COURSE INTRODUCTION

Why is this so? It is due to the central importance of such a course to the Distance Education professional in decision making positions. Especially in the private sector (but increasingly also in public institutions) any suggestions for change and innovation have to be costed. Both, the request to make efficiency gains as well as the request  to raise quality,  have cost implications.

The Economics of Distance Education course equips students with the central concepts of cost-analysis. Though in complex organizations this is no substitute for an accountant specialist, it is intended to turn the Distance Education professional into a competent partner in the process of costing. This is a central competence given that each suggestion for change is most certainly accompanied by the question “And how much will it cost?”

Costing is about numbers. Often this is sufficient to make people shy away from a course like this, though they are ready to admit its relevance. However, given available  spreadsheet tools, the mechanics of costing can be kept to a minimum. We therefore have decided to make the availability of Excel a course requirement. We do not require mastery of Excel. On the contrary, we will assist participantswith little prior knowledge of Excel to acquire the necessary skills to use Excel not only as a calculation but also as a modeling tool. This adds an interactive and explorative dimension to the dry tables of a textbook.

The course consists of three two-week modules following an introductory first week. The 1st  module introduces the cost analysis techniques, the 2nd module applies these techniques tothe issue of cost-effectiveness and cost-efficiency of distance education institutions, and the 3rd module treats the costs of educational media in distance education

The course starts with an introduction (week 1) into the economics of education in general (most importantly the ‘human capital theory’) and links it to distance education: While economics of education uses the analytical tools of economics to theoretically analyze education, distance education translates some management and production methods which have proved successful in economics (e.g. manufacturing) to education.

The 1st module (weeks 2 and 3) introduces the instruments of cost analysis and applies them to distance education institutions. After an introductory analysis of distance education as a system, the student classifies resources, applies to them the main cost categories and handles the basic costing model. Special attention is given to the treatment of capital costs and overheads.

The 2nd module (weeks 4 and 5) applies the resulting conceptual framework and  modeling tools, to address questions of cost-efficiency and cost-effectiveness to distance education institutions. Case studies are reviewed and implications for management and planning are identified.

The 3rd module addresses the problem of costing educational media. The choice of media is a main cost driver in educational provision. The main classes of media are analyzed. The student analyzes the cost of media using 'cost per student learning hour' as indicator which facilitates the comparison of the costs of different media. A spreadsheet model for rapid cost appraisal is introduced.

Though this is a substantial program, due consideration has been given to calculate the amount of reading requirements to comply with the overall stipulated learning time.
   
 

COURSE GOALS AND OBJECTIVES

The goals of the course is to enable the student to be a competent partner in the process of setting up and managing economic aspects of distance education, both on institutional level as well as on course level (i.e. with regard to media choice).

At the end of the course students should have achieved the following objectives:

1. The student understands the conceptual framework and the main tenets of human capital theory, a core theory of economics of education.
2. The student identifies the cost drivers in distance education systems and is able to measure their costs.
3. The student is able to treat capital costs and handles the basic cost model.
4. The student analyzes and compares the costs of media.
5. The student handles the basic cost model for rapid cost appraisal of a selected media configuration.
6. The student reviews the case study evidence for distance education to be cost-effective.

COURSE OUTLINE

Logically, reading comes before assignment writing. Hence reading will take up most of the time during the first week of a two week module and assignment writing most of the time in the second week. Conferencing, on the other hand, is considered an ongoing process which we expect it to peak towards the end of the first and the beginning of the second week of the two week module. This means conferencing peaks after a considerable amount of reading has been done and continues in a help desk function for  the first days of assignment writing .

This allocation of time means that it makes  more sense to break down the objectives per module rather than per week.
 

Introduction: The Expansion of Education and the Emergence of the Economics of Education

Though a number of technical issues will have to be addressed during the first week, we  proceed soon to the course content. What is the rationale behind the unprecedented expansion of education? Education can be seen as an investment with very real returns to the individual as well as to society as a whole. Private demand rises and there seems little reason to discourage it. But to satisfy a mass demand for education, giving the scarcity of resources, leads to the question of the most cost-effective provision of education. Distance education seemed to fit this bill. Using rational production techniques, including division of labor and the application of media and technologies, distance education may seem to emulate the success of industrialized manufacture of high quality consumer goods.

This relation between the core theory of economics of education which suggests to view education as an investment ('Human Capital Theory'), the postwar historically unprecedented worldwide expansion and education, and the emergence of distance education sets the scene for the questions of this course.

