Lessons From the Tragedy of the Commons

The United States has seen a significant decline in state support for higher education in recent years. From 2000 to 2012, state support per full-time equivalent student declined from an average of $7,000 to $4,400 after inflation, a drop of almost 4 percent a year. Over the same period, federal support grew 2.5 percent annually after inflation, from $3,800 to $5,100 per full-time equivalent.

The contrast between state and federal investment in the specific period from 2008 to 2012, the first four years after the Great Recession, was even greater: state support declined at an annual rate of 7.8 percent, while federal support grew at an annual rate of 7.3 percent. And while three states (Montana, North Dakota and Wyoming) have increased support for public higher education over the past three years, the other 47 states have decreased it.

On a more granular level, one has seen budget collapses at the City University of New York and a budget impasse threatening all public universities in Illinois. One might ask why City University -- which not only offered high-quality tuition-free university education through 1976 but also produced 13 Nobel laureates from the classes of 1933 through 1963 -- does not enjoy greater public support, support it once had. One might ask why Illinois universities -- including the flagship University of Illinois at Urbana-Champaign, Chicago State University and others -- do not enjoy greater public support, again support the system once had.

The Tragedy of the Commons

The decline in state support for public universities appears to be flip side of a classic economic conundrum: the tragedy of the commons. The tragedy of the commons describes overuse of a shared resource (for example, a fishing area) by individual users (fishermen). Since each fisherman can expect to harvest only a small fraction of future fish growth, the optimal strategy is to catch as many fish as possible, even though the collective result of all of those individual optimal strategies is to drive the fish population to extinction. W. F. Lloyd first described this “tragedy of the commons,” or the overexploitation of a shared resource, almost 200 years ago.

The tragedy of the commons is fundamentally a mismatch between the scale of the decision maker(s) and the scale of the resource. In the presence of this mismatch, and the absence of communication and agreement among users, each user’s optimal economic strategy in exploiting a shared resource (a fishery, or, more generally, the commons) is to overexploit the resource, potentially driving it to extinction.

A similar mismatch has emerged in support for United States public universities. Until now, public universities, like public schools, have been primarily funded locally: public schools through a combination of local and state support, and universities largely at the state level. Historically, most graduates stayed local, and most of the hiring was local. Thus, each individual participant (for example, a local business) in a local community received much of the benefit of their investment, motivating investment commensurate with the benefits of the university. State support of public universities matched the scale of users of these universities, and state investment in their public universities benefited the state population and businesses.

In contrast, if far fewer graduates stayed local, and much of hiring were significantly broader based (for example, national or global), an individual participant would logically choose to invest little or nothing in their local public universities. The logic parallels the classical tragedy of the commons, where individual users (herdsman or fisherman), acting independently, together overexploit a common resource because each has essentially no ownership of the resource. In this case, each participant underinvests because they receive only a small benefit from investing in the shared resource -- the scales of statewide investment and broader national usage do not match. The results are also similar: namely collapse of the common resource.

This reverse tragedy of the commons describes the present-day United States. Public universities have become national resources, not merely state resources, providing benefits both in the state and outside of it. The educated population is highly mobile, and businesses recruit and hire their best-educated employees on a national or global scale.

Thus, federal support for public universities has grown in recent years because the scale of federal decision making and investment matches the national scale of usage of public universities. But meanwhile, state support has fallen sharply because the scale of state decision making and investment does not match the national scale of the hiring and mobility of the well educated.

Reductions in state support not only harm the quality and affordability of public universities; they also trigger further reductions in support. Business can hire out of state, even outside the United States. Those seeking science, engineering and technology workers can use the H-1B visa program to access a global talent pool. Students who are able can choose to attend out-of-state or private universities.

To fill the gap in state support, public universities can pursue out-of-state students to increase revenue. But states like California have been publicly pressured to reduce out-of-state admissions in favor of in-state students. Another possibility -- raising tuition -- both reduces opportunities for students and makes state universities less competitive economically.

Meanwhile, those strategies don’t really address the collapse of support for public education -- and its negative consequences. (It’s worth noting, for example, that all 13 Nobel laureates at City University graduated between 1933 and 1963 -- none did during the disinvestment in the 1970s and later.) And they all further weaken the case for state taxpayer support, driving a downward spiral in state support for public universities.

