Introduction

This lesson will focus our attention on the economics of higher education and the critical role that planning and resource management can play in times of economic pressure and uncertainty.

Paul Brinkman (2006) states that Institutional Researchers, unlike Financial Officers or Accountants, are in a unique position to objectively analyze cost data and develop planning scenarios for reducing costs or increasing revenues. He offers an economic model of costs as an explanatory paradigm, and encourages the use of economic tools to identify, compare, and interpret costs in various contexts within higher education.

John Cheslock (2006) supports Brinkman’s position and provides the perspective of an economist in the analysis of costs and revenues, including the implications of price discounting on revenue projections in higher education. The final reading for the lesson is an article by Zemsky, Wegener and Massy (2005) regarding the congruence between mission strengths and market opportunities, perhaps the key question for higher education leaders and planners.

Lesson Objectives

At the end of this lesson you will be able to:

• define key economic concepts and their importance to higher education today;
• understand and analyze various costs and revenue models for higher education;
• explain why is it important to be “mission-centered and market-smart” in today’s changing external environment;
• think critically about the application of these concepts in contemporary situations confronted by institutional research professionals.