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The economics of experience-based higher education.


This article discusses some of the economic aspects of experience-based teaching and curriculum in higher education. The use of the analytical tools of economics to study education became an organized effort with Becker's (1964) pioneering work on human capital, and provided a framework that focused primarily on the allocative efficiency of investment in education by individuals and governments. Subsequent work in this area has examined technical efficiency as well, resulting in the development of production functions that specify the impact of a variety of inputs such as school variables (teachers, equipment, curriculum, and class size), family variables, and peer variables (O'Sullivan, 2003). Many of the findings with respect to the productivity of the various inputs have shown a reassuring international consistency (Woessmann, 2003). From the outset, however, most of this work has examined K-12 education, with little work in the area of higher education. Recent study of higher education has confirmed many of the earlier insights and has extended this work through the addition of intrinsic student variables such as class attendance and self-study (Bratti & Staffolani, 2002).

The study of experience-based higher education is, for the most part, a more recent phenomenon. (1) Experience-based education itself has long been a part of the curricula of schools of medicine, education, engineering, and the natural sciences, but this pedagogical approach has been less prevalent in other parts of university curricula. The conceptual promulgation of experience-based education can be traced back at least as far as early twentieth century works by Whitehead (1929) and Dewey (1938), both of whom argued that knowing and doing cannot be separated. This view has been reinforced more recently by research in cognitive science suggesting that facts stored in memory without applications are not particularly useful in later problem solving (Bransford, 1993). In addition, recent discussions of "situated learning" suggest that it may not be possible to learn pure abstractions at all, as the process of recall requires linkage to related concepts (McLellan, 1995). And, along the same lines, some researchers have suggested the need to recognize "knowledge of practice" as a separate but equally valid type of knowledge (Kenworthy-U'Ren, 2005).

As pointed out by former US Commissioner of Education and President of the Carnegie Foundation for the Advancement of Teaching, Edward Boyer, the failure to link academic knowledge and practical knowledge has undermined the standing of higher education in society (Boyer, 1996; p. 14): "Increasingly the campus is being viewed as a place where students get credentialed and faculty get tenured, while the overall work of the academy does not seem to be particularly relevant to the nation's most pressing civic, social, economic, and moral problems." Despite the large and growing body of evidence regarding the value of experience-based education, its inclusion in most university degree programs has been meager until the past decade. Indeed, the increasing prominence of professional schools that utilize more experiential education, such as internships, practica, and cooperative education, may be viewed at least partly as a response to the demand for more directly practical knowledge.

In addition to the cognitive benefits of experience-based education, research has shown that community-based experiential learning may result in college graduates that are more prepared than others to be leaders in business and civic organizations (Eyler, Giles, Stenson, & Gray, 2001 ; Middleton, 2005). Experience-based education is believed to provide the breadth needed for balance in more technical professional programs such as business (Godfrey, Illes, & Berry, 2005; Mintzberg, 1975). Its inclusion in liberal arts programs enhances student understanding regarding the applicability of their knowledge (Eyler, 1993; Eyler & Giles, 1999). Thus, the desirability of including at least some experiential education elements in all baccalaureate programs seems clear. What is less clear, and what this paper attempts to open a discussion about, is its economic feasibility.

Costs of Lecture-Based Education

In recent years, the cost of higher education has risen somewhat faster than the CPI. University administrators and legislators have taken a variety of actions to slow the rising costs and to avoid income-biased access to education. As a result, the delivery of education has undergone several changes, while its design and assessment have been less affected. A primary strategy that has been widely adopted attempts to spread the relatively fixed costs of faculty through increased class sizes in larger lecture halls and through distance learning. Blending terminally qualified faculty with less costly resources such as teaching assistants and part-time adjuncts has also been relied upon to spread fixed delivery costs. To accommodate this approach, lecture-based courses have been redesigned somewhat--away from individualized student attention and hands-on activities. Evaluation of student performance, likewise, has moved away from writing and observation-based assessment toward "objective" testing through vehicles such as multiple choice exams. These now familiar facets of lecture-based education, especially for introductory undergraduate classes, have increased the student faculty ratio and decreased the average cost of delivery per student, thus slowing educational cost growth.

