Advice & News

July 15, 2020

Book Review - Markets, Minds, and Money: Why America Leads the World in University Research


In his effort to answer the question "How did American research universities rise to preeminence?" Miguel Urquiola has written a thorough and well-researched book that enhances the history and theory of higher education by incorporating its economic history. As part of his methodology, he uses the listing of Nobel Prize winners throughout history to monitor the research productivity of major global research universities. Although Nobel Prizes were first awarded in 1901, Urquiola used the biographies of early recipients to estimate their noteworthy research activities from the 1850s to the present. Using this data, he traces the development and evolution of American research universities, from their humble 17th-century beginnings to their present stature.

While he suggests that the evolution of American institutions was like their European counterparts, he points out three significant differences in the organization and growth of American universities. Urquiola refers to them collectively as "market forces," self-rule, free entry, and free scope. The early American colleges, Harvard, William & Mary, and Yale, had initial colonial government support with church/state control; in time, this changed due to increased heterogeneity of religion, governance changes, and newer funding sources. Urquiola shares many specific examples in vignettes throughout his book.

Since early institutions were denominational, free entry was possible. Each sect could create their own school, which increased the number of new institutions in the antebellum era for U.S. colleges. Education became extremely important, and the population also desired colleges in proximity to them. Urquiola cites Tewksbury (1932) who illustrated that prior to 1861 there were up to 516 American colleges. Due to low mortality rates, by 1861, there were only 182 still open.

To survive as an institution at that time, increased service options for students became necessary. Urquiola defines 'free scope' as a situation where the university is free to diversify its product if it so wishes. He mentions two types of services for students, teaching and sorting. Teaching reforms became integral in the development of post-Civil War American higher education. Urquiola presents informative vignettes highlighting teaching reform success stories including:
  • The creation of Cornell University, strong leadership of President Andrew White, financial backing from Ezra Cornell, and a multi-faceted curriculum.
  • The development of Johns Hopkins University and President Daniel Gilman's emphasis in research areas beneficial to society and the dissemination of said research via the Johns Hopkins Press.
  • Reforms at Harvard, under President Charles Eliot - the elective system, improved instructional methods, and a broader curriculum.
  • The rise of Columbia as a research university under President Frederick Barnard.
Urquiola refers to sorting as the student experience with the different constituencies within the college. Sorting reform was crucial to the rise of research universities. Initial reforms included selective admissions at undergraduate and graduate levels, investments in residence halls, and greater control of the undergraduate experience. Increased selectivity in admissions leads to increased selectivity in faculty (tenure). All major research universities seek the best faculty to entice the best students. Urquiola suggests that these elements have given the top American research universities a competitive advantage, which provides a barrier of entry for competitors in the Academic marketplace.

Additionally, Urquiola suggests that these research universities are highly productive and have created a type of funding inequality. The World Wars made federal research funding a necessity; WWII created the Office of Scientific Research and Development (OSRD) and the Manhattan Project. Postwar research funding continued through specific funding agencies such as DOD, NIH, NSF, and NASA. He illustrates that since 1968 a majority of federal research funding went to the top tier research universities. In U.S. education, market forces work differently at different levels. In higher education, high research output begets high inflows of research dollars. He provides reasons for the success of the U.S. research university system, these include (1) mechanisms and metrics to identify talent, (2) the ability to attract talent and funding resources, (3) specific "buyers" (federal agencies) that can identify and use their services, and (4) "the nature of research is such that the highest-quality output has outsize importance."

Finally, what makes this book a good read for everyone interested in higher education is the author's prophetic final chapter, which addresses real-time topics. He addresses his four major concerns research universities need to be aware of in the future. These include:

The disruption of scope. Because research is subsidized through undergraduate teaching and athletics, it could be threatened by technology in the form of online education. Online education provides competition that could possibly reduce undergraduate enrollment and provide less for research initiatives.

Institutional identity. This has been expanding over the years to include groups such as women and ethnic minorities who have been unrepresented in both faculty and administration positions. Institutions are doing and should do more in this area at this time. This will require new ways to increase and draw renewed strength from diversity while identifying and hiring research talent.

Political risks related to inequality, funding, and immigration. Urquiola suggests that the research university system has benefitted over the years from an inequality of funding, which greatly increases their research capabilities. Therefore, political changes can impact sources and uses of funding as political risks can emanate from the left or the right. Additionally, immigration has been an important resource for research talent. Limiting immigration can be a two-edged sword that potentially impacts U.S. as well as global research universities.

Out-of-control costs. This part gets interesting as Urquiola attempts to justify the rising costs using the Baumol effect, which goes against classical economic theory of rising salaries tied to increased labor productivity. Simply stated, he implies that high-quality education comes at a higher price. Since many top research universities are technological innovators, they have been important in developing products, services, and processes that provide consistent benefits to society. Urquiola provides several thoughtful examples to explain his reasoning that are very compelling.