The Economics of Tenure

The conservative blogosphere posts frequent rants against tenure and academic research. In this note I will make some observations about tenure so that future rants are better informed.

I am tenured and therefore have an investment in the current system. I do not assert that tenure is necessarily the best system, but it is the one that has evolved. (As a conservative, I always give extra credit to those mechanisms that the society or marketplace has developed over time.)

As a scientist, I give no weight to the claim that tenure in my field protects me from taking controversial positions. Mathematics is fairly immune from social controversy; hence the only reasonable interpretation of controversy in this case is dispute over the scientific value of my work. Tenure then allows me to do work that others do not value. That sounds like damning with faint praise. Grant seeking and salary protection largely negate the "protection" to pursue work underappreciated by the broader community. As long as a significant portion of my income arises from research grants and as long as my yearly raises (and self esteem) are strongly dependent on the quality of my research (as judged by the community - not me), I have a very strong incentive to produce work that the scientific community highly values.

More positively, tenure allows me to pursue ambitious projects which have high possibility of failure. Andrew Wiles's dogged and ultimately successful pursuit of the Fermat conjecture gives a wonderful - but rare - example of tenure's support of ambitious but risky projects.

If tenure only rarely fulfills its putative role of promoting intellectual risk taking (at least in my field), what role does it serve? First, it lowers the cost of employment. Faculty exchange some salary for employment security. This is especially important in fields like mathematics and physics where there is a mythology asserting that your best work is done early in life. In sports, the expected diminution of talent with age is accompanied with early career salaries that suffice to fund the rest of your life. In academics, your employment is protected, but you are expected to redirect your energies to greater teaching and administrative work if your research productivity declines in later years.

A second role of tenure is to improve the quality of the university faculty, as measured by the impact of their research. (I know this is probably of limited interest outside academe). Why should extremely rigid work rules improve the labor force? Academics are not often gifted managers, and they are very slow to fire poor workers. Offering tenure can be a lifetime commitment, akin to marriage. At elite institutions, faculty are extremely cautious about offering tenure. They vet tenure candidates with great care. Although they make mistakes, the result is a higher quality of researcher than I believe would result from a less rigid system. When departments hire faculty on short term contracts, they still rarely fire them except under extreme conditions. Hence universities receive an economic benefit (reduced salaries) and a quality benefit (better research groups) from tenure without a significant attendant loss in quality due to rigid firing rules. Of course if more academics become better business managers and become more willing to fire incompetents the last claim would be invalid.

The only part of this discussion which could apply to tenure for elementary through high school teachers is the possibility that tenure could be exchanged for lower salaries, but salaries at this level seem to be set more by political considerations than by the marketplace; so, the potential for economic benefit seems negligible.

Exchanging tenure for reduced salaries in the larger workforce would so interfere with employers' ability to respond to changing market conditions that it would surely lead to economic decline. Hmm. Perhaps only my tenure prevents me from seeing the relevance of this last idea to the university setting.