Costs of Experience-Based Education: Fixed Costs

The costs per student in terms of instructor time are likely to be higher with experience-based education. In typical experience-based education, the course instructor must identify an experience site, such as a particular business or not-for-profit setting, then design learning experiences appropriate to the site's activities. Unless a single site provides enough assignments for an entire class, the instructor will repeat this process at multiple sites. If the site and experience can be replicated in subsequent semesters, the experiential class will not comprise a new preparation. Changing sites and/or assignments each semester will essentially mandate new preparations each semester. Also, during the experience portion of such a class, faculty members do not lecture frequently but generally meet with each student group periodically during the semester and meet with experience site personnel as well. This entails time and travel that may well exceed the amount of time usually involved in lecture plus office hours set aside for a single class.

Experience-based education necessitates small class size, so the opportunity to spread fixed costs usually does not exist. Experience sites commonly accommodate fewer students than the 30 to 500 students of a lecture class, so multiple sites are required for an experiential class. In addition to finding and managing sites, evaluation requirements necessitate smaller classes. For the students to distill the lessons implicit in their experiences, faculty members must become familiar with the experiences, then meet with individuals or small groups to guide their reflections and add insight. Guided reflection and post-experience lectures tailored to the experiences of the students are necessarily faculty intensive unless quite talented teaching assistants are available. All in all, managing three to six groups with three to five students each can be as much or more work than a single lecture class, but the section size is 9-30 not 30-500. Further, in a lecture course, teaching two sections of the same class requires dealing with a single batch of information twice. For two sections of an experiential class, this cost savings through duplication is not generally available. Reassignment of the instructor's other responsibilities (service or publishing) is a possibility at some institutions.

At institutions where faculty teaching loads involve more sections with fewer students each, reallocation between sections may be feasible, thus lowering the cost per student in some sections to offset raising it in others. For example, a university might change a faculty member's teaching load from four sections with thirty students each to three sections with 36 students each plus an experiential section with twelve students. For universities whose operating model has already spread fixed costs, through fewer, larger lecture sections, such re-design may not be possible. In this latter case, experience-based education will mean higher average fixed costs per student. (2)

Costs of Experienced-Based Education: Intellectual Capital Costs

Two forms of intellectual capital are influenced by the transition from lecture-based education to experience-based education: materials-embedded intellectual capital and faculty-embedded intellectual capital. Textbooks and related ancillary materials are organized along discipline and course lines. As such they may contain material very relevant to the experiential situation, but the order and terminology of the material is probably not well aligned with the learning demands of the experience. Further, the experiential situation is almost certainly multi-disciplinary. Existing materials-embedded capital, therefore, is often only partially on-point. Materials closely tied to the experience may very well not exist. Materials from other academic disciplines, practitioners' materials, and general public domain materials from libraries and the Web may be helpful. Students often learn a valuable lesson in the importance of information literacy, as part of the responsibility for materials selection and development must be borne by them.

Faculty-embedded intellectual capital is also a consideration. As any department chair can attest, new faculty members commonly take several semesters to master the art of lecture-based teaching. The development of skill (intellectual capital) at experience based teaching will be at least as difficult for many faculty, as they probably have had few or no experiential classes themselves, so haven't learned this method by observation or by being mentored. Time and assistance will be required by many faculty in the design, management, and coalescence aspects of the learning experience.

Another dimension of faculty-embedded intellectual capital that will pose a cost to those adopting experience-based education is familiarization with the terminology, technology, and techniques of the experience domains that their students enter. A seasoned faculty member in health care economics, for example, might have a student team attempting to determine the impact of changes in Medicaid funding on the economic health of their county. That faculty member would be required to learn some details of the Medicaid program and local medical practice that were probably not a part of their graduate school study or their interim professional development. They will also have to learn about local health care and tax authority data structures and their accessibility. This intellectual capital construction, while perhaps enjoyable from the perspective of the individual faculty member, will consume more faculty resources.

The foregoing considerations suggest that experience-based education is likely to come at a higher cost than traditional lecture-based education. Cost alone, however, cannot decide the matter, for it is possible that benefits also are higher, perhaps disproportionately so. The next section examines the evidence regarding the benefits associated with experience-based education.

