Rethinking ROI

This semester I’ll be co-chairing our President’s “Life-Transformative Education” task force, a signature initiative to rethink undergraduate education at UConn. Part of a coalition of similar efforts at other universities across the country, the basic idea of LTE is that an undergraduate education should change (or at least actively reconfirm) the worldview and life trajectory of each and every student at UConn. Our work involves a top-to-bottom rethinking of everything from student advising to internship opportunities to capstone experiences for graduating seniors.

Closely tied to our practical efforts at reforming pedagogy and student care at the University is a broader rethinking of the real value of an undergraduate education and the way that value proposition is communicated to students, parents, alums, and in the case of a state institution like UConn, to the taxpayers and legislature of the State of Connecticut. It seems to me that part of that work entails rethinking how value itself is calculated.

Somewhere along the way, universities, like so many other institutions in our culture, began to measure their impact in strictly economic terms. In making our case to stakeholders (especially purse-string holders) we talk about the economic impact of sponsored research, work force training, and other direct benefits to business. Likewise, at the level of the individual student, there is a strong tendency to assess the value of a college degree in terms of a “wage premium,” or the amount of money a college graduate can expect to make versus a non-graduate (the cover story in this week’s The Economist is case in point.) By this way of thinking, the “return on investment” or ROI of a college education is a simple matter of subtracting tuition costs from the wage premium a student can expect upon graduation.

This is a crude measure of the value of a college degree. Life-Transformative Education suggests that the real value of undergraduate education lies in its capacity to change lives, financially for sure, but in other ways too. Thus Life-Transformative Education demands an accounting beyond the wage premium to determine the true ROI of college.

Trends in macro-economics may provide a guide. Even fairly conservative economists are realizing that simple measures of overall economic growth don’t provide a very useful picture of the success of the overall economy, especially in the face of rising inequality. These economists are moving “Beyond GDP” to count things like people’s health, a clean environment, and unpaid labor like elder care and child rearing, in addition to growth, as a more accurate measure of economic health. New Zealand, for example, now uses a “happiness index,” created from a basket of metrics, to make some policy decisions instead of GDP.

So what should a “Beyond the Wage Premium” calculation of college ROI include? What else should we count? I have a few suggestions, including:

  • the likelihood of finding a job that includes health benefits
  • the likelihood of finding a job that includes parental-leave and childcare benefits
  • future ability to change jobs
  • geographic mobility
  • mental health outcomes
  • domestic abuse rates

What else? I’m sure there’s plenty (on both sides of the ledger) that I’ve left out. Please let me know in comments, and if you’re an economist and would like to work on this, let’s talk.

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