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Robert K. Toutkoushian
Michael B. Paulsen

Economics
of Higher
Education
Background, Concepts, and Applications
Economics of Higher Education
Robert K. Toutkoushian • Michael B. Paulsen

Economics of Higher
Education
Background, Concepts, and Applications
Robert K. Toutkoushian Michael B. Paulsen
Meigs Hall 114 N491 Lindquist Center
The University of Georgia The University of Iowa
Athens, Georgia Iowa City, Iowa
USA USA

ISBN 978-94-017-7504-5 ISBN 978-94-017-7506-9 (eBook)

DOI 10.1007/978-94-017-7506-9

Library of Congress Control Number: 2016932304

© Springer Science+Business Media B.V. 2016

This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of
the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations,
recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission
or information storage and retrieval, electronic adaptation, computer software, or by similar or
dissimilar methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specific statement, that such names are exempt
from the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this
book are believed to be true and accurate at the date of publication. Neither the publisher nor the
authors or the editors give a warranty, express or implied, with respect to the material contained
herein or for any errors or omissions that may have been made.

Printed on acid-free paper

This Springer imprint is published by SpringerNature

The registered company is Springer Science+Business Media B.V. Dordrecht.
Acknowledgments

There are many individuals who have contributed to the development of this book
over the past few years. We are grateful to our students at the University of Iowa
and the University of Georgia on whom we have tested our ideas and drafts of these
chapters inside and outside the classroom. Their reactions, feedback, and sugges-
tions for improvements have been invaluable to us. In particular, we owe a debt of
gratitude to the following students who have given us detailed feedback on, or
assistance with assembling and reviewing literature for, one or more chapters in this
book: KC Culver, Jason Lee, and Kelly Ochs Rosinger. We would also like to
acknowledge Manuel Gonzalez-Canché for his assistance with the discussion of
student loans in Chap. 4.
We would like to thank Springer Publishing Company for their willingness to
support this book and their patience as we revised and restructured the book. We
would also like to thank our respective academic departments and universities for
their support of the time and effort that we needed to put into writing the book.
I (Rob) would like to thank all of the economics professors at Indiana University
of Pennsylvania and Indiana University (Bloomington) for helping me to appreciate
economic reasoning. In particular, professors such as Nicholas Karatjas, Art Martel,
and Robert Stonebraker taught me that thinking like an economist can be fun, and
William Becker introduced me to the many ways that economics could be applied
to education issues. I am also grateful to Stephen Hoenack for giving me my first
opportunity to apply economics to problems in higher education and to Ed MacKay
for providing me with an outlet to combine research with higher education policy
issues in New Hampshire.
I (Mike) would like to thank my economics professors at the University of
Wisconsin (Milwaukee), especially Richard Perlman, Melvin Lurie, and William
Holahan, who helped me discover my affinity for a specialization in the economics
of education. I am also grateful to Thomas Pogue, professor of economics at the
University of Iowa, who was my mentor and role model of the academic economist.
Thanks to both Tom Pogue and Robert Engel for helping me to narrow the scope of
my economic research to topics in higher education.

v
vi Acknowledgments

Finally, we owe a great deal of gratitude to our families and spouses (Jenni and
Laurey) who have had to put up with us while we became preoccupied – and some
would say obsessed – with writing various sections of the book and wanting to get it
right.
Contents

1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Overview of Economic Reasoning and Terminology . . . . . . . . . . . . 9
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
How Economists Think and Do Their Work . . . . . . . . . . . . . . . . . . . . 18
Assumptions, Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Review of Key Economic Concepts . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Comparative Statics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Marginal Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Demand, Supply, and Competitive Markets . . . . . . . . . . . . . . . . . . . . 34
Higher Education Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Final Thoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3 Student Investment in Higher Education . . . . . . . . . . . . . . . . . . . . 45
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Private Costs of College . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Private Benefits of College . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Net Present Value of College . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
A Five-Stage Model of the College Choice Process . . . . . . . . . . . . . . 61
Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Policy Focus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Final Thoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
4 Private and Social Returns to Higher Education . . . . . . . . . . . . . . . 93
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

vii
viii Contents

Conducting Return on Higher Education Studies . . . . . . . . . . . . . . . . 99

Aggregate-Level Studies of the Return to College . . . . . . . . . . . . . . . 101
Private Return to Graduating College . . . . . . . . . . . . . . . . . . . . . . . 101
Social Return to Graduating College . . . . . . . . . . . . . . . . . . . . . . . 105
Return to Earning an Associate’s Degrees . . . . . . . . . . . . . . . . . . . 107
Return to Earning a Graduate Degree . . . . . . . . . . . . . . . . . . . . . . . 110
Private and Social Returns to Attending College . . . . . . . . . . . . . . . 116
Comparisons of Measures of Return to College . . . . . . . . . . . . . . . . . 118
Methodological Issues in Aggregate-Level Studies . . . . . . . . . . . . . . . 120
Findings from Aggregate-Level Studies . . . . . . . . . . . . . . . . . . . . . . . 124
Return to Bachelor’s Degrees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Return to Associate’s Degrees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Return to Graduate Degrees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
New Estimates of the Return to College . . . . . . . . . . . . . . . . . . . . . 126
Individual-Level Studies of the Return to College . . . . . . . . . . . . . . . . 130
Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Policy Focus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
Student Loans and Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Final Thoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
5 Demand and Supply in Higher Education . . . . . . . . . . . . . . . . . . . . 149
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Demand for Higher Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Market Demand for Postsecondary Education . . . . . . . . . . . . . . . . . 163
Changes in Quantity Demanded . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Changes in Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Supply of Postsecondary Education . . . . . . . . . . . . . . . . . . . . . . . . . . 169
Changes in Quantity Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
Changes in Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
Equilibrium in Postsecondary Markets . . . . . . . . . . . . . . . . . . . . . . . . 172
Changes in Equilibrium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
Elasticity Measures in Postsecondary Markets . . . . . . . . . . . . . . . . . . 176
Own-Price Elasticity of Demand . . . . . . . . . . . . . . . . . . . . . . . . . . 177
Own-Price Elasticity of Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
Cross-Price Elasticity of Demand . . . . . . . . . . . . . . . . . . . . . . . . . . 181
Income Elasticity of Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
Issues in Measuring Elasticity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184
Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
Alternative Measures of Demand . . . . . . . . . . . . . . . . . . . . . . . . . . 189
Quasi-Experimental Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
Policy Focus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
State Broad-Based Merit Aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
Growth of For-Profit Higher Education Sector . . . . . . . . . . . . . . . . 193
Contents ix