Benefits of Experienced-Based Education: Cognitive Benefits to the Student

The goal of education is to produce generalized cognitive gains such that an educated person will reliably perform better in a variety of domains of activity reading, writing, learning, problem solving, task performance, etc. Cases in the literature of experience-based education that have identified and reliably measured generalized cognitive benefits resulting from a single course are rare. However, the generalized learning advantages of experience-based courses have been persuasively argued by a wide array of researchers. Eyler and Giles (1999) report that service-learning students have a better grasp of the nature and context of social problems and social policy from experiential interactions with social service practitioners and clients than those who read texts and received lectures about them; additionally, they found that the language used by students in written and oral discussions of their experiences reflected higher levels of critical thinking than students in lecture-based classes on the subject. Smith (2005) reports that involving students in a realistic problem setting improves generalized student learning. Standard psychology theory suggests that direct experience should be more likely than lecture-based education to produce recall simply due to the amount of time, number of senses, and emotions involved (see Myers, 2001). Thus, all of these authors contend that general cognitive skills can be developed more effectively through experiential education.

Undertaking a college education for many students today is also driven by the desire for more particular kinds of knowledge, that is, knowledge that will enable them to assume more responsible roles in commercial and civic life. In business and economics in particular, several authors have questioned whether traditional education can deliver the prescribed content. DiPadova-Stocks (2005) points out that most management jobs consist of the management of people and, therefore, require a broader and more integrated view of people than is offered from classroom coursework in most undergraduate economics programs, business programs and MBA programs; experiential learning can provide an integrating experience that bridges this gap.

Mintzberg and Gosling (2002) argue that the excessively functional segmentation and disciplinary boundaries of business programs limit their value, as the world of actual business experience is multidisciplinary and cross-functional. Schon (1987) and Van de Ven (in Kenworthy-U'Ren, 2005) argue in a slightly different manner for the desirability of experiential education by emphasizing that the traditional content of business and economics education is not sufficient--even if learned well-because "knowledge of practice" is necessary to develop true expertise. Knowledge of practice, they argue, can only be obtained through direct interaction with the object of study; it is not accessible through purely semantic means. As an example, Van de Ven suggests that physicians who had only read about patients would be insufficiently well trained. Thus they argue for the teaching of content not traditionally attempted in the lecture-based classes because it is inaccessible using those tools. Collectively, then, the consensus of all of these authors seems to be that the business and economics content that is (or should be) included in high quality business school curricula, and that is sought by students, employers and others, is diffficult to deliver exclusively through lecture-based management education. They believe it can be better learned by including experience-based education in these undergraduate programs.

A variety of other types of learning that are desirable for graduates, yet not well taught in most lecture-based classes, may be delivered by experiential education. For example, Eyler and Giles (1999) found that students exhibited more appreciation for people unlike themselves in terms of race, age, and income. McEwen (1996) reviews the impact of service-learning on students' personal and moral development, finding that service-learning added significantly in these areas. Carnevalle and Derochers (2002) discuss how experience-based education may prepare students for participation in the knowledge economy. At its most basic level, it seems, engagement in education is simply easier for students when the subject stands before them, the opportunity to make a difference is at hand, and they can attempt to make that difference with friends (Pascarella & Terenzini, 1991).

Benefits of Experience-Based Education: Benefits to College and Community

Faculty involved in experiential education find it quite enjoyable (Eyler & Giles, 1999). They build better relationships with their students and new relationships within their communities. In lecture-based education, faculty members are typically both the "coach" in their teaching activities and the "hurdle," in view of their responsibility for test construction and grading. This conflict of roles can erode both student-teacher relationships and job satisfaction. When both the students and the faculty confront the same problem, a problem realistically posed by the outside world, they become members of the same team, and coaching regarding problem solving can be more effectively accomplished. Faculty involved in experiential education will be learners as well as teachers. Faculty members enjoyed learning so much that they devoted several years at meager wages to attend graduate school; it is not surprising to find that they enjoy the learning involved in experience-based education. Thus, the increase in faculty workload discussed above may be partly compensated by the psychic income of enhanced teaching satisfaction.

University foundations may benefit as well, from potential donors who have seen value coming from students and faculty. Chambers of commerce and local economic development agencies may benefit by using university-business partnership information in their enterprise recruitment efforts. State legislators who wish to assist higher education may find the task of obtaining funding easier when equipped with tangible evidence that demonstrates the current as well as future value flowing from higher education via experience-based classes.

