I thought this article was relevant given current headlines.
>Universities have boomed in recent decades. Higher-education institutions across the world now employ in the order of 15m researchers, up from 4m in 1980. These workers produce five times the number of papers each year. Governments have ramped up spending on the sector. The justification for this rapid expansion has, in part, followed sound economic principles. Universities are supposed to produce intellectual and scientific breakthroughs that can be employed by businesses, the government and regular folk. Such ideas are placed in the public domain, available to all. In theory, therefore, universities should be an excellent source of productivity growth.
>In practice, however, the great expansion of higher education has coincided with a productivity slowdown. Whereas in the 1950s and 1960s workers’ output per hour across the rich world rose by 4% a year, in the decade before the covid-19 pandemic 1% a year was the norm. Even with the wave of innovation in artificial intelligence (ai), productivity growth remains weak—less than 1% a year, on a rough estimate—which is bad news for economic growth. A new paper by Ashish Arora, Sharon Belenzon, Larisa C. Cioaca, Lia Sheer and Hansen Zhang, five economists, suggests that universities’ blistering growth and the rich world’s stagnant productivity could be two sides of the same coin.
>To see why, turn to history. In the post-war period higher education played a modest role in innovation. Businesses had more responsibility for achieving scientific breakthroughs: in America during the 1950s they spent four times as much on research as universities. Companies like at&t, a telecoms firm, and General Electric, an energy firm, were as scholarly as they were profitable. In the 1960s the research and development (r&d) unit of DuPont, a chemicals company, published more articles in the Journal of the American Chemical Society than the Massachusetts Institute of Technology and Caltech combined. Ten or so people did research at Bell Labs, once part of at&t, which won them Nobel prizes.
>Giant corporate labs emerged in part because of tough anti-monopoly laws. These often made it difficult for a firm to acquire another firm’s inventions by buying them. So businesses had little choice but to develop ideas themselves. The golden age of the corporate lab then came to an end when competition policy loosened in the 1970s and 1980s. At the same time, growth in university research convinced many bosses that they no longer needed to spend money on their own. Today only a few firms, in big tech and pharma, offer anything comparable to the DuPonts of the past.
>The new paper by Mr Arora and his colleagues, as well as one from 2019 with a slightly different group of authors, makes a subtle but devastating suggestion: that when it came to delivering productivity gains, the old, big-business model of science worked better than the new, university-led one. The authors draw on an immense range of data, covering everything from counts of phds to analysis of citations. In order to identify a causal link between public science and corporate r&d, they employ a complex methodology that involves analysing changes to federal budgets. Broadly, they find that scientific breakthroughs from public institutions “elicit little or no response from established corporations” over a number of years. A boffin in a university lab might publish brilliant paper after brilliant paper, pushing the frontier of a discipline. Often, however, this has no impact on corporations’ own publications, their patents or the number of scientists that they employ, with life sciences being the exception. And this, in turn, points to a small impact on economy-wide productivity.
>Why do companies struggle to use ideas produced by universities? The loss of the corporate lab is one part of the answer. Such institutions were home to a lively mixture of thinkers and doers. In the 1940s Bell Labs had the interdisciplinary team of chemists, metallurgists and physicists necessary to solve the overlapping theoretical and practical problems associated with developing the transistor. That cross-cutting expertise is now largely gone. Another part of the answer concerns universities. Free from the demands of corporate overlords, research focuses more on satisfying geeks’ curiosity or boosting citation counts than it does on finding breakthroughs that will change the world or make money. In moderation, research for research’s sake is no bad thing; some breakthrough technologies, such as penicillin, were discovered almost by accident. But if everyone is arguing over how many angels dance on the head of a pin, the economy suffers.
>When higher-education institutions do produce work that is more relevant to the real world, the consequences are troubling. As universities produce more freshly minted phd graduates, companies seem to find it easier to invent new stuff, the authors find. Yet universities’ patents have an offsetting effect, provoking corporations to produce fewer patents themselves. It is possible that incumbent businesses, worried about competition from university spin-offs, cut back on r&d in that field. Although no one knows for sure how these opposing effects balance out, the authors point to a net decline in corporate patenting of about 1.5% a year. The vast fiscal resources devoted to public science, in other words, probably make businesses across the rich world less innovative.
