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.


I just want to see college athletes get paid. Some of those kids bring in millions to the school annually, and all they get is a lousy scholarship that they don't really even want.

This analysis should cut both ways, so that the highest paid person on the court or field isn't the coach, but the star athlete.

Tom G

Why do you think university administrators aren't currently dealing with incentives that give them every reason to construct a faculty of grant hustlers and low paid professors?


Maybe this sort of analysis could be used to weed out under-attended programs that exist largely because they met a previous need or demand.

Better than the alternative that at least one A&M system school uses. A&M-Commerce technically has a MS-Economics program, but they don't offer enough classes to actually obtain the degree because there's never more than one or two students showing any interest in the program at any given time (and for those students to finish, they have to convince members of the faculty to embark on at least two independent study "classes" for which the professor will not be paid).

Maybe this kind of analysis could convince the higher ups in the A&M system to finally admit that A&M-Commerce needs to quit pretending they have an MS-Economics program.


It is very hard to measure how much an economics teacher is worth especially in the Public system; however, one thing that is for sure is that these low wages could hurt these institutions in the long run. Since colleges' aren?t paying professors for their research, this will likely mean that they will stop doing so. Thus the opportunity cost for paying low wages is the following: first, since private colleges offer low wages the best teachers will elect to search for other options that pay them better. Next, professors are going to stop researching as the research will not add value to their credentials.


Usually high prestige universities such as Texas A&M University hire very valuable professors creating higher costs. The revenue and costs are calculated, but harder to be reported. The cost is easy to be determined (the cost of the professors' pay) as the post says. The revenues don't include the benefits that a teacher earns working outside school as tutoring and others. Low-paid teachers will not bring benefits to students nor education system itself. So, we could determine this incentive as a negative incentive.

Chris G

". . . individuals cannot learn to speak for themselves at all, much less come to an intelligent understanding of their happiness and well-being, in a world in which there are no values except those of the market. . . . the market tends to universalize itself. It does not easily coexist with institutions that operate according to principles that are antithetical to itself: schools and universities, newspapers and magazines, charities, families. Sooner or later the market tends to absorb them all. It puts an almost irresistible pressure on every activity to justify itself in the only terms it recognizes: to become a business proposition, to pay its own way, to show black ink on the bottom line. It turns news into entertainment, scholarship into professional careerism, social work into the scientific management of poverty. Inexorably it remodels every institution in its own image."

from Revolt of the Elites by Christopher Lasch



They use student teaching evaluations almost everywhere. And let me tell you something: I could teach a course with almost zero educational value, a course nearly content-free, and still get excellent evaluations. In fact, I've done it. My secret? I'm pretty funny. I tell a good story. I dumb down content. I don't mark too hard or give too much work. And I pack 'em in. Texas A & M, here I come!


Having this system makes the professors have no incentive to succeed outside the university. This system emphasizes how external work is not merited in the pay, yet this makes no sense because external work does affect the professors' teaching; meaning when professors publish new research, they will incorporate this information in their teachings. With this, their quality of teaching will increase. Having professors with greater knowledge and findings will increase the demand of students who want to be in this class.
Supporting teachers and their external research will help the university be much more recognized since people will know the college for having well-rounded and published professors, who are going to very likely offer the students a much greater insight in the subject in comparison to professors with no merit in the subject. Passion is necessary in order to enthuse your students about the subject one teaches.



Wasn't there a play about this? Best little whorehouse in Texas


Ah, Texas. The standard bearer of US education from Kindergarten through College.


Those who really want to understand the economics of the modern US university system could do worse than read "How The University Works" by Mark Bousquet.


I believe the WSJ article did not make clear one important fact, which I think you are also missing. The income per faculty member in the Texas A&M spreadsheet did not include grant income. (It also did not account for research costs beyond academic year faculty salary costs.)

In my opinion this ridiculous bean-counting exercise deserves no further comment, so I won't.


It would seem obvious that there are university departments - foreign languages springs to mind - in which there's little or no possibility of research and/or grants, but which nevertheless provide useful knowledge.


