Professor at the Collège de France, specialist in growth theories and author of several articles and reports on higher education, Philippe Aghion defends the need to increase university funding without resorting to an increase in registration fees.
The Life of Ideas : A number of economists advocate high tuition fees in higher education. The argument in their favor is that they would allow for better selection and orientation of students and would encourage them to make greater efforts. They could also be progressive to meet criteria of social justice. What do you think of these arguments? Can we think, on the contrary, that low university tuition fees would be more efficient from an economic point of view?
Philippe Aghion: I have a very strong position on this issue: I truly believe that it is a mistake to increase tuition fees. I am a follower of the Scandinavian model. In Sweden, there are practically no tuition fees for Swedish or European students. This is based on the idea that school should, like health care, be free. This is a red line of the Scandinavian model. Education is free from kindergarten to doctorate. This line is justified firstly because society must educate its citizens. Furthermore, investing in education is a factor of growth because it generates what are called knowledge externalities (knowledge externalities).
The idea of ”externality” is indeed central to economic analysis, and particularly to the analysis of growth, which is my main field of research. Externality is defined as the consequence for others of an individual’s actions; a consequence that is not taken into account by the individual at the time of his choice. There are negative externalities, such as pollution, which affects many other people than the one who pollutes, and there are positive externalities. Education undeniably produces positive externalities: if I educate myself, it contributes to the knowledge of my children as well as that of the people who work with me. This is why the State – which can take into account externalities and their effects on society as a whole – must finance education.
In fact, much empirical research in economics shows that these externalities exist and are strong in the field of education, within the family as well as in the company (see go further). This is what allows us to say that education is beneficial for growth. It is the same argument that justifies that public funding of health care produces positive externalities (reduction of contagion) that can have positive effects on growth. By educating yourself, you are not only helping yourself, you are helping society as a whole, you are stimulating economic growth, and it is in this capacity that I defend free medical care and education.
It is therefore too simplistic to consider tuition fees only as incentives, focusing on the argument that students will devote more effort and attention to their studies if they are paid for. On the contrary, we must consider the fact that low tuition fees encourage students to study, when they would not have had the means to do so otherwise. This is why the notion of externality is crucial.
This is a position of principle that I have, and that I have always had. Valérie Pécresse asked me to think about university governance in 2011, and I never wanted to include university fees in my proposals, despite the insistence of some. As a growth economist, I remain faithful to this position, because I know that it is economically justified.
The Life of Ideas : You have taught at many foreign universities, including University College London (UK) and Harvard (USA). How have these experiences shaped your current position?
Philippe Aghion: I also have this position because I have seen how it works in universities with high tuition fees. For example, at Harvard, I was on admissions committees and I know how decisions are made there. Scholarships are given to people who have resume excellent, the “stars”. And so it is true that, for those who have the best level, the registration fees matter little because there are always scholarships based on social criteria allowing them to do the studies they want.
But once the big “stars” have been selected, the one who has the means goes before the one who doesn’t. That’s how it is. If we announce the joint implementation of high registration fees and scholarships for excellence based on social criteria to compensate for them, in the end, since no one checks the number of scholarships that are awarded or not, the scholarships will always be given out drop by drop. We will therefore end up with the fact that someone poor must be much more deserving than someone rich to be able to do the same studies. That is not my definition of fairness.
Sciences Po has adopted a system of scholarships to accompany the increase in its tuition fees, but this does not address the issue of fairness that I raise. I met Sciences Po students who wanted to prepare for theENA and asked me to help them pay to be able to follow the preparation ENA at Sciences Po.
The controversy over the reduction in personalized housing assistance (APL) – which is probably not unrelated to the current revolts – reminded us how much amounts of a few euros per month can significantly affect the budgets of the poorest. Thus, even seemingly minimal increases in university fees would not be without consequences for students’ choices. I recently presented these arguments to the Court of Auditors without feeling that I had been heard. Many people in the senior civil service have a very accounting-based view and underestimate the impact that changes of 5 or 10 euros can have on educational choices and, in fineon economic growth and the knowledge economy. How irresponsible of the Court of Auditors to propose an increase in registration fees, which represents a ” APL to the power of ten”, and what’s more in the midst of a period of social effervescence!
The Life of Ideas : Do you make a difference in registration fees for international students?
Philippe Aghion: In Sweden, there are tuition fees for non-European foreign students. I am not against it. In this case, the scholarship system seems relevant to me because parents do not contribute to the tax and it is indeed a question of selecting excellent students. Obviously, it is not a question here of maximizing profit; we want intellectual interactions, to have an international influence, etc. It seems to me that the principles that justify attracting foreign students are thus different from those that justify heavily subsidizing access to higher education.
The Life of Ideas : How have your positions evolved on this subject since your notable 2004 report on “Education and Growth”, written with Élie Cohen? What would be your proposals today for fairer and more effective funding of universities and research in France?
Philippe Aghion: Contrary to what has sometimes been written, I have never advocated increasing university fees. I have published numerous studies, notably for the Bruegel think tank on education and universities (see further), and I have never proposed increasing tuition fees; on the contrary, I have focused on reforming university governance. I think that the State must be reformed to finance teaching and research. This means that we can spend less in certain positions or sectors, in particular through better rationalisation of territorial levels, but that there are other places where we must spend more. In France, professors as a whole (and not just at university) are much less well paid than in neighbouring countries. The State must play its protective role but it must invest more in education.
In Sweden, we spend about 21,000 euros per student. France is far from the mark, with 14,000 euros per student on average, and there is no reason why we cannot do like them. On the one hand, there is underinvestment in higher education and basic research. On the other hand, there are tax loopholes that need to be closed since we have moved to the flat tax (single tax rate on capital), for example the PINEL stone aid. Similarly, there is no reason to lower the housing tax for the richest 20%. It is in this state reform that we must seek sources of funding for research and higher education, and not by increasing university fees.