Why Universities Do Research?

The title of this post is a question.

My colleague Mark Guzdial recently asked whether it makes sense for colleges and universities to do research:

I’m wondering now why universities do research — how does it make economic sense? Is it because it’s their raison d’etre? I don’t buy that, because that wouldn’t explain why so many smaller colleges and universities are increasing their research portfolio. Is it because a “hit” cancels out all the losses? One good piece of IP makes up for all the research that didn’t bear fruit? Or is it because a research portfolio is necessary for reputation surveys?

It’s a question that I try to answer in my new book.  Here are some of the facts.

1. University research seldom pays for itself. Institutional data is hard to come by because accounting practices vary wildly from place to place, and there is wholesale mixing of revenue sources.  According to the Center for College Affordability and Productivity, for example, the historical trend at AAU institutions has been toward reduced teaching loads for faculty actively engaged in research. But that is a trend that flies in the face of increased enrollments. Additional instructors are needed for the classes that would otherwise be taught by faculty members engaged in sponsored research.  Costs like these are not recoverable, so research sponsors get an effective discount because faculty salaries do not reflect teaching productivity. Who makes up the difference? Most institutions tap a general fund to cover these costs — the same fund that is used for instructional budgets.  Reduced teaching loads are a tax on the cost of instruction, and it is just one of dozens of ways that cross-subsidies fund the research enterprise. I recently asked the vice president for research at a top fifty land grand college about their discount rate. He told me, “We spend $2.50 for every research dollar we bring in.“
2. Institutional envy drives both behavior and investment. Presidents of public masters universities are motivated to define their institutional profiles to conform to a  “higher” Carnegie classification.  It is a phenomenon that Arizona State president Michael Crow calls institutional envy, and it drives the behavior of hundreds of colleges and universities. Sometimes institutional envy is simply the way that institutions climb the reputational pyramid.  Other times, it is the only way to make scarce resources stretch to fit expanding missions, because non-state, non-tuition revenues flow disproportionately to the universities at the top of the hierarchy. Public support for public masters universities declined by 15% from 2001 to 2006,  In that same period, tuition rose only 10%.  Gifts, endowments, grants, and research contracts are the only means available for closing the gap, but private giving has been in decline since 2001.  In fact, public university endowment income on a per-student basis is less than $600, which is essentially its pre-1987 level. That means federal and state research contracts have to generate enough income to keep fragile programs afloat. Since the 2008 market collapse, tuition increases have been used to try to stave off disaster, but,  according the Delta Project on Postsecondary Costs, Productivity, and Analysis, few of those dollars have benefited instruction.  In fact, once you remove discretionary spending,  instruction is dead last among the beneficiaries of increased tuition.
3. You do not need a research program to prosper and innovate. The examples that come readily to mind are Williams College and Harvey Mudd College. Williams in particular eschewed the tug of becoming a research university in the wake of Daniel Coit Gilman’s 1876 launch of Johns Hopkins as a research institution in the mold of the great German research universities.  Harvey Mudd is a continuing experiment in how to keep a mission focused on students.   The University of Mary Washington in Virginia innovates around technology that keeps students and alumni closely bound to the university.
4. Commercializing and licensing IP is a pipe dream for most institutions. Every tech transfer office knows the examples: Wisconsin’s vitamin D patent, Stanford’s rDNA patents.  But according to NSF’s John Hurt: “Of 3,200 universities, perhaps six have made significant amounts of money from their intellectual property rights.” John Preston, former head of MIT’s technology commercialization office is even more blunt: “Royalty income is such a horrible means of measuring success. Schools should instead focus on wealth and job creation, economic development, and corporate goodwill.”
5. Research universities have conflicting incentives. They are in many ways inconsistent institutions. The legendary University of California president Clark Kerr used the term multiversity to describe the modern research university — it is a wonderfully clarifying word. What it means is that what we think of as monolithic institutions are actually loosely federated enterprises that all live together under the same brand.  A modern research university  consists of several undergraduate colleges,  one or more professional schools, many graduate schools, several intercollegiate athletic programs, hospitals, hotels, performing arts centers, technology commercialization offices, and distance education centers. Each component has its own network of stakeholders who demand success, even if it comes at the expense of another part of the university.

Viewed through this lens, Guzdial’s questions are even more interesting.  It frequently makes little economic sense for a university to conduct research. It may be part of the mission of a multiversity, but it is not the only mission — and there are plenty of examples to guide other choices.  If the dream of IP commercialization success drives  institutions to build their research programs, what about the data that predicts little chance of success? And if a university is concerned about reputational hierarchies, does building a research portfolio actually help?  Among the many components of a modern multiversity, few could survive without the instructional programs.  Academic programs, on the other hand, might do quite well without hospitals, theaters, or fancy football arenas. So, why should a university do research?

Let’s hear your thoughts.