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The Economics of Online Postsecondary Education: MOOCs, Nonselective Education, and Highly Selective Education

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  • Caroline M. Hoxby

Abstract

I consider how online postsecondary education, including massive open online courses (MOOCs), might fit into economically sustainable models of postsecondary education. I contrast nonselective postsecondary education (NSPE)in which institutions sell fairly standardized educational services in return for up-front payments and highly selective postsecondary education (HSPE) in which institutions invest in students in return for repayments much later in life. The analysis suggests that MOOCs will be financially sustainable substitutes for some NSPE, but there are risks even in these situations. The analysis suggests that MOOCs will be financially sustainable substitutes for only a small share of HSPE and are likely to collapse the economic model that allows HSPE institutions to invest in advanced education and research. I outline a non-MOOC model of online education that may allow HSPE institutions both to sustain their distinctive activities and to reach a larger number of students.

Suggested Citation

  • Caroline M. Hoxby, 2014. "The Economics of Online Postsecondary Education: MOOCs, Nonselective Education, and Highly Selective Education," NBER Working Papers 19816, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:19816
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    References listed on IDEAS

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    1. Kim, E. Han & Morse, Adair & Zingales, Luigi, 2009. "Are elite universities losing their competitive edge?," Journal of Financial Economics, Elsevier, vol. 93(3), pages 353-381, September.
    2. Gene M. Grossman & Henrik Horn, 1988. "Infant-Industry Protection Reconsidered: The Case of Informational Barriers to Entry," The Quarterly Journal of Economics, Oxford University Press, vol. 103(4), pages 767-787.
    3. Caroline M. Hoxby, 2013. "Endowment Management Based on a Positive Model of the University," NBER Chapters,in: How the Financial Crisis and Great Recession Affected Higher Education, pages 15-41 National Bureau of Economic Research, Inc.
    4. Meer, Jonathan & Rosen, Harvey S., 2012. "Does generosity beget generosity? Alumni giving and undergraduate financial aid," Economics of Education Review, Elsevier, vol. 31(6), pages 890-907.
    5. Clotfelter, C. T., 2003. "Alumni giving to elite private colleges and universities," Economics of Education Review, Elsevier, vol. 22(2), pages 109-120, April.
    6. Melitz, Marc J., 2005. "When and how should infant industries be protected?," Journal of International Economics, Elsevier, vol. 66(1), pages 177-196, May.
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    Cited by:

    1. Benjamin Faber & Rosa Sanchis-Guarner & Felix Weinhardt, 2015. "ICT and Education: Evidence from Student Home Addresses," SERC Discussion Papers 0186, Spatial Economics Research Centre, LSE.
    2. Allen R. Sanderson & John J. Siegfried, 2015. "The Case for Paying College Athletes," Journal of Economic Perspectives, American Economic Association, vol. 29(1), pages 115-138, Winter.

    More about this item

    JEL classification:

    • A2 - General Economics and Teaching - - Economic Education and Teaching of Economics
    • I2 - Health, Education, and Welfare - - Education
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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