Final Thoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196
6 The Role of Government in Higher Education . . . . . . . . . . . . . . . . 199
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
Public Goods and Externalities in Education . . . . . . . . . . . . . . . . . . . 204
Positive Externalities and Higher Education . . . . . . . . . . . . . . . . . . . . 206
Consumer and Producer Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . 207
Positive Externalities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208
Government Intervention and Externalities . . . . . . . . . . . . . . . . . . . . . 209
Marginal Cost and Benefit Analysis of Government
Intervention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
Uniform Subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
Non-uniform Subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218
Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
Policy Focus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
High-Tuition/High-Aid vs. Low-Tuition/Low-Aid . . . . . . . . . . . . . . 225
Sharing the Cost of Higher Education . . . . . . . . . . . . . . . . . . . . . . 226
Final Thoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229
7 Higher Education Revenues and Expenditures . . . . . . . . . . . . . . . . 231
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
Economic Analysis of Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
Economic Analysis of Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . 250
Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263
Policy Focus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267
Final Thoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270
8 Competition and Production in Higher Education . . . . . . . . . . . . . 275
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277
Goals and Objectives of Postsecondary Institutions . . . . . . . . . . . . . . . 280
Postsecondary Education Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . 286
Market Structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288
Competition in Postsecondary Markets . . . . . . . . . . . . . . . . . . . . . . . 291
Measuring Market Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . 291
Price Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294
Non-price Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299
Postsecondary Production Functions . . . . . . . . . . . . . . . . . . . . . . . . . 300
Mathematical Production Functions . . . . . . . . . . . . . . . . . . . . . . . . 303
Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305
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x Contents

Policy Focus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309

Final Thoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318
9 Labor Economics and Higher Education . . . . . . . . . . . . . . . . . . . . 323
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325
Academic Labor Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327
Labor Demand for Faculty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328
Labor Supply of Faculty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329
Equilibrium Wages and Employment of Faculty . . . . . . . . . . . . . . . 332
Changes in Faculty Salaries and Employment Levels . . . . . . . . . . . 334
Shifts in the Demand for Faculty . . . . . . . . . . . . . . . . . . . . . . . . . . 335
Shifts in the Supply of Faculty . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337
Historical Changes in Academic Labor Markets . . . . . . . . . . . . . . . . . 339
Shifts in Demand for Faculty Labor . . . . . . . . . . . . . . . . . . . . . . . . 340
Shifts in Supply of Faculty Labor . . . . . . . . . . . . . . . . . . . . . . . . . . 344
Changes in Salaries and Employment . . . . . . . . . . . . . . . . . . . . . . . 344
Academic Labor Market Differences by Field . . . . . . . . . . . . . . . . . 346
Faculty Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347
Human Capital and Faculty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350
Determinants of Faculty Pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353
Non-Human Capital Differences in Faculty Pay . . . . . . . . . . . . . . . 355
Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 358
Policy Focus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361
Final Thoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365
10 Current and Emerging Research on Economics
of Higher Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371
Research on Investment in Human Capital and College Choice . . . . . . 372
Research on Rates of Return to Higher Education . . . . . . . . . . . . . . . . 375
Research on Demand and Supply for Higher Education . . . . . . . . . . . 377
Research on Positive Externalities and Government Intervention . . . . . 379
Research on Higher Education Revenues and Expenditures . . . . . . . . . 381
Research on Higher Education Competition and Production . . . . . . . . 383
Research on Labor Issues for Faculty . . . . . . . . . . . . . . . . . . . . . . . . . 385
Final, Final Thoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388
About the Authors

Robert K. Toutkoushian is a professor in the Institute of Higher Education at the

University of Georgia. He has a PhD in economics from Indiana University (Bloom-
ington), where he specialized in econometrics and finance. Prior to his faculty
appointment at Georgia, he worked as a research associate at the University of
Minnesota, as an executive director of policy analysis for the University System of
New Hampshire, and as a faculty member in the educational leadership program at
Indiana University. In addition to his faculty appointment, he serves as the editor of
the journal Research in Higher Education and has served as editor of New Directions
for Institutional Research and associate editor of the economics and finance section of
Higher Education: Handbook of Theory and Research. He has published more than
50 studies in peer-reviewed journals and edited books on a wide range of topics on the
economics of higher education, including faculty compensation, higher education
costs, student demand for higher education, performance indicators, decentralized
budgeting, institutional productivity, and state funding for higher education.

Michael B. Paulsen is a professor in the Higher Education and Student Affairs

program at The University of Iowa. He has a PhD in higher education and economics
from The University of Iowa and an MA in economics from the University of
Wisconsin (Milwaukee), where he specialized in labor economics, public sector eco-
nomics, and economics of education. Prior to his faculty appointment at The University
of Iowa, he was a professor of higher education at the Universities of Illinois, Alabama,
and New Orleans; and a professor of economics at St. Ambrose University. In addition
to his faculty appointment, he serves as the series editor of the scholarly book series
Higher Education: Handbook of Theory and Research and a consulting editor for
Research in Higher Education and the ASHE Higher Education Reports. He has over
60 publications—books, journal articles, book chapters—including his book The
Finance of Higher Education. His publications in economics of higher education
have focused on college choice, tuition inflation, effects of prices/subsidies on student
persistence, higher education costs, growth in workforce productivity, demand for
higher education, and effects of financial conditions on curricular change.

xi
Chapter 1
Introduction

Why write a book about the economics of higher education? In large part, the need
for the book follows from the nature of the field of higher education. Unlike many
academic disciplines which have developed their own specific theoretical under-
pinnings, higher education draws on theories and models from a number of disci-
plines including economics, sociology, political science, psychology, and so on. In
fact, a perusal of the faculty in most any higher education department will reveal
that professors were trained in many different fields.
This diversity in academic backgrounds has its advantages and disadvantages.
On the positive side, the range of perspectives fosters many interesting discussions
and brings together various approaches to study important problems about students,
institutions, faculty, and society. In fact, the problems we face in higher education
are so complex that no single perspective is sufficient to understand all facets of
these problems. At the same time, conversations among academics in higher
education can be hampered by the fact that they do not all share a common
knowledge base and vocabulary from these fields. Each discipline has its own
terminology, norms, and approaches to work, and thus the challenge for academics
in higher education is similar to having to learn multiple languages in order to
communicate with each other.
This communication problem does pose some challenges when it comes to
economics. Economists use terms such as marginal cost, positive externality, and
utility that are not readily understood by the general public. Research papers written
by economists often rely on complex mathematical models requiring the reader to
have studied advanced calculus and linear algebra to understand. And many
economists who work on education issues prefer to discuss their work with other
like-minded economists and are not as focused on explaining their work to aca-
demics outside of the field who nonetheless would benefit from their insights,
methods, and results.
The overall goal of our book Economics of Higher Education: Background,
Concepts, and Applications is to examine the many ways that economic principles
and theories have been, and can be, applied to understanding higher education

