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In the war between generations, will universities get caught in the cross-fire?

Summary:
Canada's baby boomers are now in their late 50s and 60s. They're done with university. Their kids, for the most part, are done with university. Sure, at some point the boomers' grandchildren might want a university education, but that is not an immediate or pressing concern. More urgent, from the baby boomer's point of view, are policies that benefit them directly, such as good health care, or tax/benefit policies that leave them with more money their pockets at the end of the day. This line of reasoning suggests that, if older generations are motivated by narrow self-interest, population aging will cause public support for education spending to fall.  Poterba 1997 gives one of the classic articulations of this argument, and also sets out some countervailing forces. For example, older

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Canada's baby boomers are now in their late 50s and 60s. They're done with university. Their kids, for the most part, are done with university. Sure, at some point the boomers' grandchildren might want a university education, but that is not an immediate or pressing concern. More urgent, from the baby boomer's point of view, are policies that benefit them directly, such as good health care, or tax/benefit policies that leave them with more money their pockets at the end of the day.

This line of reasoning suggests that, if older generations are motivated by narrow self-interest, population aging will cause public support for education spending to fall.  Poterba 1997 gives one of the classic articulations of this argument, and also sets out some countervailing forces. For example, older people might support education because they believe that education increases productivity, and they expect to benefit from economic growth, or because they care about future generations.

Ultimately, the relationship between population aging and support for education is an empirical question. One way of answering that question is by using cross-sectional variation in school districts', or states', demographics and spending. Research along these lines is usually done in the US, as that country is unusual in how much per student spending on education varies across the country. The typical result is that states or districts with a higher share of elderly voters have lower per-student K-12 education expenditures (see, for example,  Figlio and Fletcher,  Harris, Evans and Schwabb, 2001, gated, or Reback, 2014, gated).

Ethnic division can exacerbate intergenerational conflict. For example, Figlio and Fletcher find that the decrease in support for public schooling accompanying population aging was even more pronounced in communities where relatively more members of the young generation were non-white.

Housing prices, however, can mitigate it:  If older people care about property prices, and the quality of local schools is capitalized into the price of housing, then self-interest might give the elderly a reason to care about school quality. While Harris, Evans and Schwabb, 2001, gated find evidence of this at the local level, they still find an overall negative relationship between population age and state-level educational spending.  At the same time, if older people receive state-financed property-tax subsidies, they might not care how much local governments spend on schools - see, Reback, 2014, gated.

When the number of young people decreases, the overall cost of providing youth-targeted services declines as well. Under certain circumstances, as described by Levy, 2005, gated, when the young generation is sufficiently small, in-kind transfers can be sustained in a political equilibrium. Goldin and Katz 1997 document a period in the early 20th century where a higher proportion of elderly in the population actually was associated with increasing education expenditures, which might be an example of this phenomenon. 

Very little of the literature on population aging and education funding explicitly considers post-secondary education. Public tertiary education funding is generally at the state or federal level, rather than the local level. This makes it much more difficult, empirically, to link variation in demographics to education funding levels. Also, in some countries, particularly the US, a substantial portion of university education is privately financed, muddying the relationship between public funding and educational spending. One of the few articles to provide empirical evidence on the relationship between aging and tertiary education funding is Brunner and Johnson 2016, gated, who find that the share of voters supporting locally-funded community college bond referenda is lower when there are more elderly in the population, and when the portion of the young who are Hispanic is higher.

There is little to no Canadian evidence that I am aware of the relationship between population aging and education spending in general, or with respect to post-secondary education in particular. The data to do such a study would be very hard to find. Even the OECD, which provides some of the best education data available, does not have a figure for per-student government spending on tertiary education in Canada, let alone Canadian provinces (at least, not one that I could find). There is, however, another way of getting at the relationship between tertiary education funding and demographics: to use attitudinal data. This has been done in the European or international context (see, for example, Sorensen 2013Busemeyer, Goerres and Weschle, 2009, gated, or Cattaneo and Walter, 2007).  

The most recent Canadian data on attitudes towards government spending on education that I could find comes from 2006, and was gathered as part of the International Social Survey Programme. I played around with it a little bit to get a sense of how closely people's attitudes towards government spending are tied with their narrow self-interest. Some selected results are below.

Slide6

It's not that older people don't care about education. Sure, they might not care as much about education as parents of young children, but they still care. But what really changes with age is now much people care about issues that affect old people directly, like retirement benefits.

   Slide4

National defence is another thing that seems to get more salient as people get older. Also (not shown): support for more spending on law enforcement goes up as people get older, among both men and women, and support for more spending on the environment is decreasing in age.

Slide5

Health and education are in direct competition for provincial spending dollars. When people are in their 20s, 30s, or early 40s, they support increased spending on education and health in roughly equal proportions. But as people get older, their support for health spending gradually increases, and for education spending wanes slightly. Again, it's not that older people don't support spending more on education. It's just that they support health spending more.

Slide7

Before ISSP respondents were asked which government programs they would like to spend more or less on, they were asked whether they favoured cutting or increasing government spending. Most people favoured cutting government spending, especially women (I didn't expect these results about women, and have my coding multiple times, but cannot find an error).

So will universities get caught in the war between generations? Not necessarily. Half of the funding for universities in Canada is from private sources. Much of what universities do is research and development, not education, and support for this might possibly be more robust. Universities might be smart and innovative and find new ways to establish their relevance.

But my betting is on hard times ahead for Canada's post-secondary sector.

Frances Woolley
I am a Professor of Economics at Carleton University, where I have taught since 1990. My research centres on families and public policy. My most-cited work is on modelling family-decision making, measuring inequality within the household, feminist economics, and tax-benefit policy towards families. I hold a BA from Simon Fraser University, an MA from Queen’s, and completed my doctorate at the London School of Economics, under the supervision of Tony Atkinson.

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