Tuesday, January 23, 2007

Benefits are harder to figure 

That's a statement I make in teaching cost-benefit analysis. The cost of government action is often fairly clear in terms of the outlay on a spending project. The benefits received are much harder to ascertain and evaluate correctly. (Then there's whole discount-rate thing, but skip that for now.)

Last week it was reported that two Colorado legislators had asked the state's auditor to investigate the spending of $21.8 million in 2006 of the University of Colorado's Diversity Administration. The Independence Institute in Golden reports that the spending may be more than that, and that there is inadequate oversight.

Any organization undertaking a major expenditure like this would engage in some kind of assessment of the costs and benefits, right? According to the Chronicle of Higher Education, though, maybe not. (subscriber's link)

News of the Colorado development distressed, but hardly surprised, many of the nearly 170 college administrators, faculty members, and admissions counselors who were gathered here on Monday for Clemson University's Fifth National Conference on Best Practices in Black Student Achievement.

Although several said they had grown accustomed to justifying their affirmative-action efforts and felt confident they would be able to account for every dollar spent on diversity programs, others said they worried that colleges were ill prepared to defend such efforts against those demanding that they be subjected to a strict cost-benefit analysis.

...One of Monday's featured speakers, Damon A. Williams, the University of Connecticut's assistant vice provost for multicultural and international affairs, said he saw the Independence Institute's efforts to scrutinize university spending on diversity as representing "the next wave" of attacks on affirmative action. He said he had responded to news of the institute's report by sending letters to three major national higher-education organizations, which he declined to name, urging them to mobilize colleges elsewhere to defend themselves against similar scrutiny.

"I think many institutions are greatly at risk," Mr. Williams said. Colleges have only in the past few years begun documenting the educational benefits of diversity, he said, and while they generally can make good arguments that the diversity programs serve a valuable purpose, they have not done enough to document and track the money spent on such efforts and their results.

Richard Bayer, dean of enrollment services at the University of Tennessee at Knoxville, said he saw the inquiry about diversity spending at Colorado as part of a broader movement to demand accountability of higher-education institutions. "To some degree I think it is going to have an impact on diversity on campus," he said. "It makes you stop and think very carefully about how you are spending your dollars, and are you making a difference."

"Every time we try to do something, there is a group that is challenging what we are doing," Mr. Bayer said. "We are going from analysis to, almost, paralysis."

Translation: "If we have to document and justify what we do with public money, we might not be able to spend as much." Those who have been challenged to do just that are said to be best able to meet the challenges of reports like II's. But the problem is that few do so, because again, the measurement of the benefits are quite difficult.
Following the U.S. Supreme Court's 2003 decisions involving race-conscious admissions policies at the University of Michigan at Ann Arbor, colleges throughout the nation were advised by lawyers to document the educational benefits of diversity in case their affirmative-action programs were challenged. But when UConn's Mr. Williams asked the nearly 170 conference participants to raise their hands if their institutions were actively trying to measure the educational payoffs of diversity efforts, only a few hands went up.
Discriminations asks:
Why should they have to do that, they might well ask, when they can�t even document the �benefit� of History or English or a whole slew of the social sciences? But while the benefit of the Humanities might be hard for accountants to justify, their cost isn�t hard to document. At most institutions this is not true of �diversity�spending, and some honest accounting would seem to be entirely in order.
That's a good point: The opportunity cost of a discriminatory system is hard to measure since those costs -- mismatching students with universities that can serve them best -- are not directly observed.