>If you’re so smart, why aren’t you rich?
>Perhaps, with time, universities and the corporate sector will work together more profitably. Tighter competition policy could force businesses to behave a little more like they did in the post-war period, and beef up their internal research. And corporate researchers, rather than universities, are driving the current generative ai innovation boom: in a few cases, the corporate lab has already risen from the ashes. At some point, though, governments will need to ask themselves hard questions. In a world of weak economic growth, lavish public support for universities may come to seem an unjustifiable luxury.
College_Prestige on
>The golden age of the corporate lab then came to an end when **competition policy loosened in the 1970s and 1980s.** At the same time, growth in university research convinced many bosses that they no longer needed to spend money on their own
Unironically sounds like neoliberal economics caused this
Ok-Swan1152 on
The whole system also incentivises collecting citations and constantly publishing over actual impactful research.
WAGRAMWAGRAM on
>Free from the demands of corporate overlords, research focuses more on satisfying geeks’ curiosity or boosting citation counts than it does on finding breakthroughs that will change the world or make money. In moderation, research for research’s sake is no bad thing; some breakthrough technologies, such as penicillin, were discovered almost by accident. But if everyone is arguing over how many angels dance on the head of a pin, the economy suffers.
Would the Economist be able to cite even an exemple of such a thing happening? My god, even this respected (lol) publication join the far-right’s team against education.
>At some point, though, governments will need to ask themselves hard questions. In a world of weak economic growth, lavish public support for universities may come to seem an unjustifiable luxury.
How did “stop investing, companies will take care of it” turned out for Germany?
Maybe coming from where I’m from but I remember professors complaining that companies preferred to “subcontract” research to students and interns rather do it themselves and hire graduates because it was cheaper.
Goldmule1 on
I feel like a huge part of the decline this article talks about is the activities of corporations. Local universities and businesses used to work hand-in-hand, offering internships, sponsoring lab activity, and hiring students out of school.
Now that every corporate interest is incentivized by the current market culture and regulations to prioritize short term gains against all else, the R&D funding that could go to that local university is gone. I feel like a growing number of corporations also feel like partnering and hiring from particular universities is somehow biased and bad for business which means that they would all rather hire using online applications to avoid claims of bad hiring decisions.
In some it feels more like a corporate problem than a university problem, and it’s unhelpful to just keep framing it as backwards U.S. universities. If corporate America doesn’t want to work with universities, how are the universities supposed to know what research and efforts to focus on.
ixvst01 on
Instrumentalizing reason in higher ed and society at large is the new norm. In other words, people will take the most efficient path to achieve a personal goal even if that most efficient path means side stepping the true purpose of the objective. So in higher ed, professors want to keep their jobs, meet publishing quotas, and get on a tenure track. The idea is to incentivize innovation, impactful research, and publishing, but in actuality the most efficient way for a professor to meet quotas and get tenure is to pump out quick non-impactful papers and collect citations like trading cards. It’s a gamification of the system. A professor that takes the objective seriously will lose out to the others that gamify and take the most efficient route.
This concept extends to other aspects of higher ed and society. For example, college entrance exams around the world are designed to test knowledge/intelligence and get the most intelligent young people to go study at university and qualify for scholarships or prestigious schools. But the most efficient way to do well on college entrance exams (or any standardized test) is to cram like crazy and spend more time studying test taking strategies than studying the actual content. This defeats the whole purpose of the examination and learning, but it’s the most efficient way to do well and those who do it will come out on top.
etzel1200 on
It’s paywalled, but seems dubious. The value of Stanford to the US economy is likely trillions of dollars.
Maybe you’d argue Stanford changed nothing and those graduates would have achieved the same thing without it, but eh.
magneticanisotropy on
Man, this is one poorly written, poorly reasoned article that works hard to conjure up a problem that likely does not actually exist. Don’t have time now to respond, but may put in some effort later this week or weekend when I have time.
