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ERIC Number: EJ1043679
Record Type: Journal
Publication Date: 2014
Pages: 27
Abstractor: As Provided
ISSN: ISSN-0022-1546
The Rising Cost of Higher Education: Charles Eliot's "Free Money" Strategy and the Beginning of Howard Bowen's "Revenue Theory of Cost," 1869-1979
Kimball, Bruce A.
Journal of Higher Education, v85 n6 p886-912 Nov-Dec 2014
In order to explain the rising cost of higher education, economist Howard Bowen in 1980 proposed his "famous law" of institutional finance. Bowen based his "revenue theory of cost" on a study of aggregate quantitative data extending from 1929 to 1979. Neither he nor subsequent economists asked whether or how that "law" applied prior to 1929. Nor did they examine specific cases or testimony to understand the historical operation and nuances of the theory. These three issues are addressed by examining the "free money" strategy that Harvard President Charles Eliot formulated during his administration from 1869 to 1909. Recently identified by scholars, Eliot's strategy fits closely the theory posited by Bowen a century later, notwithstanding the many differences between their historical periods. During the 1910s and 1920s many wealthy universities began to adopt Eliot's "free money" strategy, and this adoption explains how that financial ideology proliferated subsequently. Eliot's singular case thus explains the origins, demonstrates the historical operation, and illuminates the nuances of the revenue theory of cost that Bowen codified in 1980.
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Publication Type: Journal Articles; Reports - Research
Education Level: Higher Education; Postsecondary Education
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: N/A
Grant or Contract Numbers: N/A