Tuesday, April 07, 2015

 

Discounting and the Difference Principle


In what seems like a previous life, I slogged through John Rawls’ A Theory of Justice.  Rawls argued that we should judge policies that would treat different people differently by applying what he called the “difference principle.”  Broadly, the idea was that different treatment was justified to the extent that it offered the greatest benefit to the least advantaged.  In other words, deviations from equal treatment were only justified when they served to create more equality.  If you must treat the rich and the poor differently, treat the poor better.  

In reading about tuition discounting, I found myself drawing on long-repressed memories of Rawls.

Tuition discounting is the practice of accepting lower-than-sticker-prices from students, in order to entice them to enroll.  A school that posts a sticker price of $50,000 a year, but only asks students to pay $40,000 a year, has a 20 percent discount rate.  Discounts are usually presented to students as scholarships, but when the scholarships are funded entirely by the institution, they’re effectively discounts.  (Third party scholarships, by contrast, actually bring in money.  That’s true even when the third party is the college’s own foundation.)  When a college has too high a discount rate for too long, its survival comes into question.  Sweet Briar’s discount rate at time of death was over 60 percent.

Some colleges are getting more strategic about their discounting.  That can mean different things.  Among other things, it could mean:


As a former colleague of mine once argued, it could even apply to a “graduation deposit,” like a security deposit.  You get it back, with interest, when you graduate.  I’ve never actually seen that tried, but theoretically, it could be.

Strategic discounting in these forms has real appeal.  It uses pricing to motivate desired behavior, typically in the form of on-time program completion.  Done well and transparently, it could nudge students in the desired direction by aligning their personal short-term incentives with their long-term incentives (and the long-term incentives of the institution).  

But every version of discounting-as-incentive falls prey to the same objection.  It tends to reward the students who are already the most resourced and capable, and therefore to punish the least resourced.  Which is where I’m reminded of Rawls and his difference principle.

On-time completion is easier for students with light external demands on their time and solid academic preparation.  It’s harder for students who have to work thirty or forty hours a week for pay, who have kids, and/or whose high school preparation was spotty or worse.  All else being equal, building in more rewards for on-time graduation means shifting resources from those who have the least to those who have the most.  

And that’s where too many of these discussions stop.  One side says that better results are more important than equity, and the other says that equity is the first principle.  Both agree that results and equity are basically opposed.  Both assume that a Rawlsian solution -- an incentive that has the most benefit for the least advantaged -- doesn’t exist.

The closest thing I’ve seen to a Rawlsian version of discounting is a scholarship with a GPA requirement.  The GPA requirement is there to prevent subsidized slacking.  But even there, to the extent that it’s easier to get and keep a high GPA when you have pre-existing advantages, it strikes me as missing the mark.

And this is where I’m hoping my wise and worldly readers will come to my rescue.

Have you seen, or come up with, an incentive-based discount that would actually benefit the least advantaged the most?  Is there a way to have both incentives and equity?

Comments:
I don't think most of the voices you're hearing deny the existence of "Rawslian solutions" so much as they are trying to answera different question. For the most part, especially within the circles these discussions take place (which may not include actual policymakers), there is agreement that those solutions should be implemented. Once that low-hanging fruit has been taken (as much has), the question is how we prioritize equity and efficiency when they constitute competing values. It's not to deny the existence of low hanging fruit as much as it is to plan for when it's all been taken.
 
Without spending money? How?

Study after study has shown that poor people's problems can be boiled down to the phrase: "They can't make enough money." People try to make it more complicated; it isn't.

But then . . . yeah.
 
Here is something universities can do that would not necessarily cost a ton: lobby local governments to zone the area around them for housing that is compatible with being a broke-ass college student. Smaller houses, more bedrooms, no yards, apartment buildings with studios and 2-3 bedrooms but no 1-bedrooms. Tiny houses that can be rented out. That will help everyone, but it will disproportionately help those who need safe and cheap housing and are willing to accept a modicum of discomfort and/or tininess.

Along the same lines, aggressively pursue Basic Maintenance in the slums that surround most colleges, even it just means getting any Federal, State, or Utility program that'll jam insulation into your attic, caulk your windows, and clean out your ducts pointed in the right direction.

 
The comment abive about housing makes me think of this story I just saw about Dutch University students getting free rent at a retirement home in return for providing some companionship to the other residents:
http://www.pbs.org/newshour/rundown/dutch-retirement-home-offers-rent-free-housing-students-one-condition/

But to the question in the post, the closest thing I've heard of to a Rawlsian discount is the Posse scholarship:

 https://www.possefoundation.org/about-posse/our-history-mission

It seems like the general idea of making the discount dependent of participation in an academic support program of some kind, rather than on grades or long enrollments as such, gets at what you're looking for.

A recent episode of This American Life was actually specifically focused in the question of why talented kids drop out of community college, and mentioned that some places have additional advising available for help with coordinating work and school schedules, and so on (called "success coaching" at the profiled community college). If you made your discount contingent on meeting a certain number of times per semester with your "success coach," that would be Rawlsian, no?

Of course, these support programs also have a price tag. But if you've got anything like that in place already...

-Mary
 
Co-op programs. Or even well designed paid internships.
I could envision scholarships contingent on participation in service focused academic honor societies that specifically and conciously plan service that has a joint benefit (i.e. a service project of helping out at a soup kitchen in which free food for the volunteers is part of the deal, serving as a tutor for kids in an environment you can take your own kids with you, ect.). They would still favor the privileged, but it would be comparatively inclusive.
 
Co-op programs. Or even well designed paid internships.
I could envision scholarships contingent on participation in service focused academic honor societies that specifically and conciously plan service that has a joint benefit (i.e. a service project of helping out at a soup kitchen in which free food for the volunteers is part of the deal, serving as a tutor for kids in an environment you can take your own kids with you, ect.). They would still favor the privileged, but it would be comparatively inclusive.
 
Two things come to mind:

First, my undergrad scholarship and grant funding were fairly Rawlsian in that they were progressive. If you had low income status (for 17 year old me, that meant my parents), then the same grants and scholarships increased in value. In other words, you were awarded an extra 50% because you were low income. That seems to address your previous issues with poor-people programs; since these scholarships benefited the middle as well as the lower classes, they were much more viable.

The second thing is that there are non-financial indicators of academic success, like club involvement. What if you make a low-income scholarship contingent on involvement in a club, e.g. student parent support club, rather than on GPA? The focus would then be on the student finishing, rather than excelling academically.

Excuse my cynicism: at the end of the program, "C's and D's make degrees", as the adage goes. For high achieving students, a 2.0 GPA might be absolutely devastating. For someone looking to get a diploma to increase their earning potential for their family, a 2.0 GPA might be just fine. Scholarships tend to be primarily focused on your top students, rather than your average student. Maybe we can rethink that.
 
Scholarships could be means-tested, then they would go to the poor. It's a bit of a procedure, of course (on several levels), to get/provide that data.

Single-parent scholarships, if you're allowed to do such a thing. In Germany you get more income support if you're a single parent, so fundamentally, it can be done.

I suspect it couldn't be done in the U.S. legal environment, but if people who complete developmental courses could be awarded scholarships based on, essentially, the judgement of teaching staff that "this is a person who needs it and will make a success of it", that could certainly be expected to be on target.

Childcare on campus.
 
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