Using economic concepts in institutional research on higher education costs

Abstract

Institutional researchers are uniquely positioned to provide the information and advice needed to assist administrators and others in addressing a variety of issues involving college and university operating costs. Many other individuals on campus deal with those costs every day, including budget managers as well as accountants who record and document the institution' s financial affairs. Such work is necessary and produces foundational data, but it is not sufficient. Could one reasonably expect cost accountants to address questions such as whether average costs per student were likely to change if the institution were to double in size or whether average costs were lower at other, similar institutions? The answer is clearly no. To address such questions entails not just budgeting or accounting for expenditures but connecting those expenditures to the appropriate inputs and outputs while being attentive to factors that might confound the analysis. It is institutional researchers who create the intersection of these various kinds of data, employ the appropriate analytical routines, and interpret and give meaning to the findings. Economics provides cost-related concepts, models, and empirical findings that can help institutional researchers in successfully undertaking these activities.Institutional researchers have three tasks involving costs and cost analysis: understanding and explaining the nature of costs, determining costs, and interpreting and comparing costs. I comment briefly on each of those 43 3 NEW DIRECTIONS FOR INSTITUTIONAL RESEARCH, no. 132, Winter 2006