Market-oriented assessments of educational output, with attention to how salary effects vary by area of study and by institutional quality, have been explored in the economics literature.26 Some studies attempt to assess evidence on the relationship between college cost and quality in terms of student and institutional performance. Beyond wage outcomes, indicators have reflected number of graduates who find a job within a given period after graduation; surveys of alumni satisfaction with their education; surveys of local business communities’ satisfaction with the university’s role in providing skilled workers; percentage of students taking classes that require advanced work; and number of graduates going on to receive advanced degrees.
Despite work in this area, many tough issues remain even if the goal is to estimate only the economic returns to education. How can wage data best be used for such calculations, and what is most important: first job, salary five years out, or discounted lifetime earnings?27 Furthermore, intergenerational and business cycle effects and changing labor market conditions cause relative wages to be in constant flux. Perhaps most importantly, student characteristics, demographic heterogeneity, accessibility and opportunities, and other factors affecting earnings must be controlled for in these kinds of economic studies. The reason full quality adjustment of the output measure is still a futuristic idea is that much research is still needed to make headway on these issues. The literature certainly offers evidence of the effects of these variables, but using precise coefficients in a productivity measure requires a higher level of confidence than can be gleaned from this research.
Beyond measures of credits and degrees produced, and their associated wage effects, is the goal of measuring the value added of student learning.28 The motivation to measure learning is that the number of degrees or credit hours completed is not, by itself, a complete indicator of what higher education produces. That is, earning a baccalaureate degree without acquiring the knowledge, skills, and competencies required to function effectively in the labor market and in society is a hollow accomplishment. Indicators are thus needed of the quality of the degree represented by, for example, the amount of learning that has taken
26See, for example, Pascarella and Terenzini (2005), Shavelson (2010), and Zhang (2005).
27Estimating lifetime earnings would introduce long lags in the assessments as some evidence suggests that the most quantitatively significant wage effects do not take effect until 8 to 10 years after undergraduate degree.
28Not only is learning difficult to measure in its own right, it would be challenging to avoid double counting with wage effects (assuming those who learn most do best in the job market).