A university's costs are set by its revenues: it raises all the money it can and spends all it raises.
Howard Bowen set it out in The Costs of Higher Education (1980) as five laws: the dominant goals are excellence, prestige and influence; there is no limit to the money that could be spent pursuing them; each institution raises all it can; each spends all it raises; and the cumulative effect is ever-rising expenditure. Because quality has no agreed measure, no sum is ever enough.
In practice
- A university receives a large bequest and within a few years has spent it on new programmes and buildings without lowering its fees.
- A department whose budget is cut finds savings it said did not exist, and when the budget is restored the savings vanish.
- Standing
- The rival explanation for rising university costs is Baumol's cost disease, which puts it down to labour-intensive teaching rather than appetite. Compare Parkinson's second law, of which this is the institutional case.
- Subject
- Learning & Education
- Essay
- Theories of teaching, and what schools are for