Tertiary funding: What is the rationale?

It sounds like the tertiary education minister and universities will come into conflict regarding funding, again.  In this specific case, I think both sides are wrong/focusing a bit narrowly.

The tertiary education minister is saying the government should link funding to performance measures – including work placement.  The philosophy guy that was asked disagreed, as they will get less funding (which is weird, as he goes on to say how employers value the skills from philosophy – so this is sort of a contradiction right – Dim Post was on this wave length as well).

In my opinion public funding of education should be based on the “external benefit” associated with said education.

When arguing against the governments suggestion I’d say, if someone can get a well paying job but there is no external benefit, why should the government fund these courses at a high level?

In a similar vein we can argue against the philosophy guy by saying there is nothing intrinsically “good” about having people running around doing a certain degree type in of itself.  We need to sit down and say “what is the external benefit associated with this”.  Once we know this we have the rationale to sort out funding.

I do not believe all courses should be funded equally.  But I also don’t believe that courses should be funded on the basis of work placement.  These conclusions come from my value judgments that:

  1. The external benefits of different courses differ,
  2. External benefits are not perfectly correlated with work placement.

Update:  Eric Crampton discusses the policy here.

Update 2:  Very different take on tertiary policy in the UK.  I can see an argument for lowering the subsidy on education for jobs with a high private benefit and low social benefit (ability to pay and externality arguments).  But what do they mean by a graduate tax?  Do I get an additional tax on me if I head over there just because I’ve been to university?

16 replies
  1. ben
    ben says:

    Value judgments again? What nonsense.

    How are either of those things value judgments? If you’re going to take observable and measurable things and simply label value judgments, then throw in the existence of gravity while you’re it. All truth is equal, etc.

    What post modernist nonsense. You would do well at BERL, Matt, although you’re better than that.

  2. Matt Nolan
    Matt Nolan says:



    Those are value judgments though. If someone else said “external benefits are perfectly correlated with work placement” then the tertiary education minister would be right and my conclusions from the final paragraph (which are in addition to the discussion on external costs) would be wrong.

  3. Matt Nolan
    Matt Nolan says:

    @Eric Crampton

    Guesses about the values of parameters are a subset of value judgments right.

    Currently I am using no data (and I doubt either of the people in the article were either), so the values I attribute are solely the result of introspective judgments. These are classic value judgments which can validly be questioned and attacked.

    Now it could be possible to use data to improve the validity of these judgments, maybe even get some sort of consensus – but even then, will our empirical model be sufficient for us to say that the values of these parameters are some sort of intrinsic truth? I just don’t buy it.

  4. Matt Nolan
    Matt Nolan says:


    Hi Ben, I believe you have edited your comment compared to when I first replied so I’ll just add a little more here 😉

    Just as a note, I only call it a “value judgment” as I am trying to make clear what exact assumptions I am making that are implicitly different from the other guys. Then the reader can make up their mind about which set of assumptions they prefer.

    For me value judgment is a very wide term, and the purpose of using it is just to show that there can be debate regarding assumptions. I do not want to push through and say “the world is like this, suck it” – which is how I feel it would come off if I wasn’t clear about what assumptions I am differing on when I come up with a different conclusion.

  5. Eric Crampton
    Eric Crampton says:

    You’re advancing a testable hypothesis about a parameter. I have a hard time calling that a value judgment, even if it’s hard to test it in practice. The value judgment would be if you were making a hard call that discipline X must provide more external benefits than discipline Y without any evidence. But just noting that there are likely differences across disciplines seems pretty neutral.

  6. Matt Nolan
    Matt Nolan says:

    @Eric Crampton

    I agree that ruling out one point out of a set is a less extreme judgment than picking a single point. And I agree that testability does allow us to use data to improve the amount of faith we can have in a judgment.

    However, these are the assumption that drive my conclusions – and no matter how well supported these assumptions are I will always call them “value judgments”, because of the role they play.

    I do not see the term “value judgment” as negative in anyway – in practical terms it is really just saying that I have a core assumption that does not necessarily have universal support.

  7. inismona
    inismona says:

    The tertiary education minister is saying the government should link funding to performance measures – including work placement. The philosophy guy that was asked disagreed, as they will get less funding (which is weird, as he goes on to say how employers value the skills from philosophy like INIS MONA

  8. Matthew Proctor
    Matthew Proctor says:

    Serious question for Eric: Is a value judgement a statement along the lines of “intangible A > intangible B”? And you’re saying what Matt’s labelled value judgements are falsifiable, and therefore A and B must not be intangible?

  9. Eric Crampton
    Eric Crampton says:

    Value judgments, in my book, are either non-falsifiable axioms that start the analysis, or normative statements that draw from your own particular SWF. If your starting axioms are the default ones used in the field you’re working in, you don’t have to do much to justify it; if they’re not, then you do.

    Saying that differences among economists come down to value judgments is to say economics can’t say anything. We’ve a method that allows us to reach conclusions regardless of the values of the economists doing the analysis. I really hate the trend of throwing up “value judgments” as explanation for differences in results.

    In Matt’s case above, I’d say “My starting assumptions” rather than value judgments. Because they’re falsifiable, because they don’t depend on his “world view” or anything fluffy like that. If X1 and X2 are true, then conclusion follows. They’re premises or assumptions, not value judgments. X1 and X2 can be intangibles, but they’re starting premises that are reasonably consistent with the existing literature as best I’m aware of it.

  10. Matt Nolan
    Matt Nolan says:

    @Eric Crampton

    Many perceived external benefits aren’t observable so how can I test them?

    I view it as a value judgment as I’m saying “this external benefits box, which I have a set of beliefs and values regarding, has this set of properties”. I can’t reach my conclusion about policies until I’ve stated that – and someone else could come up with another set of “external benefits” that support a whole different conclusion.

    By separating out the external benefits in this way, the rest of the policy can be discussed in a fairly objective sense – namely, when someone comes up with their own framework for what constitutes external benefits and what they are, they can then turn around and say we should fund on the basis of that because the internal benefits are of course internalised. Only by making my own assumptions regarding the shape of external benefits was I able to make a conclusion in the second part of the post – and I wanted that to be transparent.

    Also by doing this, I help people understand why they might disagree with my conclusion – without disagreeing with the general concept of funding only external benefits.

    Also note that I am not saying that there can’t be “better” and “worse” assumptions about external benefits/costs – I just don’t think I’m anywhere near the position where I can pretend my assumptions are necessarily good.

  11. Matt Nolan
    Matt Nolan says:

    @Eric Crampton

    I see what you are saying, however this is how I see them as “value judgements”.

    ” 1. The external benefits of different courses differ,
    2. External benefits are not perfectly correlated with work placement.”

    If someone was to define their external benefits as work placement – or something that is perfectly correlated with work placement – then they would be wondering why the hell I’m thinking differently.

    Furthermore, if they defined their external benefit to only be over the idea of getting a degree – then my conclusion of differential funding would seem weird.

    Now, when the external benefits are defined we can test for them, definitely – but people can really define external benefits however they want. I agree with you that it is KEY to argue about whether these external benefits are reasonable – but we need to discuss these differences in a transparent way before we can do that.

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