[Excerpt] Befitting a former journalist, Kirp\u27s book is extraordinarily well-written; once one picks it up it is hard to put down. Some economists may be put off by a book that contains no equations, tables, figures or regression results. Such an attitude, however, would be misguided and any academic economist interested in better understanding how market forces are reshaping higher education should read Shakespeare, Einstein, and the Bottom Line

Ehrenberg, Ronald G

English

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Review of the Book Shakespeare, Einstein, and the Bottom Line: 
The Marketing of Higher Education 
Ronald G. Ehrenberg 
Cornell University, rge2@cornell.edu 
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Review of the Book Shakespeare, Einstein, and the Bottom Line: The Marketing of 
Higher Education 
Abstract 
[Excerpt] Befitting a former journalist, Kirp's book is extraordinarily well-written; once one picks it up it is 
hard to put down. Some economists may be put off by a book that contains no equations, tables, figures 
or regression results. Such an attitude, however, would be misguided and any academic economist 
interested in better understanding how market forces are reshaping higher education should read 
Shakespeare, Einstein, and the Bottom Line. 
Keywords 
higher education, economic markets, academic institutions, competition 
Disciplines 
Higher Education | Labor Economics | Labor Relations 
Comments 
Suggested Citation 
Ehrenberg, R. G. (2004). [Review of the book Shakespeare, Einstein, and the bottom line: The marketing of 
higher education] [Electronic version]. Journal of Economic Literature 42(2), 1140-1142. 
Required Publisher Statement 
© American Economic Association. Reprinted with permission. All rights reserved. 
This article is available at DigitalCommons@ILR: https://digitalcommons.ilr.cornell.edu/articles/860 
Journal of Economic Literature, Vol. XLII (June 2004) 
The project's major theme is clearly and 
provocatively laid out by the coauthors in the 
lead-off chapter: "Many Latin American govern- 
ments cut infrastructure spending in the era of 
macroeconomic reform-a line item in the 
adjustment program that set adjustment back 
rather than forward" (p. 1)..."The conclusion is 
that cutting high-return public infrastructure 
indiscriminately during fiscal adjustment does 
not make sense in either macroeconomic or 
microeconomic terms" (p. 4). 
The introductory chapter begins with refer- 
ences to the existing literature arguing that the 
social returns to public infrastructure investment 
are typically very high, ranging from 20-120 per- 
cent, in spite of the occasional "white elephant" 
project. The authors then speculate as to why 
these investment projects have often experi- 
enced disproportionate contraction during peri- 
ods of fiscal austerity. They argue that the 
"myopic use of the current budget deficit to 
GDP ratio as the single yardstick to assess fiscal 
performance" (p. 2) is largely to blame. "It could 
easily be avoided if economic analysts-including 
the IFIs (International Financial Institutions)- 
were to change their thinking and evaluate 
adjustment in terms of the only budget constraint 
that matters economically, namely, the intertem- 
poral budget constraint (IBC)...that the present 
value of all future government revenues must be 
sufficient to cover the existing stock of debt plus 
the present value of all future government 
spending" (pp. 2-3). 
Using the IBC as a guide, the authors discuss 
various fiscal tricks that have been used by coun- 
tries to reduce their current deficit/GDP ratio, 
even though these actions have a negative effect 
on the net wealth position of the public sector. 
Examples are taken from recent macroeconomic 
history in the United States at the time of the 
Gramm-Rudman bill, the European Union as 
member countries struggled to meet the 
Maastricht deficit targets, as well as many devel- 
oping countries. Easterly and Serven then go on 
to argue that the list of illusory fiscal adjustments 
should potentially include slashing spending on 
infrastructure projects. If these projects indeed 
have social returns well in excess of the govern- 
ment's marginal cost of borrowing, eliminating 
them will worsen the public-sector net wealth 
position, improvements in their current 
deficit/GDP ratio notwithstanding. 
The remaining chapters provide careful data 
collection and analysis as well as detailed econo- 
metric evidence (using times-series, cross-coun- 
try, and panel data techniques as appropriate) to 
back up the book's main message. The chapters 
are tightly interwoven and relate neatly to each 
other in a way that is atypical for multi-authored 
collections on topics of current policy interest. 
I came away impressed by the thoroughness of 
the authors' research on linkages between infra- 
structure spending, public-sector net worth and 
economic growth. The analysis is sophisticated, 
taking into account possible complementarities 
and/or substitutability of various public and pri- 
vate investments, the impact of economic growth 
on government revenue collection, etc. This vol- 
ume will be invaluable to anyone interested in 
the effects of infrastructure investment on 
macroeconomic performance either during nor- 
mal times or in periods of fiscal crisis and 
retrenchment. 