© Springer Science+Business Media B.V. 2016 1

R.K. Toutkoushian, M.B. Paulsen, Economics of Higher Education,
DOI 10.1007/978-94-017-7506-9_1
2 1 Introduction

problems and issues. In writing this book, we have several more specific goals and
objectives. Our first goal is to help raise the level of understanding of economics
among academics who work in the field of higher education. Both of us were
originally trained as economists and teach classes at our universities on the eco-
nomics of higher education, and regularly publish our research in education
journals. As economists, we believe in the value of economic concepts and theories
and see many ways in which the field could make greater contributions to the study
of higher education. Accordingly, we have attempted to write the book in such a
way that it would be accessible to a wide audience while still maintaining sufficient
academic rigor.
At the same time, our second goal for the book is to work in the opposite
direction as well, and help rank-and-file economists understand the issues and
nuances that go along with the field of higher education. Economists who have
not specifically studied higher education can sometimes look at the field through the
more traditional lenses that they use in other contexts, and in the process not be able
to account for much of observed behavior in the field of higher education. For
example, economists may use human capital theory to view going to college as
being similar to investing in a stock or bond, in that students and their families pay
money in the hope of earning a higher monetary return in the future. Although there
is a lot of value in taking this perspective, it does not explain, for example, why
some students choose majors such as history where the expected financial return is
relatively low, or why some students choose to attend less-prestigious institutions
(the so-called “undermatching” phenomenon). The problem is that the investment
in human capital model overlooks some of the unique attributes of college which
(as we explain in the book) should properly be viewed as both an investment and
consumption good, and where the utility of the decision can include non-market
benefits and costs. Likewise, economists may initially apply their models of the
theory of the firm to explain how colleges and universities operate, and yet be
puzzled by the fact that highly-selective institutions such as Princeton and Yale
deliberately choose to have excess demand for their services and in the process
forego substantial profits that they could have earned. Even though our treatment of
these topics in this book is not as mathematically complex as is typical for
economic studies, we hope that there will be enough food for fodder, so to speak,
for economists to learn more about the field and perhaps develop even better models
to help the field progress and develop.
Third, in the book we strive to go beyond simply summarizing existing work and
offer a number of new insights and ideas into how economics can inform the study
of higher education. In Chap. 3, for example, we expand the traditional model of
higher education as an investment in human capital to incorporate the utility of
student decisions, the non-monetary benefits from going to college, and the impli-
cations of shared decision making between students and their parents. Chapter 4
presents a broader view of the many issues surrounding how to measure the
financial returns to higher education. In Chaps. 5 and 8 we explain how higher
education should be viewed not as a single good or service but really a bundle of
educational services that students consume, and the resulting implications this has
1 Introduction 3

for understanding student (and institutional) behavior. And in Chap. 8, we offer new
ideas about college and university goals and what motivates their institutional
behavior, as well as new ideas on how to think about the ways in which colleges
and universities compete with each other in markets.
It is probably clear at this point that our book is targeted towards a number of
different audiences. The book should be useful as a textbook resource for graduate
students in the field of higher education who are taking courses in the economics of
higher education, higher education finance, and/or higher education policy analysis.
Both of us have taught these courses at our respective institutions, and have
struggled to find a text that was written at an appropriate level for our students
and focuses entirely on higher education. The book should also be useful for faculty
members in departments with higher education programs who not only teach these
classes, but engage in scholarly work on topics covered in the book such as student
access to higher education, higher education policy analysis, financial aid, and
faculty compensation. A third group of readers that may be interested in the book
include higher education policy makers and researchers who work outside of
academic higher education departments but nonetheless conduct and/or disseminate
research on higher education topics. Finally, we hope that the book is a useful
primer for economists who are interested in applying their tools and techniques to
problems and issues in postsecondary education.
We take a relatively unique approach to the structure and organization of this
book in the hope of reaching the various intended audiences. The first chapter
provides an overview of economic reasoning, terminology, and methods, and pro-
vides a foundation that is helpful for understanding the material in the rest of the
book. The remaining Chaps. 3, 4, 5, 6, 7, 8, and 9 can be grouped into “demand-
side” and “supply-side” topics that relate in one way or another to the study of the
economics of higher education (see Fig. 1.1). Finally, Chap. 10 also spans the range
of demand- and supply-side topics by providing examples of current research and
indicators of future research corresponding to the scope and topics of each previous
chapter.
Each chapter begins with a Background section in which we provide the reader
with some historical perspective on the economic origins of the concepts discussed
in the chapter. This section will be of particular value to non-economists who may
not be aware of how, for example, human capital theory came to be. Because this is
not the central purpose of the book, however, we have only included an abbreviated
discussion of these origins and point interested readers towards other sources for
further reading.
After presenting and explaining the central economic concepts and theories in
the core sections of each chapter, we follow this with two subsections. The first
subsection is titled Extensions, and the purpose of this is to talk about how the basic
economic concepts and models described in the previous section have been, or
could be, extended in new and interesting directions. As an example, in Chap. 5 we
follow the explanation of demand and supply in higher education markets with a
discussion of how economists are applying quasi-experimental methods to measure
own-price elasticity of demand. The second subsection in each chapter is titled
4 1 Introduction

THE DEMAND SIDE THE SUPPLY SIDE

Costs and Benefits of College and University
Higher Education for Behavior: The Provision of
Students and Society Higher Education

Chapter 7:
Chapter 3: Student
Investment in Higher Education
Higher Education Revenues and
Expenditures

Chapter 4: Chapter 8:
Private and Social Competition and
Returns to Higher Production in Higher
Education Education

Chapter 5:
Chapter 9:
Demand and
Labor Economics and
Supply in Higher
Higher Education
Education

Chapter 6:
The Role of
Government in
Higher Education

Fig. 1.1 Organization of main chapters in this book

Policy Focus, where we examine one or more ways in which higher education
policy relates to the given topic. Policy analysis topics that we cover in the book
include high-price/high-aid versus low-price/low-aid pricing for public universi-
ties; the role of application fees policies in the college-choice process; student loans
and borrowing behavior; the impact of online/distance education on postsecondary
markets; the rationale for, and nature of, college mergers and closings; and the role
of social media in faculty work.
We used a mix of approaches to presenting the material in an attempt to reach the
different audiences who might benefit from the book. As is typical for principles-
and intermediate-level economics books, there are a number of graphs that are used
to explain key concepts. At other times, however, we must rely on equations to
develop the material for the reader due to its common usage in important economic
studies. When possible, however, we augment the mathematical models with
hypothetical illustrations and show key results in tabular form. This is most
apparent in Chap. 3, where we begin by using equations to lay out a five-stage
model of how students make decisions about college, and then apply the equations
1 Introduction 5

