What's Your Econ 101 Professor Worth?

The Texas A&M University system has embarked on a new accountability program. For every department – indeed, for every professor – revenue generated and?cost incurred are calculated; and?profit – the difference – is reported. Each professor is presumably supposed to have a?marginal revenue product above his/her compensation.

Cost (at least the professor’s pay) is easy to calculate.?? Unfortunately, the calculation of revenue includes only outside grants received and tuition revenue.? Any unfunded research, no matter where published, is assumed to have zero value, as is any service. Were this to spread throughout Texas (as I sadly expect it will), any publication – even in the most visible scholarly outlet, even if it affects how the average person thinks about the world – would be valued at zero; so too would an appearance in a nationally visible media outlet.

University administrators facing these incentives would have every reason to construct a faculty of grant-hustlers and low-paid teachers (subject, one might perhaps vainly hope, to some minimum teaching quality).? Despite the traditional UT-A&M rivalry, I hate to see a great institution do this damage to itself.? Worse still, this kind of mindless accounting, if it spreads, would increase still further the widening gulf between the quality of the nation’s best private universities and its top public universities.? Very depressing – especially to someone who has spent 38 years teaching at public universities.

Steve Nations

Does this apply to the Athletic Department also? Does it apply to individual sports/teams? I would hope so. (For the record, I'm a BIG sports fan, but jeez - fair is fair.)


As a Former Student of Texas A&M & the Mays Business School, this is disheartening. I had some very good professors down in Aggieland (some of whom i re-connect with from time to time) and I worry/wonder if some of them will leave the university because of this.

Proud Aggie

Loftin made it clear that the purpose of the cost-benefit analysis was not to "assess the overall productivity" of each professor. I highly doubt that professors are going to start losing their job because they came out "in the red."

My guess is that the spreadsheet was merely a look at where payroll was going, and what sources of revenue the University has been working with. And if a few of the professors who have a net "cost" to the university find a way to become better professors because of it, great.

Ian Callum

Professors are worth much more than administrators.

Ben D

Prof. Hamermesh, perhaps you should present some research attempting to quantify the value to the university or the public of publications and TV appearances.

Eduard Beckstein

"...mindless accounting"
Exactly, this seems like the apotheosis of a fool's errand, launching a new "program" to try and calculate what they admit in advance is necessarily incalculable. Teas A&M fail....


So Texas A&M admits that higher ed is a business. What a shocker.


Why do you see the need for a quality requirement when the only metric is revenue?

Frank Mitchell

Letting college professors operate with a taste of real world
commercialism may be an idea whose time has come, although I would suggest doing it a bit differently for economics professors.

It is interesting that some tenured economics professors at major universities, earning maybe $125,000 yearly with full benefits, who can't be fired and replaced with a lower-paid teachers, are teaching their students the benefits of outsourcing and free trade.

And outsourcing and free trade have caused millions of American workers to lose their jobs. Thanks to free trade, our "industrial heartland" has become the "rust belt."

But tenured economics professors still preach how great outsourcing and free trade are for the American economy.

But, what if American colleges did away with tenure, and every year they brought in 10,000 English-speaking economics professors from India or elsewhere who were willing to work for maybe as low as $20,000 per year.

Would economics professors then understand the real meaning of outsourcing a little better if their salaries plummeted, or they lost their jobs.

Maybe the unemployed economics professors could retrain and become nurses or get jobs at Walmart.




How can you calculate a professors profit? How are they dividing between professors the grants and tuitions being paid to the college as a whole? From what is written in the article i would have to say that to calculate the revenue is impossible. And maybe its not, but for us to understand how this happens we need some more information. And then after we have the knowledge of how a professors profit is calculated and depending on this, how much they get paid. Then we will be able to see clearly how this will affect us.


We have a similar policy for being granted tenure at SD universities. X publications + Y research dollars + Z students advised = value. If value > min they can receive tenure. This seems to work fairly effectively.