Management issues and  objectives:

• The students are introduced to the course set-up
• Students and faculty introduce themselves to each other
• Students are introduced to the online Masters program
• Students are introduced to the Economics of Distance Education course
• Students are introduced to the main tenets of the economics of education
• Students relate the emergence of distance education to the growing demand for education

Required reading:
Either from the set textbooks or provided electronically

PERRATON H 'Introduction: golden goose and ugly duckling' in: PERRATON H 2000 Open and Distance Learning in the Developing World Routedge, London, pp 4-9
PETERS O 'Distance education and industrial production: a comparative interpretation in outline' in: PETERS O 1998 Learning and Teaching in Distance Education, Kogan Page, London pp 109-120

SCHULTZ T W 'Investment in Human Capital' in: American Economic Review, vol. 51 (1961), pp. 1-17

Module I: The Techniques of Cost Analysis

Module I introduces the basic concepts and techniques of costing. We start with a  view of distance education as a system and by identifying its major components. We then define the main classes of resources required in each component. Each  resource  must be costed. A number of cost categories are defined and applied. This finally leads to a model which allows us to study the behavior of costs when changing the volume of activities.

Special emphasis is given to the issues like capital costs, overheads and cost attribution of joint products.

Objectives:

1. Students analyze distance education as a system and identify the main subsystems.
2. Students classify resources (including human resources, premises, equipment and stocks)
3. Students classify costs according to the main cost categories (fixed and variable costs, capital and recurrent costs, opportunity costs).
4. Students handle the basic cost model to explore the effects of the different cost categories on average cost per student.
5. Students describe different options for treating capital costs

Required readings:
Either from the set textbooks or provided electronically

RUMBLE G 1997 The Costs and Economics of Open and Distance Learning Kogan Page, London

Assignment

Due date June, 19th
 
 

Module II: The Cost-effectiveness of Distance Education

Note: During Module II Professor Dr. Greville Rumble, the author of one of our core readings, will be our visiting expert from 6/24 to 6/29.

This module applies cost analysis to distance education institutions. Using 'cost per student' and 'cost per graduate' as an proxy indicator for cost-effectiveness we will examine the method of anylazing institutional cost-effectiveness. We review cas study evidence for the claim of distance education being a cost-effective means of educational provision.

Management guidelines to monitor the cost-effectiveness of distance education are suggested.

Objectives

1. Students summarize the methodology of cost-effectiveness analysis of distance education systems.

1. Students identify the most important indicators of measuring institutional effectiveness (cost per student and cost per graduate).
2. Students identify the different steps in cost analysis of distance education institutions

2. Students summarize the evidence for the cost-effectiveness of distance education

1. Students examine the evidence of the cost-effectiveness of open universities
2. Students summarize the evidence for the cost-effectiveness of distance teaching for ?school equivalency? (the World Bank/UNESCO case studies).

3. Students identify different institutional forms of distance education. In particular:

1. Students distinguish between dedicated mode, dual- and mixed-mode, networks and consortia.
2. Students examine the implications of these modes on the cost structures of the respective institutions.

4. Students identify planning guidelines for ascertaining the cost-effectiveness of distance teaching institutions.

Required readings:
Either from the set textbooks or provided electronically

RUMBLE G 1997 The Costs and Economics of Open and Distance Learning Kogan Page, London
RUMBLE G 1992 The Comparative Vulnerability of Distance Teaching Universities in: Open Learning 7 (2) pp 31-45
MUGRIDGE I and White V Responses to Greville Rumble's Article 'The Competitive Vulnerability of Distance Teaching Universities' in: Open Learning 1992 pp 52-62

Assignment

Due date July, 3rd
 
 
 

Module III: Costing Educational Technologies

Module III addresses the issue of costing technologies. After some methodological consideration on how to cost educational technologies and the introduction of 'cost per student  learning hour' as a measure to facilitate cost comparison, we classify media in two major categories. The first category, 'resource media' are unidirectional and can be replicated  as objects, e.g. books, cassettes, CD-ROMs. They are more likely to generate economies of scale. Communication media, on the other hand, which link a student and a teacher or tutor are less prone to generate scale economies.

For each of the two major types of media we examine their cost structure, look at some cases and identify some benchmark cost figures,  using cost per student learning hour as unit of measurment. Special attention will be given to issues of web- based teaching and training.
Finally we introduce a spreadsheet to as a management tool for rapid cost appraisal.

Objectives

1. Students understand the problems of comparing educational technologies/ media.
2. Students determine 'cost per learning time' as an indicator to compare costs of media.
3. Students compare 'cost per student learning hour' for the most important resource media.
4. Students understand the cost structure for communication media.
5. Students understand the specific issues of costing net-based learning.
6. Students use a spreadsheet to explore the cost behavior of different combination of media

BATES AW 1995 Technology, Open Learning and Distance Education Routledge, London

BATES AW 'Calculating the costs of Teaching with Technology' in: Bates AW 1999 Managing Technological Change: Strategies for College and University Leaders London: Routledge, pp.122-152
HÜLSMANN T 2000 The Costs of Open Learning: a Handbook BIS, Oldenburg (Chapters 1 and 2; Case studies 1, and 9).
RUMBLE G 2000 Costing Networked Learning In: JALN forthcoming
WHALEN, T. & WRIGHT D. (1999). 'Methodology for Cost-Benefit Analysis of Web-Based Tele-Learning'. In: The American Journal of Distance Education, Vol. 13 No. 1, (pp. 25-43)

Assignment:

Due date July, 18th