Universities are Fashion Brands
Originally posted Dec. 8, 2011
What is fashion? Fashion is something that everyone intuitively understands. But if I want to make a valid comparison between fashion brands and universities, I have to first establish what makes fashion fashion.
I claim (and others would broadly agree with me) that fashion is about status and signalling. High-status people (like fashion designers) need to signal, that is, distinguish themselves from middle-status and low-status people. They do this by rapidly changing the current trend. It does not matter what the current trend is, only that it be quickly changing and difficult to predict. That way, high-status people can be peacocks by demonstrating to other people that they can afford to spend half of their waking hours staying on top of current trends. Middle-status people will seek to emulate high-status people by copying their fashion trends, but they will always be behind the game because they cannot afford to spend half of their waking hours keeping up with fashion. Additionally, if a significant fraction of middle-status people ever have the same fashions as high-status people, it means that high-status people aren't changing their fashions rapidly enough. By the time these fashions are mass-produced in factories so that low-status people can afford them, even the middle-status people will have moved on.
Pricing as a Status Indicator
In fashion, it is universally true that if you lower your costs, you lower your status. A high-status tuxedo might be ridiculously expensive - much more expensive than the materials and time it takes to craft - but contrary to what an economist would predict, the prices will never drop. This is because fashion has no utilitarian value. The price tag (among other things) dictates its perceived value, rather than utility dictating price. (This is also mostly true of art.)
There is an obvious analogy to university pricing. Does anybody else find it suspicious that all mid tier to top-tier universities cost roughly the same, despite having differently-sized endowments, and being located in different areas with different costs of living?
Let's look at some numbers, shall we? (Rankings from US News+World; public colleges not included)
1 Harvard: 39,849
2 Princeton: 37,000
3 Yale: 40,500
4 Columbia: 45,290
5 Caltech: 37,704
(20 schools later:)
22 Georgetown: 41,393
23 Carnegie Mellon: 43,396
23 University of Southern California: 42,818
25 Wake Forest (Could that name get any yuppier?): 41,576
29 Tufts: 42,962
(100 schools later:)
82 American University (Can't get more American than that): 38,071
119 Catholic University of America (snigger): 35,460
119 University of San Francisco: 37,424
128 New School: 39,350 (What kind of name is New School?)
You would think that with such high prices, universities would compete by lowering their prices. But of course they can't lower their pricing. University degrees allow you to signal your high status, but otherwise have no intrinsic value. Therefore, for those who know no better, price dictates value, instead of value dictating price.
Why is it that universities advertise amenities like dining halls, housing, gyms, athletics, student life, beautiful campuses/architecture/landscaping, etc.? As an institution of higher learning, shouldn't you be advertising, you know, just maybe, the quality of your education? Universities, for the most part, don't actually provide any education. But it's still important to make your customers believe they're getting their money's worth. (Note that I say believe - it doesn't matter if they actually get their money's worth, just as long as they believe they are, and that other people believe they are.) But this brings up another point - why is it that people think that these luxurious amenities indicate that they're getting their money's worth? If I were a customer, I'd be more convinced that I was getting my money's worth if I could look at graduates' career statistics. This brings us to our next point:
Would Harvard be Harvard without its iconic red brick Oxbridge-esque architecture? No.
Ask a tourist, any tourist, what they remember most about Harvard. No, they will not say "I talked to a student and it was the most intellectually stimulating conversation I've ever had". They're going to say, "It had a really beautiful campus". People come to Harvard, and they walk away thinking that Harvard is Harvard because it has beautiful architecture, landscaping, dining halls, dorms, and gyms. Notice that this list is roughly the same list I gave above.
The reason that people think they're getting their money's worth is because they think they're sending their kids to a Harvard clone. It's got all the same tangibles, so surely all the intangibles are also there. Right? Right?... Please tell me I'm right? But surely I'm right, there's no way!
University Admissions is a Fashion Game
All the blame for this fashion game cannot necessarily be pinned on the universities. That would be like blaming the high-status fashion designerns. Of course, the blame also goes to the high-status consumers who buy into high-status fashion designer brands. In a similar vein, there is cooperation between high-status applicants and high-status universities in order to maintain both.
About ten years ago, it was fashionable to play the oboe. That certified you as a high-status applicant. Now all the middle-status applicants have figured this out, and therefore it's no longer fashionable. The new trend is in ethnic instruments (Sengalese dance? Korean gayageum? Chinese erhu?). Or here's another example: community service in impoverished districts used to be fashionable. Now you've got to ship out to Honduras or Africa for a summer. As I said in the introduction, it doesn't matter what these fashions are - only that they change fast enough to leave middle-status applicants behind.
Therefore, there is a cooperative effort between high-status applicants and high-status universities to set new trends in admissions. This is one thing that prevents middle-status universities from becoming high-status universities, despite their superficial similarity - they do not set the fashion trends.
For heaven's sake, why? Because it's conspicuous consumption. People believe that they can buy their way into the middle/upper class, the same way that they believe they can buy their way into the middle/upper class with flashy expensive cars and luxurious suburban homes. They are being conned by people who are peddling high fashion.
"The demo[graphic] for this ad [for a $50,000 watch] isn't the Rothschilds or the 1%: they don't buy based on ads. And they don't need to be told what constitutes quality or authenticity, they can tell, that's what boarding school was for. Everyone else is going to need to be hit over the head with the semiotics of quality.
The target demo is not the 1%; the target demo is the Aspirational 14%. They know they are supposed to like quality and goodness and etiquette and discretion, but no one ever taught them what those things look like, so when someone does point it out to them they will go all in."
Universities aren't in the education market; they're in the fashion market.