A few small comments, yes, numbers of researchers globally have increased, but this is largely driven by growth in poorer countries. In the US, for example, Science + Eng academic employment has been dropping (decreased by 8% from 2005-2015 (see NSF data [https://wayback.archive-it.org/5902/20231214215411/https://www.nsf.gov/statistics/2017/nsf17306/static/report/nsf17306.pdf](https://wayback.archive-it.org/5902/20231214215411/https://www.nsf.gov/statistics/2017/nsf17306/static/report/nsf17306.pdf) ), and has actually continued since then.
The article then weakly (or not at all) links a drop in overall productivity to academic research. However, US productivity gains are highly asymmetric across fields. While the 1% number isn’t great, this is largely driven by manufacturing declines, and absolutely massive declines in fields like construction (https://bfi.uchicago.edu/insight/research-summary/the-strange-and-awful-path-of-productivity-in-the-us-construction-sector/). I’m not sure how we blame shit construction productivity on academic research.
Leading to the next point – part of the lack of huge, rapid developments spinning out of academic research is because a lot of low hanging fruit isn’t really there. Big advances in computing for instance take retooling and scaling at the fab level, so these things take significantly lead times and absolutely massive capital expenditures, requiring much larger teams (also tying into larger research employment). Things that do come to fruition aren’t 5 years down the line. Gigantic magnetoresistance was discovered in 1988. It took 7 years for GMR sensors to become a thing, and almost a decade for the first hard disk read heads based on the GMR effect to be developed. MRNA vaccines? First tested in the early 90’s! Stating that “they find that scientific breakthroughs from public institutions “elicit little or no response from established corporations” over a number of years” is a no shit statement at this point. It takes a lot of time, and retooling a fab isn’t something you jump into.
The arguments about patent declines are similarly poorly supported, at best. I have no comments about the stupidity of saying “Oh we should be seeing much higher productivity explosions now because of AI!” when the internet didn’t even see an explosion in terms of productivity. Not buying it. Could it be true, maybe. Is there argument here stupid? Yes.
8 Comments
I thought this article was relevant given current headlines.
>Universities have boomed in recent decades. Higher-education institutions across the world now employ in the order of 15m researchers, up from 4m in 1980. These workers produce five times the number of papers each year. Governments have ramped up spending on the sector. The justification for this rapid expansion has, in part, followed sound economic principles. Universities are supposed to produce intellectual and scientific breakthroughs that can be employed by businesses, the government and regular folk. Such ideas are placed in the public domain, available to all. In theory, therefore, universities should be an excellent source of productivity growth.
>In practice, however, the great expansion of higher education has coincided with a productivity slowdown. Whereas in the 1950s and 1960s workers’ output per hour across the rich world rose by 4% a year, in the decade before the covid-19 pandemic 1% a year was the norm. Even with the wave of innovation in artificial intelligence (ai), productivity growth remains weak—less than 1% a year, on a rough estimate—which is bad news for economic growth. A new paper by Ashish Arora, Sharon Belenzon, Larisa C. Cioaca, Lia Sheer and Hansen Zhang, five economists, suggests that universities’ blistering growth and the rich world’s stagnant productivity could be two sides of the same coin.
>To see why, turn to history. In the post-war period higher education played a modest role in innovation. Businesses had more responsibility for achieving scientific breakthroughs: in America during the 1950s they spent four times as much on research as universities. Companies like at&t, a telecoms firm, and General Electric, an energy firm, were as scholarly as they were profitable. In the 1960s the research and development (r&d) unit of DuPont, a chemicals company, published more articles in the Journal of the American Chemical Society than the Massachusetts Institute of Technology and Caltech combined. Ten or so people did research at Bell Labs, once part of at&t, which won them Nobel prizes.
>Giant corporate labs emerged in part because of tough anti-monopoly laws. These often made it difficult for a firm to acquire another firm’s inventions by buying them. So businesses had little choice but to develop ideas themselves. The golden age of the corporate lab then came to an end when competition policy loosened in the 1970s and 1980s. At the same time, growth in university research convinced many bosses that they no longer needed to spend money on their own. Today only a few firms, in big tech and pharma, offer anything comparable to the DuPonts of the past.