to an imaginary student to show how the equations lead to specific results that we
illustrate using tables.
As noted earlier, our aim was to write a book that would be challenging to both
economists and academics who study higher education, and yet be accessible to a
broader audience than is typically found for such material. Admittedly this is a fine
line to walk, and some chapters may be more difficult to follow than others due to
the complexity of the material and the methods used. It is unnecessary for readers to
have prior knowledge of calculus or statistics to follow most of the discussions in
the book; however, having such knowledge would be helpful in a few places, and
we have attempted to provide the reader with help at selected points in the book. We
also provide glossaries of the mathematical symbols used in some chapters. Like-
wise, we do not presume that the reader has prior knowledge of economic concepts,
theories, or terminology. We introduce and explain economic concepts such as
demand, supply, utility, externalities, and marginal cost to the reader and provide
references for further reading on background material as well. Finally, we made
decisions about the terminology that we use throughout the book that may differ
from what some readers have seen in other contexts. For example, throughout the
book we use the terms “postsecondary education,” “higher education,” “college”
and “university” interchangeably to represent education levels above high school,
even though some may argue that the words “higher education” do not relate to
institutions offering 2-year degrees. When it is necessary to make finer distinctions,
however, we have done so.
The book consists of 10 chapters. Chapter 2 provides the reader with an
overview of economic reasoning and terminology that is used throughout the
book, and is most relevant for those without prior exposure to economics. The
first section introduces the origins and evolution of the subfield known as the
economics of higher education and then discusses how the scholarly work of
economists has expanded the scope of the subfield and developed many fruitful
areas of inquiry. In addition, this chapter examines how economists think and do
their work, and presents a set of key economic concepts in the context of how
economists use optimal decision-making models and models of the marketplace to
study the behavior of individuals, institutions, and governments in higher
education.
In Chap. 3, we provide a detailed presentation of how students make decisions
about whether and where to go to college. This model begins with human capital
theory, viewing college-going as an investment in one’s human capital. The chapter
lays out the basic framework for how economists explain the decisions of students
and their families about investing in higher education. We describe the private
financial costs and benefits of college, and how students’ perceptions and compar-
isons of these costs and benefits—as well as the non-market costs and benefits of
college—affect the choices they make regarding whether and where to go to
college. We then present a five-stage model of college choice and use the model
to illustrate how economists use comparative statics to study the effects of higher
education policies that can provide incentives to encourage more students to choose
to go to college or attend a specific institution.
6 1 Introduction

Viewing higher education as an investment, the investors themselves—students

and parents, as well as society in general—naturally want to know the size of the
return on this investment. In Chap. 4, we use the private benefits and costs of
college to conceptualize and calculate the private return to college in terms of the
net present value of benefits minus costs, the ratio of benefits to costs, and the
internal rate of return. We extend this to analyze social returns, where the calcula-
tions account for the added costs incurred by and the added benefits that accrue to
others in society to support a student’s investment in college. We apply these
approaches to the calculation of the returns to investment in different levels of
degrees (associate’s, bachelor’s, master’s, doctoral). The chapter also includes an
extensive examination of the methodological challenges and issues associated with
calculations of the returns to investment in higher education.
In Chap. 5, we examine the theories of demand and supply and the competitive-
marketplace model and discuss how they can be applied to the study of higher
education markets. We begin by providing a brief background on the economic
concepts of markets, demand, and supply. Then we derive the individual’s demand
curve from the basic tenets of the traditional economic theory of individual con-
sumer behavior. We follow this by showing how the college choice model from
Chap. 3 can also be used to develop the demand for higher education. In this
section, we distinguish between individual and market demand, and then turn to
the supply side of higher education markets. In the next section, we combine supply
and demand to determine the market-clearing price for higher education services
and the corresponding equilibrium quantity or enrollment level. We then examine
the concept of elasticity, its calculation, and the various ways in which economists
apply elasticity to higher education. We end the chapter by discussing a number of
extensions of demand studies and by analyzing selected higher education policy
applications.
In Chap. 6, we explore the economic justifications for the role of government in
supporting postsecondary education, emphasizing that the primary economic ratio-
nale for governmental financial support of higher education is based on evidence of
the positive externalities created when students go to college. Externalities may
lead to market failures that result in students’ underinvestment in higher education
without government involvement. We differentiate between the private or internal
benefits that accrue only to students who go to college and the public or external
benefits that accrue to society and are not considered by students in their college-
going decisions. Our analysis emphasizes the application of the concepts and
theories from public sector economics and welfare economics that constitute a
useful analytical framework for examining the role of public policy in higher
education markets. We examine the effects of public policies or interventions that
take the form of financial incentives that reduce the cost paid by students, in order to
encourage a socially-optimal number of students to go to college.
In Chap. 7, we study the economics of revenues and costs of higher education,
highlighting the institutions that constitute the supply side of higher education
markets. We show how economists analyze revenues for organizations, with a
special emphasis on the important role that subsidies play as a source of revenue
1 Introduction 7

to fund their operations. On the costs or expenditures side, we discuss how

economists study the cost structure for organizations, and how this relates to
colleges and universities. We extend the basic model to explore how some institu-
tions use a decentralized budgeting model to assign revenues and costs to academic
units within the institution. We also focus on the policy implications of institutional
closings and mergers and how it relates to topics discussed in this chapter.
In Chap. 8, we analyze how colleges and universities behave in markets. The
chapter includes a discussion of higher education markets and how they compare to
the models frequently used by economists for firms in the for-profit world. We
discuss the goals and objectives of postsecondary institutions in light of the fact that
most institutions do not pursue profit maximization, at least in a strict sense. We
then turn to the ways in which colleges and universities compete with each other for
students, either on the basis of price or product differentiation. The extension to the
model considers the likely impacts of the growth of online or distance education on
postsecondary markets. Finally, the chapter concludes with a policy focus on the
ways in which states provide funding to their public institutions, and how these
approaches relate to competition and goals with regard to institutional performance.
Chapter 9 looks at the many ways in which concepts and theories from labor
economics can be applied to higher education. We begin by presenting information
on labor demand and supply, and how they come together to determine equilibrium
wages and employment levels in postsecondary markets. We review historical
changes that have occurred in academic labor markets, and then focus attention
on the determinants of faculty pay. For the extension to the model, we consider the
labor economic implications for non-tenure track (or adjunct) faculty. Finally, we
conclude the chapter with a policy focus on how faculty integrate social media into
their work, and some of the opportunity costs that can arise.
In the last chapter (Chap. 10), we discuss examples of current research, and
indicators of future research, that correspond to the scope and topics of each of the
prior chapters. In particular, this chapter serves as a place to highlight recent and
emerging work in the field, alert readers to important research that could not be
adequately covered elsewhere in our book, and offer some suggestions for further
reading within the topical scope of each chapter of the book.
Given the ambitious goals of the book, there are admittedly a number of
limitations that should be acknowledged at the onset. First, we cannot cover all of
the important and relevant topics in higher education to which economics has been
or may be applied. In selecting topics for inclusion, we strived to pick those that are
most central to the study of higher education and would be helpful for faculty
members who teach classes on the economics of higher education, higher education
finance, and higher education policy analysis. In the last chapter of the book, we
provide the reader with analyses of recent research, corresponding to each chapter
in the book, with some suggestions for further reading.
A second limitation with the book is that we could not cover or include all of the
important contributions that economists have made to the field. It was not our goal
to provide a complete history of the subfield of economics of higher education, nor
to cite every study that has had an impact on the field. Nonetheless, readers will see
8 1 Introduction