Before you all turn too skeptical think of the possibilities. Why at Texas A&M there is a Vice President for Marketing and Communications.......where are the productivity measures and value added? How about the Commandant of the Corps of Cadets.....does the entire Corps produce a single dime? Or go to the university's web-page where it trumpets the publication of a faculty member's book on French composer Irene Nemirosky. How much grant money did that generate?
would your average Texas gas station attendant think that was a good use of state tax money?


The idea that universities in Texas only consider "productivity" in an economic sense as an indicator of worth is not surprising.

The state of Texas is a state with no reputation among academics, despite its anomalies.

Texas is a fool's paradise, and I hope Texans are happy.

Oh, I wish that secession was legal.

Jonathan Katz

If grants are used to pay the professor's salary during the academic year then the funding agency is a victim of fraud. The rules are very clear: "Direct costs" pay for the out-of-pocket expenses of research (equipment, supplies, research travel, non-faculty salaries, etc.) and must be accounted for specifically. "Indirect costs" are reimbursement for hard-to-measure-individually expenses like building maintenance and utilities. There are no other categories.

In fact, the study counted only tuition as revenue. This explains the surprising result that humanities departments, with few grants but lots of students, often were profitable, while engineering departments, with many grants but fewer students, ran at a loss.

If this study were adopted as a funding guideline the result would be a mad scramble to attract students. The only way to do that is to outbid other departments with sexy subjects, higher grades and lower student workloads. There would be a race to the bottom in quality of education.

A university isn't really selling itself as a four year party; parents won't pay for that. It is selling the reputational value of its degrees---graduates of respected institutions are valued in the job (or post-graduate education) market. If it dilutes the seriousness of its education, the students may rate the professors highly, and flock to the easiest courses, but will later find that the money they (or their parents) have paid in tuition has been wasted. Employers won't want them. Once that becomes known, parents won't send their children there.

Jonathan Katz
Professor of Physics
Washington University
St. Louis, Mo. 63130


Tom McMahon

Bean counters who cannot bring anything to the table but the bootom line. Academics and education are priceless, no value can be put on a great professor who is written and respected among his peers or the educating those willing to learn. As we fall behind other industrialized and emerging nations in math and science we fail to fund and grant greater research dollars to both academics and education at our own peril. A country is only as great as its educated population who understand its dynamics and its infrastructure on which to build.

thomas mcmahon
millis ma


Humanities people bring in only a small fraction of grant money compared to hard sciences. Does this mean we should stop studying everything where professors can't be funded with millions from the NSF and NIH?


This is great news. The externalities coming from economics department is near zero. These numbers will be very important to bring light to the reality.


If faculty are paid solely by the numbers of students they teach and and the amount of funded research, then the incentives are to teach more students and to do more funded research. To teach more students just give blanket "A" grades, agree to allow unlimited numbers into classes, and to teach many classes. Whether a class meets or not is not in the metric, consequently you may see classes canceled frequently. You will also see grade inflation.

How is funded research to be quantified? Is it just by the number of dollars a faculty member receives in grants or is it the overhead funds received by the university, or is it some other metric? If it is by the number of dollars a faculty member receives in grants, then what is to prevent self-funded research? Say Professor x donates $10,000 to the university to have Professor x conduct research on whether chickens have downward sloping demand curves, does that count as much as the NSF giving x the same amount, but with the university getting substantial overhead funds? If the metric is overhead what is to prevent faculty from negotiating with funders to decrease salaries and increase overheads, and then being rewarded with an increased salary equal to that overhead (the marginal product) for the rest of his employment at the university?

This is not a good idea; it is sophomoric economics; if ever implemented the way it is presented it will be disastrous. If you start adding stipulations like insisting that classes not be canceled, professors actually teaching rather than holding pizza parties regularly, and that funded research be published by reputable organs, THEN you are left with something resembling what we have now. So we go full circle and all we have done is give administrators a justification for increasing their salaries. But I suppose that is the point of this exercise, is it not?