>The new paper by Mr Arora and his colleagues, as well as one from 2019 with a slightly different group of authors, makes a subtle but devastating suggestion: that when it came to delivering productivity gains, the old, big-business model of science worked better than the new, university-led one. The authors draw on an immense range of data, covering everything from counts of phds to analysis of citations. In order to identify a causal link between public science and corporate r&d, they employ a complex methodology that involves analysing changes to federal budgets. Broadly, they find that scientific breakthroughs from public institutions “elicit little or no response from established corporations” over a number of years. A boffin in a university lab might publish brilliant paper after brilliant paper, pushing the frontier of a discipline. Often, however, this has no impact on corporations’ own publications, their patents or the number of scientists that they employ, with life sciences being the exception. And this, in turn, points to a small impact on economy-wide productivity.
>Why do companies struggle to use ideas produced by universities? The loss of the corporate lab is one part of the answer. Such institutions were home to a lively mixture of thinkers and doers. In the 1940s Bell Labs had the interdisciplinary team of chemists, metallurgists and physicists necessary to solve the overlapping theoretical and practical problems associated with developing the transistor. That cross-cutting expertise is now largely gone. Another part of the answer concerns universities. Free from the demands of corporate overlords, research focuses more on satisfying geeks’ curiosity or boosting citation counts than it does on finding breakthroughs that will change the world or make money. In moderation, research for research’s sake is no bad thing; some breakthrough technologies, such as penicillin, were discovered almost by accident. But if everyone is arguing over how many angels dance on the head of a pin, the economy suffers.
>When higher-education institutions do produce work that is more relevant to the real world, the consequences are troubling. As universities produce more freshly minted phd graduates, companies seem to find it easier to invent new stuff, the authors find. Yet universities’ patents have an offsetting effect, provoking corporations to produce fewer patents themselves. It is possible that incumbent businesses, worried about competition from university spin-offs, cut back on r&d in that field. Although no one knows for sure how these opposing effects balance out, the authors point to a net decline in corporate patenting of about 1.5% a year. The vast fiscal resources devoted to public science, in other words, probably make businesses across the rich world less innovative.
>If you’re so smart, why aren’t you rich?
>Perhaps, with time, universities and the corporate sector will work together more profitably. Tighter competition policy could force businesses to behave a little more like they did in the post-war period, and beef up their internal research. And corporate researchers, rather than universities, are driving the current generative ai innovation boom: in a few cases, the corporate lab has already risen from the ashes. At some point, though, governments will need to ask themselves hard questions. In a world of weak economic growth, lavish public support for universities may come to seem an unjustifiable luxury.
>The golden age of the corporate lab then came to an end when **competition policy loosened in the 1970s and 1980s.** At the same time, growth in university research convinced many bosses that they no longer needed to spend money on their own
Unironically sounds like neoliberal economics caused this
The whole system also incentivises collecting citations and constantly publishing over actual impactful research.
>Free from the demands of corporate overlords, research focuses more on satisfying geeks’ curiosity or boosting citation counts than it does on finding breakthroughs that will change the world or make money. In moderation, research for research’s sake is no bad thing; some breakthrough technologies, such as penicillin, were discovered almost by accident. But if everyone is arguing over how many angels dance on the head of a pin, the economy suffers.
Would the Economist be able to cite even an exemple of such a thing happening? My god, even this respected (lol) publication join the far-right’s team against education.
>At some point, though, governments will need to ask themselves hard questions. In a world of weak economic growth, lavish public support for universities may come to seem an unjustifiable luxury.
How did “stop investing, companies will take care of it” turned out for Germany?
Maybe coming from where I’m from but I remember professors complaining that companies preferred to “subcontract” research to students and interns rather do it themselves and hire graduates because it was cheaper.