User Communities on a National Scale

How can this spiral toward collapse of public universities be stopped? Fisheries management suggests two alternative but complementary approaches, both based upon the concept of an optimal strategy for the user community as a whole. One approach to managing fisheries is to regulate the total harvest at a sustainable level and then to apportion the harvest to fishermen in one of several ways: restrict the season, restrict the effort or adopt a system of catch shares.

The analog for funding universities would be to provide funding at a sustainable level on a suitable scale and then allocate enrollment. That is the current model in Germany and the Nordic countries, reflecting “deeply rooted social values, such as equality of opportunity and social equity” (OECD report, 2015). That model was once common in the United States before public support lost pace with increasing costs and tuition was introduced to make up the shortfall. Examples include the University of California system and City University of New York. New York State’s community colleges were created on an analogous but explicit shared-funding model: one-third funding each from the state, local sponsors and students.

We can and should move toward a more significant national component of a shared funding model, as a partial replacement for the failing present approach of state funding. But perhaps we simply need to start with more open communication about the benefits of investment in public higher education.

Elinor Ostrom, the 2009 Nobel laureate in the economic sciences, essentially called for the emergence of user communities of beneficiaries of a common resource, such as a university, who understand and together effectively manage their common resource, generating a match between the scale of a common resource and the community of its users. As she stated in her Nobel lecture, “Isolated, anonymous individuals overharvest from common-pool resources. Simply allowing communication, or ‘cheap talk,’ enables participants to reduce overharvesting and increase joint payoffs … Large studies of irrigation systems in Nepal and forests around the world challenge the presumption that governments always do a better job than users in organizing and protecting important resources.” In particular, “resources in good condition have users with long-term interests, who invest in monitoring and building trust.”

There has always been an interested user community in America -- beginning with the founding of Harvard University in 1636 as a public-private partnership between the Commonwealth of Massachusetts and some of its wealthier citizens. Recent public-private partnerships include Emory University and the Georgia Institute of Technology and the Five College Consortium (the University of Massachusetts and four private colleges).

In fact, private universities have also needed to develop and cultivate their own user communities to generate adequate support and have experienced some striking contrasts. Overall alumni giving rates have fallen significantly, but colleges and universities with a well-identified sense of community have experienced increased overall giving and high alumni giving rates. This trend brings hope for the future.

We need to build upon this concept to better support public higher education on a broad, national scale. To this end I offer several concrete suggestions to galvanize a national user community. We should:

• Develop a unified voice as stakeholders. Public universities are represented by the Association of Public and Land-grant Universities, the Association of American Universities, and the American Association of State Colleges and Universities. Their membership forms a complex Venn diagram. For example, the University of North Carolina at Chapel Hill is a member of APLU and AAU but not AASCU, while many other UNC campuses are members of APLU and AASCU but not AAU. There are also separate organizations for private nonprofit universities, for community colleges and for university faculty. Although all of those associations have similar agendas for improving funding for and access to the higher educational common, a unified single voice for public universities could speak more effectively to further a common agenda.
• Communicate more effectively to the public. We must make the case that support for broad access to higher education is a mission-critical national investment, in the spirit of the post-Sputnik space program and the war on cancer. More budget transparency and improved public outreach are key components.
• Speak on behalf of a broad national user community of stakeholders in higher education. A partnership including industry, as well as between public and private universities, is needed. I applaud AAU President Mary Sue Coleman’s address “Saving Public Higher Education” at the 2016 World Academic Summit, and in particular her statement “Public universities are the workhorses of American teaching and research. And the benefits to society are powerful.” Although she notes that there are no private research universities in a majority of states, the AAU itself recognizes the value of a broad public-private effort by including 26 private research universities in America among its 62 member institutions. Public and private universities should be coming together to support their common mission and generate increased public support for all.
• Advocate for more national-scale support, while preserving the independence of public and private universities. Such a program could perhaps be modeled upon a combination of existing federal grants, the National Merit Scholarship Program, Pell Grants and ROTC (as a model of public service).

In summary, we in higher education must work together to build a more active and effective national user community, one that acts on its collective responsibility to support its commons -- the public universities of the United States -- with increased national-scale support.