that we have cited a large number of economists and other academics who have
been central to the study of higher education, and we have perhaps erred on the side
of citing too many studies rather than too few.
Finally, by attempting to write a book that would have something for everyone,
so to speak, we acknowledge that our approach may not always hit the mark. The
book is likely to be too simplistic for some readers, particularly economists who are
used to communicating their ideas solely through complex mathematical models
and already understand the economic concepts that we explain to readers. Likewise,
the book may prove to be too difficult for some readers who are not mathematically
inclined and do not have any prior exposure to economic terminology. In short, it
would be impossible to write a book that would be everything to everyone, and
perhaps this book will serve as a starting place for future works by others who can
fill niches that we have not done here.
It is our sincere hope that this book serves not only as a valuable teaching
resource for those of us who teach graduate-level courses in higher education
programs, but also contributes to the intellectual development of the field and
serves as a foundation for further research on the economics of higher education.
Many economic concepts are fairly intuitive once the reader becomes familiar with
the terminology and manner in which the concepts are presented by economists.
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Chapter 2
Overview of Economic Reasoning
and Terminology

Abstract In this chapter, we provide an overview of the many different ways that
economic reasoning can be applied to the study of higher education. We begin by
taking a look at the origins and evolution of the field of economics and the subfield
of the economics of higher education, and follow that with an examination of how
the subsequent scholarly work of economists expanded the scope of the field and
established many additional areas of inquiry within this subfield. In the next section,
we discuss how economists think about problems and how they do their work. This
section illustrates that although economics has some similarities to other scientific
fields in terms of its basic approaches to problems and its methodologies, the field
also has its own terminology and unique concepts that are important to understand.
The final section introduces the reader to a number of important economic concepts,
primarily in the context of some of the fundamentals of basic economic models of
optimal decision making often used in the analysis of the behavior of economic
actors and decision makers—i.e., students, faculty, departments, institutions and
governments—in the higher education context.

Introduction

Economics is the study of choice. It is a social science that focuses on how decision
makers use their resources (such as money and time) in pursuit of their goals. The
most fundamental problem to an economist in virtually every situation is that
resources are limited in quantity. Because of this scarcity of resources, decision
makers must always give up something in order to get more of something else. This
is reflected in the saying: “There really is no such thing as a ‘free lunch’”. This
means that even a person who consumes a lunch for which she didn’t pay the bill
still misses out on the opportunities to use that time to engage in other activities,
such as taking a nap, taking a brisk walk, running an errand, or getting some
additional work done.
Economists study how individual or organizational decision makers can best
utilize their limited means to pursue their (unlimited) ends. All of the decisions that
consumers, workers, organizations, and governments make are done in the face of

© Springer Science+Business Media B.V. 2016 9

R.K. Toutkoushian, M.B. Paulsen, Economics of Higher Education,
DOI 10.1007/978-94-017-7506-9_2
10 2 Overview of Economic Reasoning and Terminology

constraints such as limited time, income, or other resources. And all decision
makers have constraints they must accommodate. Because economists focus on
explaining the actions of these decision makers, they view the discipline of eco-
nomics as useful for examining a wide range of decision makers in a variety of
decision-making contexts—including higher education. In this sense, economics is
a very general and flexible way of thinking about the world.
Academics who study the economics of higher education adapt and apply
economic models of decision making to deepen our understanding and better
inform our analysis of the behavior of students, faculty, administrators, institutions
and governments at the local, state, and national levels. For example, students are
decision makers who make choices about whether or not to go to college, which
college to attend, how much time to devote to their studies, and more; but they are
constrained by their limited time and income. Professors are also decision makers in
that each must decide how to use his or her time to conduct research, teach students,
and engage in service activities. Economists likewise view an academic department
or an entire institution as a decision-making unit. For example, the enrollment
management office on campus—in ways consistent with the preferences of the
central administration—chooses how many and what mix of students to admit;
deans and department chairs choose whether or not to hire additional faculty and
what the new faculty member’s salary will be; and college presidents must decide
how to allocate resources between academic and non-academic units to achieve the
institution’s goals. In their decision making, these units will be constrained by
campus-wide and campus-unit budgets with special attention to how much revenue
additional students will generate and how much additional expenditures will be
required to meet faculty payroll.
In this book, we look at the many different ways that economic reasoning can be
applied to the study of higher education. We begin the first section of this intro-
ductory chapter by taking a look at the origins and evolution of the field of
economics and the subfield of the economics of higher education, and follow that
with an examination of how the subsequent scholarly work of economists expanded
the scope of the field and established many additional areas of inquiry within this
subfield. In the next section, we discuss how economists think and how they do their
work. This section illustrates that although economics has some similarities to other
scientific fields in terms of its basic approaches to problems and its methodologies,
the field also has its own terminology and unique concepts that are important to
understand. The final section introduces the reader to a number of important
economic concepts, primarily in the context of some of the fundamentals of basic
economic models of optimal decision making often used in the analysis of the
behavior of economic actors and decision makers—i.e., students, faculty, depart-
ments, institutions and governments—in the higher education context.
Background 11

Background

Adam Smith is usually credited with being the “father of modern-day economics,”
and with good reason. With the publication of The Wealth of Nations in 1776, Smith
introduced the world to much of the framework that underlies the way that
economists think about problems and issues. The Wealth of Nations is among the
most highly-cited academic books and has been required reading for generations of
economists. However, there were also a number of other academics who contrib-
uted to the development of economics prior to the work of Smith. In fact, discus-
sions of selected economic concepts such as wealth can be traced back to ancient
Greece and the work of academics such as Xenophon, Plato, and Aristotle around
350 BC. In the Middle Ages, Thomas Aquinas and Duns Scotus debated economic
ideas about “just prices,” and Ibn Khaldun examined issues including the special-
ization of labor and money as a medium of exchange. Closer to the time of Adam
Smith, academics including Sir William Petty, Sir James Steuart, Jeremy Bentham,
David Ricardo, and others began articulating ideas about economic reasoning in the
seventeenth and eighteenth centuries, leading to the recognition of economics as a
unique academic discipline.
The work by economists in the seventeenth and early eighteenth century relied
heavily on exposition and did not use graphs, mathematics, or statistics to explain
key concepts. In the nineteenth century, a new generation of economists built upon
the ideas developed by Smith and his contemporaries and led to the development of
the ways in which economics is portrayed today. These ideas came to be known as
“neoclassical economics” and introduced notions such as marginal analysis into the
field. Of particular note is Alfred Marshall’s 1890 book Principles of Economics,
which is recognized by many as the first major economics textbook and helped
introduce graphs as a key instructional tool for the field.
Modern-day economics has seen a number of subsequent developments from the
classical / neoclassical period. The Great Depression of the 1930s saw the intro-
duction of “Keynesian economics” as John Maynard Keynes developed economic
theories to justify government involvement in markets to spur economic growth.
Other economics including Hayek and Friedman countered by advocating for free
markets and less government interventions in markets. “Supply side economics”
came to represent monetarist policies in the 1980s in which some economists
argued that policies directed at the supply side of markets rather than demanders
was the most appropriate course of action. There have also been many other trends
and developments within the field of economics that are beyond the scope of what
we can review in this book.1 Within the broad heading of economics, economists

