The Market for Higher Education is Not for Learning

Market for higher Education

This is the first in a three-part series by Prof Ashish Kulkarni called “Understanding the Market for Higher Education”.

What makes up a market? Common sense tells us that a market should have the following characteristics:

1. There should be a clearly defined good or service that is being sold.

We’re already in trouble! What is the good or service that is being sold in higher education? Learning, you might say. But ask yourself this: does the certification matter at least as much as the learning, especially in higher education? Perhaps it matters more! If you could get either the learning or the certification from a higher-ed course (but not both!), which would you pick? And it’s all fine and dandy to put your hand on your heart and say that you’d always pick the learning, but if you’ve ever asked your Prof about the “important questions” before an exam, you’re out of luck. No matter what you say, your actions showed that you wanted to minimize learning and maximize your grades.

So what is being sold? Is it learning, or is it certification?
And what is being bought? Is it learning, or is it certification?
And if you are going to say that in India you can’t get the certification without the learning, then there is this large monument in Agra that I would like to sell to you.

2. It should have a clearly defined price

Visit the Coursera page, or indeed any other online education service you like. You will see that the learning is almost always free. What do you pay for? The certificate.
So a clearly defined price exists, but for the certification – not the learning!
Not only does this provide further strength to my argument above in point 1, but it also tells us something important, and potentially disturbing. The market is willing to pay for the certification, but not the learning!

3. Consumers should have definable preferences

If you find yourself mildly outraged, depressed, or surprised at what you have read so far, then I would argue that your preferences when it comes to higher education were not clearly defined so far. Because if I have been able to show you that you were buying something else altogether, then your preferences weren’t well-defined, were they? And if the buyer (and as you will see later on in this essay, also the seller) isn’t clear about what is being bought and sold then we’re in trouble!

4. Not all consumers should be able to produce the good or service themselves

Can you teach yourself MS Excel? Of course, you can. It’s a skill that is non-negotiable in the corporate world and remains an underrated one in many higher education courses in India.

But even if you could produce the learning at home, without laying recourse to a college or an online course, you still wouldn’t be able to produce the certification. The market for higher education is the market to get yourself certified – it isn’t a market for learning.

5. Existence of specialized producers

I write a blog, called Econforeverybody. There are millions of other blogs online. Almost all are free, some much better than mine will ever be. And indeed, this is true for every subject literally imaginable.

Am I a specialized producer of education and learning? I would like to think so, but from a legal perspective, I’m guessing not. (Not a lawyer, so take this with a pinch of salt!)

Unless there is an economic transaction at play, and unless there is a clearly defined good or service that is transferred to the buyer, I don’t count as a specialized producer. At the risk of sounding like a broken record: the market for higher education is a market for certification, not learning.

6. Classification of the good or service in question

Group 99924. That’s the heading in the service tax code for services related to higher education.

But, uh, based on my arguments in points 1 through 5 above, I’m not sure we have the definition of the market for education down pat:

“ “Education” is not defined in the CGST Act but as per Apex Court decision in “Loka Shikshana Trust v/s CIT”, education is (sic) process of training and developing knowledge, skill and character of students by normal schooling.”

What you’re buying is the certification, per my arguments above. But that word, certification, isn’t mentioned in the legal definition of educational services, let alone defined or explained!

Either my arguments above are wrong, or we need to rework the very definition of education from a legal perspective.

If there is, in fact, a market for higher education in India, economic forces of demand and supply are also at play. But what’s being supplied, and more importantly, what is being demanded? What problems does learning not being the end goal for this market cause? Read the second part of this series: “Supply, Demand and Perils of the Higher Education Market in India” to find out!


The views expressed in this article are the author's own.

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