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Well, across universities they are different, but it is not the case within a specific college. For example, physics majors pay the same price as philosophy majors, all else equal. But does it make sense to charge students the same exact thing for what is essentially two entirely different products? Is this equilibrium stable and can anything in economics help us understand why this equilibrium has evolved?

  1. Colleges and universities are probably the most aggressive price discriminators in the entire economy (aside from airlines, perhaps). But having different students pay different prices to attend the same institution does not seem to make people upset. In fact, it is celebrated. And this practice is becoming more, not less, prevalent. 

  2. My initial instinct is that the costs of educating a nuclear physics major are far larger than the costs of educating a philosophy major. But my instinct might be wrong. I am focusing on average costs and not marginal costs. Once a university makes expensive investments in high technology (such as lasers, accelerators, etc.) those costs are essentially fixed and largely sunk. The marginal cost of educating a physics major, conditional on these facilities ever getting in place, is likely to be fairly comparable to the cost of educating other majors.

  3. A countervailing force is that economies of scale in educating are more likely to be enjoyed by majors such as history, economics, philosophy, etc. that are amenable to large lecture halls, better use of instructional technology, lack of requirement for a “lab hour” and more. The hard sciences and other capital intensive majors are less able to capitalize on these scale economies.

  4. Could it be that universities are trying to maximize enrollments / net revenues at the university level and not just at the college or department level? If certain majors are underpriced, then perhaps those students who cannot get into them will go elsewhere in the university where the majors are overpriced? I was a physics major turned economics major in college.

  5. It is common for colleges to wish to receive far more applications than they could ever admit. That raises its “prestige” and is also good for its US News Ranking. If prices were set across majors so that markets cleared in each major, there would be no appearance of selectivity, hurting the school’s prestige.

  6. Every university I have been involved with takes the long-view in respect to student loyalty, especially in regard to future annual giving and endowment building efforts. Charging all students the same price across majors may build a sense of community in an effort to maximize not only net tuition revenues, but some measure of net long term revenues. This is hard for me to square with the first point above, which is far more obvious to students than the prevalence of constant pricing across majors.

  7. Maybe I should be more practical and observe that my students are picky. They like to change majors, and some like to be double or even triple majors. Maybe the transactions costs from the institutions’ standpoint far exceed what could be gained by setting market clearing prices. Just think of how the finance office would react to hundreds of students changing majors regularly, pro-rating different tuition rates, adjusting financial aid packages, etc. Or maybe institutions feel like students will enroll in cheap majors but sample courses in the expensive ones, losing a significant amount of revenue in the process.

I suppose that #7 is the major driver, followed by #5 (but why don’t less prestigious schools experiment with variable pricing? This question is representative of a far greater wonder I have – and that is why there seems to be so little innovation in the pricing and delivery of higher education today. After all, there are over 4,000 colleges (including two-year and technical colleges) in the US, but there are shockingly few alternatives in terms of the educational experience offered. Contrast that with the options you have when walking into a modern grocery store. Comments are very welcome!

(Update: A colleague does me one better by asking why I focus on majors instead of courses. That would alleviate the problem with #7, but 1-6 still apply). 

2 Responses to “Why Are All College Majors the Same Price?”

  1. David Kaplan says:

    The colleges are subsidizing the tuition of the hard science majors by sticking the soft social science majors with part of the cost, with a long view goal of producing well-paid doctors/scientist alums who will give back to the school that educated them.

    Although I think we may be underestimating the expense of keeping blowhard philosophy/religion professors on campus, funding school trips to foreign countries for language students, and keeping the history professors’ bar stocked properly.

    I actually think you have it in #7 “Or maybe institutions feel like students will enroll in cheap majors but sample courses in the expensive ones, losing a significant amount of revenue in the process.”

    We would have (already have?) too many religion majors and not enough science majors.

  2. Tom S. says:

    Do colleges charge the same price? Although the tuition appears to be the same, the lab fees associated with certain majors (or courses) can be substantial. For instance, physics, art, and psychology often have lab and computer fees that appear to be related to the additional marginal cost. If the fees seem to be nominally low, this would make sense since the marginal cost of education is quite low.

    Then again, hard sciences often pay better than the others and those extra student fees don’t appear to cover the difference. But, if this were to be argued, my reply would be those higher salaries are often paid in return to the larger outside grants that come to the university, not for the higher cost of instruction.

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