance education institutions and conventional learning institutions are like comparing horses and zebras – they certainly look alike in many ways. But they behave differently and fundamentally they are different. Consequently, methods of comparison can be fraught with arbitrary and sometimes erroneous assumptions.
To begin, what is cost effectiveness and efficiency with regard to these institutions? As Rumble (1997) states, “Efficiency is the ratio of output to input. A system is cost efficient if, relative to another system, its outputs cost less per unit of input” (p.120). While efficiency deals with costs, effectiveness deals with how well those costs are being utilized. “Effectiveness is concerned with outputs. An organization is effective to the extent that it produces outputs that are relevant to the needs and demands of its clients. This implies the existence of criteria by which the organization’s success in this respect can be measured” (161). The question is: Is there a sound criterion?
Laidlaw and Layard (1974) and Rumble (1997) look toward individual course costing and student numbers as the primary cost drivers while Wagner uses a more aggregate cost application of the system. In his 1972 article, The Economics of the Open University and again in his revised 1977 article, The Economics of the Open University Revisited, Wagner uses four calculations in his study of cost effectiveness.
“The four calculations are:
(a) the average recurrent cost per equivalent undergraduate;
(b) the capital cost per new student place; (Wagner includes rental capital cost of capital equipment in his revised study.)
(c) the average recurrent cost per graduate;
(d) the resource cost per equivalent undergraduate;” (160: 364).
Wagner (1972) begins with the fact that the distance educational university deals with undergraduates while the conventional university has undergraduates and post-graduates. “These must be standardized to enable a valid comparison to be undertaken” (163).
It would be much simpler if the two systems were identical so that the criteria for measurement could easily be applied equally but the fundamental differences between distance education and conventional learning institutions and their processes make for a myriad of difficulties. To further exacerbate the methodical issues, differences within and between degrees, teaching methods, jurisdictions, course-work, media used, and even the same types of institutions compound the equation. As it may be shown, the method may not be lacking as much as the scope may be too large.
Degrees
Wagner (1972; 1977) attempted to standardize university degrees in his effort to compare per student costs between the undergraduates of the OU (Open University) and the combination of undergraduates and post-graduates of the conventional university. He further added the part-time and full-time aspect to the mix –with the undergraduates at the OU as the part-time students and the full-time students as those studying at the conventional university. He assumed that equalization of students would be 2:1 – 2 part-time undergraduates to 1 full-time post-graduate. When he revisited this assumption in his second article, he conceded that the figure wasn’t completely fair and went with the revised University Grants Committee’s estimates that gave extra weight to science graduates and less to those with arts degrees. This was based on the higher costs of teaching science vs. arts courses which is true for both institutions. Still, these figures are assumptive.
Credit transfer policies with the OU students created an additional problem with these calculations as well as the question of whether or not the degrees themselves were identical and exactly how many graduates of the OU should be calculated. Rumble (1997) attempted to level the playing field as far as graduates and “…argued that the simplest approach was to assume that the [OU]…produc[ed] a fixed number of graduates pre year” (125). Thus enabling a calculation of the per graduate cost.
Teaching Methods
Wagner (1977) himself allows, “The Open University is of interest to economists because its method of instruction produces a different cost function from that for conventional universities” (360). The distance educational institution produces cost effectiveness in its use of processes that exact less labor – although, this too is an assumption, it has been shown more true than not. It has not yet been proven that an education from a distance education university is more or less superior to that of a conventional university (Rumble, 1997).
Jurisdictions
When looking to compare educational systems, the jurisdiction in which the institutions lay is another critical element. One cannot safely assume that one institution is the same as another (no matter what region or nation) even if their teaching methods seem similar; nor can the routine use of the US dollar as the common monetary denominator be safely used as both of these rudiments are subject to vast differences. Rumble (1997) states, “…monetary comparison is only really possible within a jurisdiction” (133). The use of an “efficiency ratio” seems the best method of comparison under these settings (Rumble, 1997: 133)
Course Work
Beyond costing equivalencies in undergraduates and post-graduates degrees, comes the question of what constitutes equal course work? Can standards be established that can equalize arts and social science courses with science and technology courses for comparison? The cost for development and instruction for science and technology courses is much greater than that for the arts. Most researchers struggle with adequate methodology. Wagner (1977) concluded in his revised study that his methodology in cost effectiveness of the OU was lacking. This was due not only to the higher costs of some courses but the increased production of courses resulting in higher costs and fewer students per course. No one has compared the types of graduates with one another.
Media
The type of media used is an essential point in comparison of distance education and conventional universities. Conventional universities use print as the primary source of media while distance education universities use broadcasting, video and other technologies. Rumble (1997) suggests, “…analyze the cost of each medium separately.” The high costs of technologies are compared with the higher overheads of the traditional universities (Rumble, 1997). Wagner (1972; 1977) makes the suggestion that broadcasting (and other technologies) can be eliminated or reduced for more cost effectiveness but this is put forth without a real examination of what other areas that could be considered.
Work-Time vs. “Free-Time” and Full-time vs. Part-Time
Both Wagner (1972) and Laidlaw and Lanyard (1974) assumed that students at the OU studied only half-time in comparison with conventional university students. But Rumble (1997) later points out that in one study course load was counted and the in the other student heads were counted thus making the figures disagree.
Wagner, Rumble and Laidlaw and Lanyard all refer to value-added time; essentially placing a monetary value on employment missed because of schooling. Wagner (1972) makes the assumption that OU students are not lacking value-added time because they study in their free time. This seems to disregard in value time not spent in formal employment: the social economic impact of which is not measured and may be a substantial invalid assumption. None of the researchers tackle this directly.
The Final Product = Graduates
Rumble (1997) discusses the “value-added performance indicators” as a part of what denotes quality in graduates (163). This is another facet to the question of whether or not a degree from a distance education institution is greater than a degree from a traditional university. He offers a weighted average equation that calculates an “overall effective ratio” based on the evaluation of entrance and exit testing. Although it seems a sound foundation, it also appears a rather weak comparison when valuing the different degrees given the other variables that could come into play. As Rumble (1997) states, “Comparing the relative value of graduates can be problematic…there are no uniform graduates” (130).
Conclusion
It may be that the best methodology is to compare undergraduates taking courses (without transfer credits) to other undergraduates taking the same courses. And to examine cost effectiveness in terms of drop-out versus retention rates rather than reduction or deletion of learning media.
Costs for both types of institutions are not constant, as Rumble (1997) points out, “...many of the models used to project costs forward assume that the overhead costs of the institution are fixed. This is a dangerously wrong assumption” (132). He also recognizes that comparisons are essential, but cautions that “…much depends on the particular design, size and circumstances of the project” and what figures may show in one year of comparison may be of no import the next.
Methodological issues surrounding cost effective analysis of distance educational institutions and traditional educational institutions are many. With much of the research, the scope may indeed be too large. Diluting different students, courses, teaching methods, capital costs, media - among other things, in an effort to obtain a more general and balanced entity may make the picture easier to see but not necessarily easier to understand. Painting stripes on a horse makes it appear more like a zebra but still doesn’t give a clear understanding of the differences between the two.
References:
Laidlaw, B., Layard, R. (1974). Traditional versus Open University teaching method: A
cost comparison. Higher Education, 3, 439-468.
Rumble, G. (1997). The costs and economics of open and distance learning. London:
Kogan Page.
Wagner, L. (1972). The Economics of the Open University. Higher Education, 1, 159
183.
Wagner, L. (1977). The Economics of the Open University Revisited. Higher Education,
6, 358-3