1
There have been numerous books and articles written on the history of economic thought.
Readers who are interested in learning more about the history of economic thought and how it
has evolved over time are referred to Screpanti and Zamagni (2005), Hunt and Lautzenheiser
(1992), DesJardins and Toutkoushian (2005), and Canterbery (2010).
12 2 Overview of Economic Reasoning and Terminology

began to specialize in subfields of inquiry such as labor economics, macroeconom-

ics, microeconomics, monetary economics, econometrics, and many others.
The focus of our book is on the subfield known as the “economics of higher
education” which is part of the broader study of the economics of education. This
subfield’s origins can be traced back to human capital theory. When economists
began in earnest to study how education affects people, their analysis often focused
on how the acquisition of higher education increases students’ human capital,
which subsequently pays off for them in terms of greater lifetime earnings. Because
economists view labor as an important resource in production, the study of educa-
tion became important to macroeconomists as a means to explain national produc-
tivity and economic growth, and to microeconomists and labor economists as a way
to examine earnings and income inequality.
The concept of human capital has a long but uneven history within the field of
economics. Traditionally, economists identified land, labor, and capital as the three
primary types of resources used in the production of goods and services. This early
view of labor as a resource for production coincided with the industrial revolution
and its concurrent emphasis on manual labor. The practice of relating humans to a
form of capital dates back at least to the work of Sir William Petty in the late
seventeenth century, who developed measures of the monetary value of human
capital (Hull, 1899). The connection between worker productivity and earnings was
made explicit in the pioneering work of Adam Smith in The Wealth of Nations and
reiterated over the years by Irving Fisher (1906) and many others.
The idea that people acquire skills and human capital through education
followed from this early work. Given that education required an investment of
time and money, economists began to ask whether the benefits from education
exceed the cost. Among the first explicit examinations of higher education as an
investment in human capital is the study by J. R. Walsh (1935), who compared the
earnings of college graduates to the cost of their education. He concluded that there
was a positive return on investment for students who earned bachelor’s degrees and
also found that, at the time of his study and using his limited methods, there was a
negative return on investment for students who earned graduate degrees.
Education did not become an established area of inquiry for economists, how-
ever, until the late 1950s when a new generation of economists including Jacob
Mincer, Gary Becker, W. Lee Hansen, Burton Weisbrod, and Theodore Schultz
entered the field. As noted by Becker (1960), the Cold War and the race to develop
technologies to compete with the Soviet Union led to a renewed emphasis in the
United States on the need for the nation to increase its collective human capital
through education. In his 1961 presidential address to the American Economic
Association, Theodore Schultz focused on education as an investment in human
capital, and as a result the study of education began to receive visibility and
credibility among economists. In this speech, Schultz was critical of the field of
economics for overlooking the ways in which human capital can be enhanced
through an investment of time and financial resources:
Background 13

“The failure to treat human resources explicitly as a form of capital, as a produced means of
production, as the product of investment, has fostered the retention of the classical notion of
labor as a capacity to manual work requiring little knowledge and skill, a capacity with
which, according to this notion, laborers are endowed about equally. This notion of labor
was wrong in the classical period and is patently wrong now.” (1961, p. 3)

In December of that same year, the first conference devoted to the investment in
human capital (titled “Exploratory Conference on Capital Investment in Human
Beings”) was held in New York City. Key papers on the investment in human
capital were delivered at the conference by Schultz, Becker, and Weisbrod, among
others. Published work by these and other scholars appeared at about the same time,
serving to further clarify and deepen the understanding of human capital and its
economic aspects.2 Soon thereafter, Becker (1964) published the highly-cited book
titled Human Capital: A Theoretical and Empirical Analysis with Special Reference
to Education. In this book, Becker develops and presents his general theory of
human capital and its formation and applies it to examine differences in earnings
due to various student characteristics, generate age-earnings profiles, analyze the
returns to general and specific on-the-job training, calculate private rates of return
to college education with adjustments to account for differences in students’
abilities and early home environments, and estimate social returns to college with
emphasis on the importance of external benefits.
This period of intense scholarly work around 1960 established the foundation
for, and marked the beginning of, the formal study of the economics of education.
There have since been a number of books published on the general topic of the
economics of education. Within a few years, Mark Blaug—Professor of Economics
of Education at The University of London—published the first of what would
eventually be three editions of his increasingly comprehensive Economics of
Education: A Selected Annotated Bibliography (1966, 1970a, 1978) of scholarly
work in this new field. In his third edition (1978), Blaug reminds readers of a view
he expressed in his second edition (1970a), stating at that time that “the economics
of education still lacks a satisfactory introductory textbook for students” (p. 9). By
1978, he reports that a remarkable 16 such textbook-like volumes had been
published on the general topic of the economics of education. In the United States,
the most highly-regarded and widely-used textbook in this area has been the 1990
book by Elchanan Cohn and Terry Geske titled Economics of Education (3rd
edition). The volumes in print on the economics of education vary considerably,
however, in several important ways. Some books focused on primary and secondary
education issues, or higher education, or both. Books also differ in terms of their
target audiences, with most being primarily written for economists which makes