I feel like a huge part of the decline this article talks about is the activities of corporations. Local universities and businesses used to work hand-in-hand, offering internships, sponsoring lab activity, and hiring students out of school.
Now that every corporate interest is incentivized by the current market culture and regulations to prioritize short term gains against all else, the R&D funding that could go to that local university is gone. I feel like a growing number of corporations also feel like partnering and hiring from particular universities is somehow biased and bad for business which means that they would all rather hire using online applications to avoid claims of bad hiring decisions.
In some it feels more like a corporate problem than a university problem, and it’s unhelpful to just keep framing it as backwards U.S. universities. If corporate America doesn’t want to work with universities, how are the universities supposed to know what research and efforts to focus on.
Instrumentalizing reason in higher ed and society at large is the new norm. In other words, people will take the most efficient path to achieve a personal goal even if that most efficient path means side stepping the true purpose of the objective. So in higher ed, professors want to keep their jobs, meet publishing quotas, and get on a tenure track. The idea is to incentivize innovation, impactful research, and publishing, but in actuality the most efficient way for a professor to meet quotas and get tenure is to pump out quick non-impactful papers and collect citations like trading cards. It’s a gamification of the system. A professor that takes the objective seriously will lose out to the others that gamify and take the most efficient route.
This concept extends to other aspects of higher ed and society. For example, college entrance exams around the world are designed to test knowledge/intelligence and get the most intelligent young people to go study at university and qualify for scholarships or prestigious schools. But the most efficient way to do well on college entrance exams (or any standardized test) is to cram like crazy and spend more time studying test taking strategies than studying the actual content. This defeats the whole purpose of the examination and learning, but it’s the most efficient way to do well and those who do it will come out on top.
It’s paywalled, but seems dubious. The value of Stanford to the US economy is likely trillions of dollars.
Maybe you’d argue Stanford changed nothing and those graduates would have achieved the same thing without it, but eh.
Man, this is one poorly written, poorly reasoned article that works hard to conjure up a problem that likely does not actually exist. Don’t have time now to respond, but may put in some effort later this week or weekend when I have time.
A few small comments, yes, numbers of researchers globally have increased, but this is largely driven by growth in poorer countries. In the US, for example, Science + Eng academic employment has been dropping (decreased by 8% from 2005-2015 (see NSF data [https://wayback.archive-it.org/5902/20231214215411/https://www.nsf.gov/statistics/2017/nsf17306/static/report/nsf17306.pdf](https://wayback.archive-it.org/5902/20231214215411/https://www.nsf.gov/statistics/2017/nsf17306/static/report/nsf17306.pdf) ), and has actually continued since then.
The article then weakly (or not at all) links a drop in overall productivity to academic research. However, US productivity gains are highly asymmetric across fields. While the 1% number isn’t great, this is largely driven by manufacturing declines, and absolutely massive declines in fields like construction (https://bfi.uchicago.edu/insight/research-summary/the-strange-and-awful-path-of-productivity-in-the-us-construction-sector/). I’m not sure how we blame shit construction productivity on academic research.
Leading to the next point – part of the lack of huge, rapid developments spinning out of academic research is because a lot of low hanging fruit isn’t really there. Big advances in computing for instance take retooling and scaling at the fab level, so these things take significantly lead times and absolutely massive capital expenditures, requiring much larger teams (also tying into larger research employment). Things that do come to fruition aren’t 5 years down the line. Gigantic magnetoresistance was discovered in 1988. It took 7 years for GMR sensors to become a thing, and almost a decade for the first hard disk read heads based on the GMR effect to be developed. MRNA vaccines? First tested in the early 90’s! Stating that “they find that scientific breakthroughs from public institutions “elicit little or no response from established corporations” over a number of years” is a no shit statement at this point. It takes a lot of time, and retooling a fab isn’t something you jump into.
The arguments about patent declines are similarly poorly supported, at best. I have no comments about the stupidity of saying “Oh we should be seeing much higher productivity explosions now because of AI!” when the internet didn’t even see an explosion in terms of productivity. Not buying it. Could it be true, maybe. Is there argument here stupid? Yes.