(directly) for about 3.3 percent of gross domestic product (Soete, Guy, and Praest Knudsen, 2009), which makes it larger than a number of industries for which productivity data are routinely collected. It also accounts for about 10 percent of state budgets in recent fiscal years (National Association of State Budget Officers State Expenditure Report, 2011).
Beyond the production of credentialed citizens, academic institutions also perform much of the nation’s research and development. In 2008, colleges and universities spent $52 billion on research and development, with 60 percent of this funding derived from the federal government. Academic institutions performed 55 percent of basic research and 31 percent of total research (basic plus applied) in the United States (National Science Board, 2010:5-4). Although nonacademic organizations conduct research in select functional fields such as health, defense, space, energy, and agriculture, the general prominence of academic research and the established funding patterns reflect a post–World War II political consensus that federally funded basic research is most effectively performed in academic institutions. This contrasts with patterns observed elsewhere in the world, where there is greater reliance on government-operated laboratories, other forms of public research organizations, or industry to conduct research.
In the current global economic and fiscal climate, the attention being paid by policy makers to the competitiveness and general state of higher education in the United States continues to heighten. Recent research (e.g., Carnevale, Smith, and Strohl, 2010) indicates that the economy’s expanding sectors and industries rely disproportionately on workers with higher education credentials. During the current recession, characterized by high and persistent unemployment, analyses of evidence such as online job postings and real-time jobs data reveal a mismatch between job openings and the educational credentials of the workforce. Higher education institutions themselves have become increasingly concerned about improving their own performance, competing with peer institutions on cost and quality, and providing a degree of public accountability.
In this environment of strong policy maker and institutional interest in the performance of higher education, stakeholders have used whatever data and measures are available in an attempt to understand trends and perceived problems; for better or worse, some version of productivity will be measured. Therefore, it is crucial to develop coherent measurement tools that make the best possible use of available and potentially available data. Failure to do so will keep the door open for an ever-expanding profusion of measures, many of them unnecessarily distortive, and endless debates about measurement as opposed to productivity itself.
Currently in policy debates, administration discussions, and media coverage, attention tends to focus on the soaring sticker price of college (overall costs have remained more or less in line with general inflation). Cost per degree, graduation rates, and retention metrics have been used as though they measured efficiency or overall productivity. What is often ignored in these discussions is the quality of higher education instruction. When attention is overwhelmingly focused on