However, as faculty members progress in their careers, their focus shifts away from grants and publications towards mentoring junior faculty and running various parts of their professional societies. These functions are nearly impossible to quantify, but are crucial for the success and ongoing development of departments. If evaluated strictly from revenue most senior faculty would be the first to go.

Eric M. Jones

This is a bit puzzling. Since the university certainly has a revenue stream and expenses and some other cash sloshing around, how is it that the individual faculty has any interest in doing the actual accounting work?

If they want YOUR numbers...LIE like a sinner. If they object, tell them to do it themselves. This bad idea will go away eventually.

My guess is that the "Upper Management" is clueless as usual. Buy them all a copy of Robert Townsend's "Up the Organization".


Further hollowing-out of the middle class. Fear not, man of the university, you too will be calculated in terms of the pennies you are worth.

Of course, for the CEO, for the Politician, there is no such calculation made.

Ah, equality, where have you gone?

Phil Aliberti

Seems to me a great mistake is trying to be made. Not all of our endeavors need to be cost justified. Soon we'll have people trying to charge students more if they earn an "A" in a class because they obviously received a greater educational product than someone who received a lesser grade!



I believe this system must be modified somehow to account for unfunded research and publications, because these two things definitely add value to the professor's teaching at the university and need to be rewarded somehow. Rewarding only monetary gains will, like the post says, only incentivize "grant-hustlers and low-paid teachers", and in the long run probably weaken the institution rather than strengthen it.


"University administrators facing these incentives would have every reason to construct a faculty of grant-hustlers and low-paid teachers."

What alternative incentive system would you suggest? Neither grant-hustling nor low pay are necessarily predictors of poor teaching or research, are they? How should a university evaluate professors? Publication rate? Graduation rate? Grant income? Some nebulous, peer-determined "quality" factor? I don't think there's an easy answer.

Kristine A

Um, yes when the cost of a college education doubles every 5 years you've got to look at cost control. So all you academics who scoff at the increasing commercialization of universities better adapt or die. I for one won't be sending my kids to a university that has their professors researching, the kids being taught by grad students, and the kids graduating with 100k in debt from a program (like Feminist European Literature from the 18th Century) that has NO jobs.

My alma mater, BYU-Idaho, has lowered the per student cost of education the last few years.

Their answer? No tenure, no teacher rankings, no research, no graduate school, no athletics. And? Year round school (three semesters with students assigned to different 2-semester tracks)

Just be the best university with the best professors who actually TEACH (and do it well), and prepare the students to become the best workers in society and in their communities.

Oh, you mean the educational system is actually for the benefit of the students?? Imagine that.



Hopefully it applies to athletic departments. Then we can scrap title ix and just have men's football and basketball. We can eliminate all the money-wasting sports and keep the profitable ones (imho the only important ones).


When calculating professor's revenue, outside work isn't included. All unfunded research, despite the form of publication, are not valued. Not paying attention to such a big factor is like not paying attention to the factors that affect our lives; it is like assuming that all things remain constant when analyzing supply and demand when in fact there are numerous factors that can affect the curves.
Since little attention is paid to the unfunded research done by the professors, then there's little incentive for the university administrators to obtain good, high-paid professors. Because they have few incentives, they probably think there will not be enough marginal benefits from hiring better professors. What the government must establish is a regulation so there ARE incentives to promote the hiring of good professors, so the gap between private and public college education is reduced.


how ridiculous. imagine all the practical applications of unfunded research over the years, that were not realized until much later (sometimes decades, long after the original author died.). like say, tensor calculus ... unfunded research with no applications until a young scientist used them for a small theory called general relativity around 1917. then there is the purely theoretical work into prime numbers that turns out has applications in security and codebreaking.

Some people would say that the real measure of a university is that it produces knowledge, not revenue. Knowledge is a public good and (ask any economist) often undervalued. Sometime the applications of the knowledge are not apparent until decades and centuries later.