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The Benefits and Costs of Academic Tenure

By D. Eric Schansberg

The nature of public policy is that the benefits are relatively obvious while the costs are relatively subtle. In identifying these subtle costs, economists often pour cold water on what otherwise seem like hot proposals or at least popular policies. When the cold water ends up on members of a special interest group, they often respond by saying that “tenured professors at state-run universities” shouldn’t criticize.

In one sense, the critique is an irrelevant distraction—a straw-man thrown up by people who are apparently uncomfortable with using government to benefit themselves at the expense of others. But in another sense, these nit-pickers have a point. Tenure is a wonderful job characteristic to have, but it establishes some poor performance incentives and is certainly prone to abuse.

Once a professor has tenure, he can do a horrible job in the classroom, shirk on campus service, and ignore his research responsibilities. Current events also attest to the fact that tenured professors can make life miserable for university administrators (see: Larry Summers at Harvard). In varying degrees, administrators can impose sanctions—reduce pay raises, revoke summer teaching opportunities, and increasingly, invoke “post-tenure review” (where tenure can, in extreme cases, be rescinded). But all in all, tenure provides an impressive level of invulnerability to the whims of job markets and the market’s usual demands for productivity.

Of course, many professors do a fine job even with tenure. Likewise, many people work for the government, for monopolies, or both—but are still diligent and effective in their jobs. Incentives are not deterministic; they’re just incentives. And people always choose the extent to which they respond to those incentives.

The primary rationales for tenure are “academic freedom” and to a lesser extent, economic security. The latter implies that a professor can be more productive because he doesn’t need to worry about losing his job. But this argument is weak, since one could make that claim about any job. The “academic freedom” argument carries more weight, especially in some fields. If one’s research or teaching is not “politically correct”—seeking or dispensing unpopular truths—then tenure provides protection to continue the quest for truth with far less fear of reprisal.

For example, a colleague of mine at Texas A&M once wrote a report recommending that the university should not operate its own golf course and airport—a reasonable suggestion that some legislators and university officials found quite offensive. Without tenure, he would have been fired. More accurately, without tenure, he wouldn’t have written the report! Or as a tenured professor, it’s much easier for me to criticize the subsidies to higher education—costs borne by average taxpayers while the benefits go mostly to those in the middle and upper-income classes.

All that said, to a labor economist, tenure is simply a positive job characteristic. The fancy term is “compensating wage differentials”. But the idea is that jobs with unpleasant job traits must “compensate” by paying a higher wage to attract a suitable workforce. Likewise, jobs with pleasant job characteristics can pay lower wages. Professors have a number of wonderful job characteristics, including tenure. Thus, professors are paid less than they would be if they weren’t offered those job traits.

Two interesting observations follow. First, all other things equal, tenure is a convenient way to avoid higher spending on education. If we got rid of tenure, you’d have to pay more to get people to take jobs with relatively more risk.

Second, tenure is actually an unwelcome job characteristic for individuals who don’t place a high value on the added job security. Imagine any job characteristic or fringe benefit that you don’t use or value. For example, your firm offers a free gym but you don’t like to work out. Clearly, you’d be better off with more cash instead of a fringe benefit you don’t value highly. In that sense, tenure is like an expensive insurance policy. For those who don’t want or need such insurance, they’re worse off for being in a system that requires them to have (and pay for) that insurance.

For now, higher education is dominated by public universities that offer tenure and an inertia of tradition that strongly encourages the practice. Because I enjoy teaching and research, I’m willing to make that trade-off. Tenure is ok, but I’d prefer the cash.

D. Eric Schansberg

Professor of Economics, Indiana University Southeast

Adjunct Scholar, Indiana Policy Review

Author, Turn Neither to the Right nor to the Left: A Thinking Christian’s Guide to Politics and Public Policy

(812) 941-2527

dschansb@ius.edu

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