Combining Costs and Benefits

As the foregoing review indicates, there is growing evidence regarding the cognitive and developmental benefits of experience-based education. However, as stated earlier, obtaining accurate measurements of generalized cognitive effects from a short-term limited experience (such as one course) is difficult. This makes direct benefit/cost analysis on a per-course basis unreliable. Carefully designed empirical studies comparing entire programs that do and do not utilize significant amounts of experience-based education as a supplement to or replacement for lecture-based education are needed to draw reliable general conclusions. Thus far, such studies have not been completed. However, the following thought experiment may be at least suggestive of the general nature of the conclusions to be anticipated from such empirical work.

Consider an isoquant map depicting the production of "an educated person," someone defined as, say, a person with the ability to discuss and apply information. On one axis is lecture-based education and on the other is experience-based education. Given the research cited above concerning the value of experiential education and given the long-standing presumed value of lecture-based education, the isoquants should display the usual convex-to-the-origin configuration. In view of the earlier discussion of the relative costs associated with these two different types of inputs, the addition of a budget constraint to this map would indicate that a smaller number of experience-based classes or, alternatively, a larger number of lecture classes would exhaust the budget. Putting these together and assuming diminishing marginal returns, the point of optimization would include both lecture-based and experience-based education. (3) Careful empirical work is needed to provide a detailed analysis of this sort, but the implication is clear that the augmentation of lecture-based classes with experiential classes is quite likely to be efficient and, based on the literature reviewed above, is long-overdue.


Rigorous study of the economic impacts of experience-based education has yet to be completed. Comparisons of cost between courses relying on lecture-based education and those that are experience-based suggest that the latter are, in fact, more expensive to deliver. However, the benefits derived by students, faculty, the institution, and the community may be correspondingly--or perhaps even disproportionately higher as well. The evidence adduced thus far from researchers across the disciplinary spectrum concerning the advantages of experience-based education is persuasive, and much of this evidence has been drawn from experiences in business and economics education. Thus, it is perhaps fitting that economists are positioned to make a unique contribution, at this juncture, to the debate about feasibility. As higher education is called upon to respond to public pressures to both ensure affordability and, at the same time, provide educational experiences with practical relevance, the debate about experience-based education could not be more timely. Ultimately, the analysis of this subject by economists may serve to illuminate clearly for the public the nature of the tradeoffs that must be confronted in order to achieve the public's desired goals for higher education.

Published online: 11 January 2007


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(1) Experience-based education herein refers to curriculum-based face-to-face interactions with objects of interest followed by an attempt to coalesce the desired educational content from the experience. One might think here of Kolb's cycle of experiential learning (concrete experience [right arrow] reflection [right arrow] abstract conceptualization [right arrow] active experimentation) (Kolb, 1984; A. Y. Kolb & D. A. Kolb, 2005). Included in this definition are faculty directed internships, practica, in-service experiences, laboratory testing, directed applied research, service learning, travel study, and the like. Experience-based education is contrasted here with the familiar readings and lecture format of lecture-based education.

(2) It might be noted at this point that some avenues used to include experience-based education such as requiring faculty members to include experience-based components in their classes without reducing the lecture-based class load constitute cost shifting onto faculty members and not true cost savings.

(3) Helpful comments from a reviewer suggested that the methods for producing various types of knowledge, say definitions versus critical thinking, might differ. She/he also indicated that, if so, the isoquants and their tangencies might differ for introductory courses versus advanced courses. This is very possibly true, in addition to other differences that have been noted. Eyler and Giles [Chs. 4-6] and Jacoby [Ch. 7] suggest that experience-based education with high quality directed reflection results in more in-depth understanding of a subject, more higher-order thinking about the subject, and a more positive attitude toward the discipline than does lecture-based education. However, the expectation that a single experience can adequately illustrate the breadth of disciplinary terms and topics covered in a typical survey course textbook may be unrealistic. Further discussion of this issue is warranted but beyond the scope of this paper.

L. L. Lawson ([mail envelope])

Department of Business, Missouri Western State University, 4525 Downs Drive, St. Joseph, MO 64507, USA

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Author:Lawson, Larry L.
Publication:Atlantic Economic Journal
Article Type:Report
Geographic Code:1USA
Date:Mar 1, 2007
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