I remain unconvinced, however, by the volume's 
central theme that infrastructure compression is 
an inappropriate component of macroeconomic 
adjustment programs. The author's focus on the 
IBC and "solvency," while appropriate in normal 
times, is not "the only budget constraint hat mat- 
ters" during times of financial distress. Once coun- 
tries find themselves mired in a debt crisis, they 
face severe liquidity or period-to-period cashflow 
constraints; the opportunity cost of funds skyrock- 
ets (which, of course, also affects the IBC). If the 
fiscal realities are that some expenditures must be 
cut and/or some taxes or user charges must be 
increased, the fiscal authorities must assess which 
expenditures to leave intact (or with smaller cuts): 
infrastructure spending, high caliber civil servant 
salaries, social safety net programs, education and 
health programs, etc. Ideally, budget authorities 
would like to have the same thorough analysis of 
the costs of cutting other government expenditure 
categories that the present volume provides for 
infrastructure spending. 
JOHN T. CUDDINGTON 
Georgetown University 
I Health, Education, and Welfare 
Shakespeare, Einstein, and the Bottom Line: The 
Marketing of Higher Education. By David L. 
Kirp. Cambridge and London: Harvard 
1140 
Book Reviews 
University Press, 2003. Pp. vi, 328. $29.95. 
ISBN 0-674-01146-5. JEL 2004-0164 
I rarely agree to review books. However, once 
every few years a book comes along that I wish I 
had written and that I want to tell the world 
about. David Kirp's Shakespeare, Einstein, and 
the Bottom Line: The Marketing of Higher 
Education is the most recent of these books and 
hence this review. 
Kirp is a professor of public policy at 
Berkeley-not an economist. However, he 
understands how economic forces affect higher 
education institutions better than most econo- 
mists. While many books on higher education, 
such as my own Tuition Rising: Why College 
Costs So Much (2000, Cambridge MA: Harvard 
University Press), focus on the behavior of one 
institution (in my case Cornell) or a class of insti- 
tutions (in my case selective private colleges and 
universities), Kirp paints a much broader picture 
of how economic pressures are affecting the 
behavior of all academic institutions, be they 
public or private, graduate/professional or under- 
graduate, or non profit or proprietary. Much of 
the picture he paints is not very flattering 
because he describes multiple situations in which 
traditional academic values come in conflict with 
market pressures and how the responses that 
institutions make are often driven by dollars signs 
rather than their core values. 
Befitting a former journalist, Kirp's book is 
extraordinarily well-written; once one picks it up 
it is hard to put down. Some economists may be 
put off by a book that contains no equations, 
tables, figures or regression results. Such an atti- 
tude, however, would be misguided and any aca- 
demic economist interested in better 
understanding how market forces are reshaping 
higher education should read Shakespeare, 
Einstein, and the Bottom Line. 
Kirp takes the reader on a tour of higher edu- 
cation institutions around the country. We learn 
about the arms race of spending taking place at 
selective private institutions as each institution 
tries to improve its position vis-a-vis its competi- 
tors and how the large publics are for similar rea- 
sons developing honors colleges-which serve 
only a few of their top students at the expense of 
the many. We see how one of the nation's most 
respected private academic institutions, the 
University of Chicago, goes through a painful 
revision of its core curriculum in an effort to 
make the university more attractive to more 
potential students, even though in doing so some 
of the unique flavor of the institution is lost. 
We travel to visit a liberal arts college in 
Pennsylvania that is seeking to define its niche 
and to achieve "brand recognition" without heav- 
ily investing in science. We observe how the prin- 
ciple of providing aid based on students' financial 
need is at least partially sacrificed by the institu- 
tion and merit aid is increasingly used in an effort 
to attract a more "desirable" student body at a 
lower total financial aid cost. We visit one major 
urban private university that is making a big 
splash and drastically increasing its students' SAT 
scores through the recruitment of a number of 
star faculty members. However, these faculty 
members have no contact with the institution's 
undergraduate students and the majority of 
undergraduate students at this institution are 
taught by adjuncts and graduate instructors. So 
enhanced institutional reputation, based on hir- 
ing star faculty and upgrading the SAT scores of 
undergraduate students has come at the expense 
of divorcing the research faculty from undergrad- 
uate students. It is not surprising that this institu- 
tion recently became one of the first private 
universities at which adjunct faculty voted to 
establish an adjuncts-only faculty union. Kirp's 
discussion of this institution leaves us wondering 
if the institution's improved academic reputation 
can be sustained if undergraduate students have 
little contact with top faculty. 
