The Informed Consumer Model in Higher Education

R. Barbara Gitenstein’s post in Inside Higher Ed today, entitled “Transparency or Redundancy?,” got me thinking about the concept of the informed consumer. The rationale behind the informed consumer concept is that market actors who are informed have a greater capacity to understand the importance of their market actions and choices, and are enabled in making better choices. It’s classic ECON 101.

In the higher education marketplace the informed consumer concept seeks to play itself out through a miriad of state and federal reporting requirements and a slew of rankings. In other words, the information is out there and is pretty easy to access. Gitenstein rightfully argues that the new federally required “shopping sheet” is redundant and I agree with her. Students already have a plethora of knowledge about institutions from the school’s VSA site, IPEDS, Complete College America, etc.

But there are two steps to being informed. The first is access to knowledge that is meaningful to your decision and the second is the understanding of that information and the comparability of it from one product to another. And finally, for the informed consumer model to work, the consumer must have the ability to use that information to make “better choices.”

Currently, as Gitenstein points out, there is much information available. I would however argue that the information available may not be the type of information that is meaningful to a student’s decision on which college to attend. And I say this rather callulously. A personal story provides a good example. A few months ago I was trying to decide amongst several PhD programs. I decided to attend a campus tour at one of the institutions. The overwhelming majority of the prospective students on the tour were high school seniors and I found the presentation by the admissions staff and the questions asked by the students very illustrative of the types of things that really matter to students. The campus tour focused almost exclusively on student living quarters and the student recreational facility. The majority of questions asked by students were not about faculty credentials or retention rates (although one student did ask about employment statistics for a particular major), but were instead about student club activities and athletic events.

And even if student success data did weigh heavily in the decision process, the comparibility of the current data is dubious. In order to make an informed decision, a consumer must be able to easily compare one product to another.  When one decides to buy a car or a stove or some other consumer product, for example, the utility of the product will probably be fairly unanimous among consumers. All car shoppers seek cars for pretty much the same purpose- transportation. There are differences, of course. One consumer may value gas efficiency more and another may value safety ratings more. But overall, the market is pretty homogenous. The higher education market, on the other hand, is vastly diverse. The utility of a degree will mean something very unique and different for each consumer. For some, it will be ability to get a job in a certain field, for others it will be the social connections they made while living on campus and participating in Greek life, and for others it will be the exposure to different ways of thinking and analyzing the world. Over the past century American higher education has done a fantastic job of catering to a diverse market, but as public funding becomes more scarce, the lanes narrow and choice is constraigned.

Lastly, we seek informed consumers because we believe the informed consumer is able to make “better choices” and that those better choices will lead to a more efficient market. But in higher education the “best” choice is not always apparent. Is the best choice the cheapest choice? Is the outcome of the best choice an employed graduate, or is it a more enlightened citizen? It’s more than likely a number of things.

The informed consumer model is not as easily applied to higher education as it is to the durable goods marketplace. The utility of the product means too many different things to consumers, there’s a disconnect between the data that is available and what really matters to the consumer, and comparability is difficult. The answer, as Gitenstein points out, is likely not redundancy of information.

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