2
For example, see Becker (1962), Hansen (1963), Schultz (1961, 1962, 1963), and Weisbrod
(1961, 1962). For an early edited collection of chapters focused on economics of higher education,
see Mushkin (1962).
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North Carolina, Lopez, of Alabama, Barton, of Louisiana, (now of
South Carolina,) and to my relatives, Woodbury and Bellamy
Storer, Esqrs., of Maine and Ohio, and James M. Keith, Esq., of
Boston, late District-Attorney for Norfolk and Plymouth Counties.
In every instance, however, verification of the statutes has been
made from copies in the State Library of Massachusetts.
[169] Davis, Criminal Justice, p. 482.
[170] 1 Commentaries, 129.
[171] Ibid.
[172] 43 George III., c. 58.
[173] 9 Geo. IV., c. 31; 10 Geo. IV., c. 34.
[174] 7 William IV.; 1 Vict., c. 85.
[175] To this list may also be added the Territory of
Washington.
[176] The Territory of Kansas belongs to the above group.
[177] Compiled Statutes of Connecticut, 1854, p. 307.
[178] Revised Code of Mississippi, 1857, chap. 64, p. 601.
[179] Digest of Statutes of Arkansas, 1848, chap. 51, p. 325.
[180] Revised Statutes of Minnesota, 1851, chap. 100, p. 493.
[181] Statutes of Oregon, 1855, chap. 3, p. 310.
[182] Revised Statutes of Maine, 1857, chap. 124, p. 685.
[183] The above should evidently read “the first two sections,”
to be possible.
[184] Compiled Statutes of New Hampshire, 1853, chap. 227,
p. 544.
[185] Revised Statutes of New York, 1852, ii. pp. 847, 876. The
last section of this statute does not require proof of pregnancy.
[186] Revised Statutes of Ohio, 1854, chap. 162, p. 296.
[187] Compiled Laws of Michigan, 1857, vol. ii. chap. 180, p.
1509. The statute of the Territory of Washington is very similar to
those above.
“Every person who shall administer to any woman pregnant
with a quick child, any medicine, drug, or substance whatever, or
shall use or employ any instrument, or other means, with intent
thereby to destroy such child, unless the same shall have been
necessary to preserve the life of such mother, shall, in case the
death of such child or of such mother be thereby produced, on
conviction thereof, be imprisoned in the penitentiary not more
than twenty years, nor less than one year.
“Every person who shall administer to any pregnant woman, or
to any woman whom he supposes to be pregnant, any medicine,
drug, or substance whatever, or shall use or employ any
instrument, or other means, thereby to procure the miscarriage of
such woman, unless the same is necessary to preserve her life,
shall, on conviction thereof, be imprisoned in the penitentiary not
more than five years, nor less than one year, or be imprisoned in
the county jail not more than twelve months, nor less than one
month, and be fined in any sum not exceeding one thousand
dollars.” Statutes of the Territory of Washington, 1855, p. 81.
[188] Compiled Statutes of Vermont, 1850, chap. 108, p. 560.
[189] Supplement to the Revised Statutes of Massachusetts,
1849, p. 322.
[190] Statutes of Illinois, 1858, vol. i. p. 381.
[191] Revised Statutes of Wisconsin, 1858, chap. 169, sect. 58.
It will be noticed that the second section of the above statute
differs from the first, in not requiring the proof of pregnancy.
[192] Code of Virginia, 1849, chap. 191, p. 724.
[193] Revised Statutes of Missouri, 1856, i. chap. 50, p. 567.
[194] Code of Alabama, 1852, sect. 3230, p. 582.
[195] Revised Statutes of Louisiana, 1856, p. 138. By its
wording, this statute might be forced into the next division.
[196] I insert this clause not merely for its relation to the points
we are now considering, but for its important bearing on the
broad question of infanticide during labor; concerning which it
stands in bold and direct antagonism to all the rulings of the
common law in this country and abroad. In other respects also,
though not faultless, the Texas statute is rationally and admirably
drawn.
[197] Penal Code of Texas, 1857, p. 103.
[198] Digest of Laws of California, 1857, art. 1905, p. 334. The
statute of the Territory of Kansas, similar to the above, is as
follows:—
 “Every physician or other person who shall willfully administer
to any pregnant woman, any medicine, drug, or substance
whatever, or shall use or employ any instrument or means
whatsoever, with intent thereby to procure abortion, or the
miscarriage of any such woman, unless the same shall have been
necessary to preserve the life of such woman, or shall have been
advised by a physician to be necessary for that purpose, shall,
upon conviction, be adjudged guilty of a misdemeanor, and
punished by imprisonment in a county jail not exceeding one
year, or by fine not exceeding five hundred dollars, or by both
such fine and imprisonment.” Statutes of Kansas, 1855, chap. 48,
p. 243.
[199] We have already commented upon the phraseology of
the Louisiana statute. The latitude of its first clause is shown by
the context to have been unintentional, and therefore hardly
justifies a change in its classification. The second section of the
Statute of Washington Territory, however, is closely analogous to
that now given; while the final sections of the statutes both of
New York and Wisconsin, which make it penal for a woman
voluntarily to effect or submit to the unjustifiable induction of
abortion, are equally silent regarding proof of the existence of
pregnancy.
[200] Revised Statutes of Indiana, 1852, p. 437.
[201] Rex vs. Phillips, 3 Campbell, 77; Russell, Crim. Law, 553-4;
1 Gabbett, Crim. Law, 522; 1 Bishop, Crim. Law, 386.
[202] State vs. Cooper, 2 Zabriskie, 52, 57; Rex vs. Russell, 1
Moody, 356, 360.
[203] Regina vs. Wycherley, 8 Carrington and Payne, 265.
[204] The People vs. Jackson, 3 Hill, N. Y. Reports, 92;
Wharton, Criminal Law, 98.
[205] Davis, Crim. Justice, 484.
[206] Wharton, Amer. Crim. Law, 424.
[207] Wharton, Amer. Crim. Law, 75.
[208] The State vs. Vawter, 7 Blackford, 592.
[209] 1 Gabbett, Crim. Law, 523; Archbold, P. A., lxx, 2.
[210] Roscoe, L. E., 242; Eng. Com. L. Rep., xxv. 453; Rex vs.
Coe, 6 Car. & P., 403; Vaughan, 13.
 [211] 1 Bishop, Crim. Law, 527.
[212] In Massachusetts, though the statute is silent on these
points, it is asserted that whenever a potion is given, or other
means are used, by “a surgeon,” for the purpose of saving the life
of the woman, the case is free of malice, and has a lawful
justification. Davis, Crim. Justice, 282; Report of the Criminal Law
Commissioners, 1844, Causing Abortion, I., note a.
[213] After a little reflection, it will be seen that this word is not
