Here’s a great story you may have missed: at the University of Toronto, students have created their own exchanges where they can pay students who are enrolled in a class which is full to drop out, thus opening space for themselves.  In other words, a secondary market in class spaces has spontaneously emerged (as markets do).

Most people’s reaction to this is either shock/horror (costs to students, more inequality, yadda yada), or mild amusement.  But I think it raises some interesting questions: other than administrative convenience, why do we have a single price for all classes in a faculty, anyway?

From time immemorial, until sometime in the nineteenth century, professors actually charged their own tuition with no interference from “the university”.  They charged whatever the market would bear, which often wasn’t very much.  But it kept a market discipline on the profession.  Professors who couldn’t help students pass their exams didn’t just get bad teaching reviews – they got less money.

(Just once, when someone talks about how neo-liberalism is eroding the eternal values of the medieval concept of the university, I want them to include guaranteed professorial pay as one of the modern vices that needs to be rejected in favour of its medieval antecedents.  Just once.  Please.)

It’s interesting to think what would happen if we went back to that model.  Why not link professorial pay to the number of students taught?  Or, go a step further – allow professors to set their own price-per-class.  Really good professors could charge a lot, and thus (perhaps) limit their teaching load by reaching their desired income through higher average fees.  Either way, we’d be lining up incentives with teaching rather than research, and there would be real incentive to teach those big intro classes.

When you think about it, there’s lots of intriguing ways that demand-based pricing could be applied.  For instance, imagine what would happen if institutions decided to generate a set amount of income per class (say, $50,000).  Students would pay the class fee, divided by the number of students.  In smaller classes, students would see their price-per-class rise; students in big classes would get a break.  As a bonus, low-demand courses would cancel themselves out within the first week or two – if students saw prices rising because of low enrolment, they’d probably skedaddle before the add/drop period.

(If you think these pricing schemes are unfair, just remember: they’d follow exactly the same pattern as subsidies do now – much greater for smaller classes than for big ones.  If one’s unfair, so’s the other.)

It’ll never happen, of course.  But thought experiments like this help us to think through what we pay for in higher education – and why.