We next visit a lower tier law school that has 
traditionally placed a high value on public serv- 
ice. Sadly, law school rating organizations (i.e., 
US News and World Report) do not factor public 
service into their ratings and a new law school 
dean is forced to try to change the nature of the 
product the institution is producing. We visit a 
major business school located at a public univer- 
sity-this business school has privatized itself 
and effectively ceased to share its revenue with 
the rest of the university. So facilities improve 
and salaries rise at the business school at the 
same time that salaries are frozen and facility 
needs are not met at the rest of the university. 
While the business school remains firmly 
ensconced near the top of the business school 
rankings, its faculty members are busy writing 
"proprietary cases" for corporate executive edu- 
cation programs and, as a result, the research 
output of the faculty suffers. 
1141 
Journal of Economic Literature, Vol. XLII (June 2004) 
We learn how budgetary models, designed to 
increase the incentives that individual units with- 
in an academic institution have to take actions to 
increase revenues and reduce costs, often have 
perverse effects on the academic programs at the 
institution as a whole (a theme of mine also in 
Tuition Rising); how some institutions have tried 
to use the internet to generate additional revenue 
from their faculty members' teaching, while oth- 
ers have instead chosen to place all of their 
course outlines on the web, and still others have 
sought to share faculty resources across geo- 
graphically dispersed institutions by teaching 
classes to multiple locations via the internet. We 
learn how efforts to commercialize faculty 
research findings, often those produced with 
public support, may interfere with the free 
exchange of knowledge. Finally, we explore how 
for profit competitors are fundamentally chang- 
ing the competitive landscape that institutions 
face and forcing institutions to rethink how they 
deliver certain types of training and education. 
Though Kirp's discussion may at times give the 
reader the sense that he is "anti market," nothing 
could be further from the truth. Rather, Kirp 
understands that the use of market based princi- 
ples has contributed to the dynamic nature of 
American higher education and its continual 
improvement. However, he also understands that 
there is often a trade off between traditional aca- 
demic values and the use of market mechanisms. 
Shakespeare, Einstein, and the Bottom Line is 
really a plea for academics and academic leaders 
to always keep their core academic values in 
mind when they make very hard decisions. Put in 
terms that economists will easily understand, 
increasing the magnitude of the revenue flowing 
into an academic institution is not always in the 
best interest of the institution. 
RONALD G. EHRENBERG 
Corell University 
Ending Hunger in Our Lifetime: Food Security 
and Globalization. By C. Ford Runge et al. 
Baltimore and London: Johns Hopkins 
University Press for the International Food 
Policy Research Institute, 2003. Pp. xxi, 288. 
$55.00, cloth; $19.95, paper. ISBN 0-8018- 
7725-3, cloth; 0-8018-7726-1, pbk. 
JEL 2003-1448 
Ending hunger in our lifetime is a moral imper- 
ative, argue four of the agricultural development 
profession's most distinguished scholars, and it is 
possible technically, economically, and politically. 
The book sets out the case along all three of these 
dimensions. 
This idea is not new. Herbert Hoover founded 
the Food Research Institute in 1921 at Stanford 
University with the goal of ending hunger. Lord 
Boyd-Orr made it the objective of the Food and 
Agriculture Organization (FAO) at its founding in 
1945. And at the first World Food Conference in 
1976, Henry Kissinger pledged United States 
support for ending hunger "within a decade." 
With encouragement and financial support from 
the Ford Foundation, the authors explain what is 
different now. 
The premise of the book is that "...given the 
growing interdependence among nations, food 
security has taken on characteristics of a global 
public good, necessitating a multilateral response 
" (p. 205). The proposed "response" is not mod- 
est. Ending hunger will require that rich coun- 
tries invest substantially more in foreign 
assistance, including vastly more on agricultural 
research in poor countries themselves. Existing 
international institutions including the World 
Bank, FAO, WTO and a (new) Global 
Environment Organization (GEO) will need to 
be radically re-engineered to be fairer to poor 
countries. Expanding trade opportunities will be 
the engine of renewed economic growth, and the 
Doha Round of multilateral trade negotiations 
should be renamed the "Food Security 
Negotiations" as a way to bring greater access for 
exports from poor countries to the markets of 
rich countries. 
At one level, this global perspective is clearly 
right. We have learned, perhaps uncomfortably, 
that hunger sits at the intersection of three larger 
forces: 1) trade and investment flows in the glob- 
al economy, 2) the political interests of rich coun- 
tries in poor countries, and 3) the governance of 
poor countries themselves. In effect, the authors 
are asking rich countries to focus on organizing 
all changes in these three vectors with the objec- 
tive of ending hunger. Anything less, they claim, 
cannot solve the problem. 
Fortunately, they are wrong about the need for 
this multilateral approach, in three important 
ways. First, it treats the poor as passive "receivers 
of food." "In a very real sense, ending hunger in 
the twenty-first century is a question of mind 
over matter: because we know that sufficient 
1142 


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