so open to objection as might at first be supposed.
[214] 1 Russell, Crimes, 671; 1 Vesey, 86; 3 Coke, Inst., 50; 1
Hawkins, C. B., s. 16; 1 Hale, 434; 1 East, P. C., 90; 3 Chitty, Crim.
Law, 798; Wharton, Crim. Law, 537.
[215] Davis, Crim. Justice, 486.
[216] Archbold, Crim. Pleading, 490.
[217] Regina vs. Trilloe, 2 Moody, C. C., 260, 413.
[218] The State vs. Cooper, 2 Zabriskie, 52; Hanes, U. S. Digest,
5.
[219] The Commonwealth vs. Parker, 9 Metcalf, 263; The
Commonwealth vs. Bangs, 9 Mass., 387; The State vs. Cooper, 2
Zabriskie, 57; Hanes, U. S. Digest, 5; Smith vs. State, 33 Maine, (3
Red.) 48.
[220] Bishop, Crim. Law, 386; Mills vs. The Commonw., 1
Harris, Pa., 631, 633.
[221] Wharton, Crim. Law of the U. S., 537.
[222] 1 Russell, Crimes, 661; 1 Vesey, 86; 3 Coke, Inst., 50; 1
Hawkins, c. 13, s. 16; Bracton, 1. 3, c. 21.
[223] Bac. Ab., tit. Infants.
[224] 2 Vernon, 710.
[225] Doe vs. Clark, 2 H. Bl., 399; 2 Vesey, jr., 673; Thellusson
vs. Woodford, 4 Vesey, 340; Swift vs. Duffield, 6 Serg. & Rawle,
38.
[226] Fearne, 429.
[227] 2 Vernon, 710; The Commonwealth vs. Demain, 6 Penn.
Law Journ., 29; Brightly, 441.
[228] 1 Hale, 90; The Commonw. vs. Chauncey, 1 Ashmead,
227; Smith vs. State, 33 Maine, (3 Red.) 48.
 [229] Ibid.; Hanes, U. S. Digest, 5.
[230] Wharton, Law of Homicide, 44.
[231] The Commonw. vs. Parker, 9 Metcalf, 263, 265; Davis,
Crim. Justice, 281.
[232] 1 Blackstone, 129; Rex vs. Senior, 1 Moody, C. C., 346; 3
Inst., 50; Wharton, C. L., 537; Ibid., Law of Homicide, 93.
[233] Rex vs. West, 2 Carr. & Kir., 784; 1 Bishop, C. L., 255;
Wharton, Law of Homicide, 93.
[234] Rex vs. Scudder, 1 Moody, 216, 3 Car. & P., 605,
overruling Rex vs. Phillips, 3 Campbell, 73; Russell, Cr., 763, note.
[235] If made without her consent?
[236] Regina vs. Goodchild, 2 Car. & Kir., 293; Rex vs.
Goodhall, 1 Den. C. C., 187; 3 Campbell, 76.
[237] 1 Bishop, Crim. Law, 518.
[238] 1 Bishop, Crim. Law, 385.
[239] Wharton, Crim. Law, 541.
[240] 1 Harris, Pa., 631, 633.
[241] Lee, Note to Guy’s Principles of Forensic Medicine, p. 134.
[242] Beccaria, Crimes and Punishments, 104.
[243] “An efficient, and practical remedy for the prevention of
this crime would be a law requiring the causes of death to be
certified by the physician in attendance, or where there has been
no physician, by one called in for the purpose. In this way the
cause of death, both in infants and mothers, could be traced to
attempts to procure abortion. In three cases which occurred in
Boston, in 1855, the death was reported by friends to be owing to
natural causes, and in each it was subsequently ascertained that
the patient died in consequence of injuries received in procuring
abortion. It is probable that such cases are by no means rare;
and if the cause of death were known, an immediate investigation
might lead to the detection of the guilty party.” (Boston Med. and
Surg. Journal, Dec., 1857, p. 365.)
[244] Register of the Morgue.
[245] From 1846 to 1850, 188 cases of criminal abortion were
discovered in Paris, but for want of proof, only 22 of them were
sent to trial. (Comptes Rendus Ann. de la Justice Criminelle.)
 [246] Report on the Medico-legal duties of Coroner. 1857.
[247] Radford, British Record of Obstetric Medicine, vol. i. p.
55.
[248] Wharton, Criminal Law, 540.
[249] Smith vs. The State, 33 Maine, (3 Red.) 48.
[250] Rex vs. Phillips; Regina vs. Goodall; Reg. vs. Haynes, etc.
[251] Taylor, Med. Jurisprudence, p. 386.
[252] Percival, Medical Ethics, p. 84.
[253] Ibid., p. 85.
[254] Loc. cit., article 317.
[255] Report to Suffolk District Med. Society, May, 1857, p. 12.
[256] In this connection, I cannot too strongly deprecate a
practice that has lately been proposed, the detection, namely, of
the early existence of pregnancy by the administration of ergot.
(Boston Med. and Surg. Journal, April, 1859, p. 197.) The use of
ergot for this purpose, in however small a dose, would seem
utterly unjustifiable.
[257] Fifteenth Massachusetts Registration Report, 1857, p.
199.
[258] Quetelet, Theory of Probabilities, p. 234.
[259] New York Med. Gazette, Editorial; London Medical Times
and Gazette, 1850, p. 487.
[260] Boston Med. and Surg. Journal, Editorial, 1855, p. 411.
[261] Dean, Medical Jurisprudence, p. 139.
[262] Boston Med. and Surg. Journal, Editorial, Dec. 13, 1855.
[263] American Medical Gazette, Editorial, July, 1857, p. 390.
[264] Ibid., April 1859, p. 289.
[265] Maine Med. and Surg. Reporter, Editorial, June, 1858, p.
39.
[266] Deville, Researches on the proportion of still-born
children compared with the mortality of the City of Paris during
the thirteen years, 1846-58. Memoirs of the French Academy,
1859.
 [267] New Hampshire Journal of Medicine, Editorial, July, 1857,
p. 216.
[268] London Lancet, Editorial, July, 1858, p. 66.
[269] Tatum, Virginia Med. Journal, June, 1856, p. 457.
[270] Loc. cit., p. 19.
[271] The Councillors of the Massachusetts Medical Society.
Proceedings of the Society, 1858, p. 77.
[272] Phillips, On Evidence, i. p. 135; Ryan, Medical
Jurisprudence, p. 193; Storer, Sen., Introductory Address, 1855,
p. 10; Simpson, Physicians and Physic, p. 31.
[273] Proceedings of the Society, 1858.
[274] Man Transformed. Oxford, 1653.
[275] “Resolved, That while physicians have long been united
in condemning the procuring of abortion, at every period of
gestation, except as necessary for preserving the life of either
mother or child, it has become the duty of this Association, in
view of the prevalence and increasing frequency of the crime,
publicly to enter an earnest and solemn protest against such
unwarrantable destruction of human life.
“Resolved, That in pursuance of the grand and noble calling we
profess,—the saving of human life,—and of the sacred
responsibilities thereby devolving upon us, the Association
present this subject to the attention of the several legislative
assemblies of the Union, with the prayer that the laws by which
the crime of abortion is attempted to be controlled may be
revised, and that such other action may be taken in the premises
as they in their wisdom may deem necessary.
“Resolved, That the Association request the zealous co-
operation of the various State medical societies in pressing this
subject upon the legislatures of their respective States, and that
the president and secretaries of the Association are hereby
authorized to carry out, by memorial, these resolutions.”—
Transactions of the Am. Med. Association, 1859, vol. xii. p. 75.
*** END OF THE PROJECT GUTENBERG EBOOK ON CRIMINAL
ABORTION IN AMERICA ***

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