By Dr Sean Gallagher
James Adams, at the prestigious National Bureau of Economic Research in the US, challenges the long-accepted wisdom that continued concentration of research within the best universities is the optimal investment of taxpayers' dollars. He highlights unintended adverse consequences from a nation's best scientific research capability being focused in a small number of elite universities.
Adams's research shows two tiers of universities have emerged among the leading 110 universities that produce 80 per cent of American scientific research output.
At the very top are the mega-rich private universities, such as Harvard, Stanford and Yale. They have used their endowment wealth and reputation to attract much of the most productive scientific research talent, often drawing it away from funding stressed but high-quality public institutions such as the University of California at Los Angeles, University of Michigan and University of Washington. The leading private universities are twice as productive in research as their public counterparts.
On face value, this may seem to be a natural market outcome of robust competition. But it has led to a suboptimal outcome for the US as a whole, measured in terms of overall efficiency of American research production across 620 scientific fields. From 1982 to 1999, adjusted for gross domestic product growth and inflation, for every $US1 million invested in scientific research from all sources, the overall output of academic papers declined in private universities (by 11 per cent) and public universities (by 23 per cent). The number of PhD students for each $US1m invested declined by a staggering 50 per cent equally in these leading American private and public universities during the same period.
What's happening to the best universities in the world? Everyone knows concentrating resources can increase efficiency, or what economists call scale economies.
But when the scale does not continue to increase, as is the case with private US universities that deliberately limit their size, there is a point beyond which more concentration of financial resources cannot be used efficiently, thus decreasing returns to scale. Wealthy elite universities in the US that win $US1 billion a year or more in federal research funding seem to have reached that point.
But it is a Goldilocks problem with research funding. Too much and it will be squandered, too little and the scale will be too small to be efficient, the justification for concentrating resources in the first place. Today, US public universities risk getting below the minimum scale required to effectively use government research support.
Tellingly, the quality of American scientific output also decreased during the same period. The US share in world output of highly cited scientific papers fell from about 38 per cent to 33 per cent as the US increased its share of global GDP. US taxpayers get less bang for their research buck than they used to.
Australian policy-makers should take heed because of the striking parallel between US and Australian universities. As in the US, there is a clear division between Australia's elite universities, the Group of Eight, and the rest. According to emeritus professor Frank Larkins from the University of Melbourne, the wealthy Go8 universities continue to increase their dominance. Larkins reports that from 1992 to 2008 the Go8 increased its share of Australian Research Council funding from 66.9 per cent to almost 70 per cent.
Some may argue that the higher education systems of the US and Australia are of vastly different sizes and so any comparison is not relevant.
However, it is the size of the university that matters. Unlike American corporations that dwarf Australian companies, Australian and US universities are comparable in size and so have similar economies of scale.
The principal lesson from the American experience for Australia is that when research becomes concentrated at the top and diluted at the bottom, the entire system becomes less competitive and less efficient. Knowledge suffers.
According to Adams, if sustained growth of national research output is the objective, then the challenge is spreading resources across more universities and replicating the assets of top universities.
Clearly Australia cannot sustain 39 Go8-like comprehensive research universities. If research investment is to be made in non-Go8 universities, the obvious place to start is in building up their existing strengths.
But it has to be the right type of investment. Recently The Chronicle of Higher Education reported that almost 40 third-tier universities in the US more than doubled their institutional spending on research in the past decade. Yet more than half fell in ranking because they did not strategically invest in quality.
Education Investment Fund money for regional universities should be used to build world-class scientific infrastructure in regional universities, geared towards attracting and retaining the best and most productive professors and PhD students.
By getting the Goldilocks problem right, we can maximise research competition in Australia and benefit the entire country.
Sean Gallagher is a research associate in American higher education at the US Studies Centre at the University of Sydney.