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Smiths policies on education

should be adopted, with particular

reference to Exeter
University Discuss
Ollie Ekins, Harriet Kurzynski and Maiwand Nangyal


Outline of policies
Advantages and disadvantages of policies
Application of policies to Exeter University

Background of:

5 June 1723 - born in Kirkcaldy

1726 - abducted by gypsies
1737 - Glasgow university at 14
1740 - Oxford university at 17
1748 - Edinburgh university professor in
1751 - Glasgow university professor in moral
philosophy, logic, literature and rhetoric
1759 - published Theory of Moral Sentiments
1764 - personal tutor to son of Duke of
1773 - 1776 - studied in London with old
friends, wrote majority of WoN
1776 published The Wealth of Nations. Ideas
filtered into the real life economy in the 19th
1778 appointed Commissioner of Customs in
Edinburgh (salary of 600)
17 July 1790 died in Edinburgh

Smiths policies on education

1. Endowments should not be used for lecturers salaries and should instead be
invested into the university itself

2. Public vs private schools - Smith promoted private schools since less Govt
intervention and more sustainability was needed.

3. Free market of professors - idea that salary is based on ability to attract students.

Policy 1 - Removal of endowments for lecturers income

and the adoption of the Scottish system of HE

Endowments are donations from individuals for

investments into universities, with the goal of gaining a
return from it.

In Smiths time:

Around Smiths time the endowments to Oxford served as

the professors income, meaning their salary was
independent from their university or from students fees.
Smith was hugely critical of this, claiming that because of
this payment structure, professors had given up the
pretence of teaching.

Policy 1 - Removal of endowments for lecturers income

and the adoption of the Scottish system of HE
Smiths policy -Scotlands university education vs Englands:

Smith felt that Scottish higher education system was superior to the endowment
driven English system
Scottish lecturers had fairly small salaries and depended on the students that
they attracted for their course, for the majority of their income. Students also
paid honoraria to specific lecturers- an incentive based system
Smith felt that England and the rest of Europe should indeed adopt this Scottish
Endowments should be spent on universitys infrastructure instead

Advantages with application to Exeter

- Lecturers will be held accountable by the students to provide the best
learning possible, leading to high student satisfaction and a better
reputation for Exeter

- Honoraria means that the best lecturers will still have high incomes and
so do not need to worry about the removal of endowments. Best
lecturers will remain at Exeter and so will world class teaching

- Investment in infrastructure will mean better facilities for students and

teaching. University will rise up the rankings in terms of research quality
in the long term

Disadvantages with application to Exeter

- Teachers will be more insecure about their jobs, and will
look to leave. Departments may become short staffed and
so Exeter may end up with less qualified teachers

- May lead to a contest of popularity between lecturerssome lecturers may have good relations with the students,
but not actually be good at teaching. Students are also not
mature enough to choose their courses. This will lead to a
drop in exam performances for Exeter students and
therefore a fall in rankings and reputation

Should endowments be mainly used to fund lecturers
salaries or should it be spent elsewhere?
A- It should be used to fund teachers only

B- It should be used to fund other aspects of the university and not fund the lecturer's
C- It should be a mixture, and the best lecturers salaries should be financed by the

Policy 2 - Public vs private schools

During Smiths time:

Government provided funding for public schooling

Very few private schools

Smiths policy:

Thought there should be more private education to free up expenditure for the


Opportunity cost- government saving from education expenditure

Private schools profit motive incentive to improve

More to spend on University investments & justice, defence, infrastructure

Better quality education; increasing demand (shifts right)

Long run- arguably more university applicants

providing more income; facilities, research, teaching


Education would not be available to all

Schooling & university would become elitist institutions

Counteracts Smiths belief

Government bursaries
Increased competition for public school places

Quality of education not necessarily improved via private provision


People may relocate to where education is free

Some children may not receive proper education

diminish skills set, unemployment may increase

During Smiths time very few private schools

Could have created a monopoly

Set their own prices
Consumer exploitation consumer surplus

What is the biggest disadvantage of the private
provision of schools?
A-Education will not be available to everyone, the poor will be excluded
B-Private education may not necessarily improve the quality of teaching
C- Creation of a monopoly and an elitist group within the education sector
D-Public schools will become more oversubscribed and so their level of teaching will

Policy 3 - Free market of professors

Before Smith:
Salaries of professors were fixed - low quality of teaching
and low incentive to improve (as stated by Smith at
Oxford university).
Smiths policy:
Make professors salaries performance-based; based
purely on the number of students they were able to
Very significant benefits arising from this theory, but there
are also some drawbacks.

Advantages (with reference to Exeter University)

Encourages professors to increase

their teaching quality to attract
more students.

Exeter attracts the best lecturers

around the world, increasing
reputation for teaching quality.

Reduction in X-inefficiency

Exeter - more competition between

workers, again lead to higher teaching
quality within the institution.

Advantages (with reference to Exeter University) cont.

Consequences for Exeter University:

Rise up the rankings (nationally and globally)

Off the back of this, higher funding from third party

groups and sponsors, meaning university capital

Advantages (with reference to Exeter University) cont.

Consequences for Exeter University:

Attract more undergraduate and postgraduate


Problem with this is UK has hubs (London,

Birmingham, Manchester)

Disadvantages (with reference to Exeter University)

May discourage lecturers to

teach as their salary is not likely
to be fixed year on year.
At Exeter, this may lead to poorer
performing students and degrees,
and the university could therefore
fall in the rankings.

Tense working atmosphere

between workers due to more
competition to attract students
- unpleasant working

Exclusion of poor people from

attending lectures due to high fees.

Contradicts Smiths belief of education

being available to all.

Counterproductive as it leads to:

Increased unskilled labour

Larger inequality gap.

Disadvantages (with reference to Exeter University) cont.

Other consequence for Exeter:


Fixed fees of 9,000 - Smith would not

support this due to differences in teaching
qualities between universities.
E.g. Exeter teaching quality < Cambridge
teaching quality, so fees adjusted
Consequence -> pupils pay lower fees ->
reduction in professors salaries -> reduction in
professors at Exeter University -> reduction in
quality of teaching.

Argued cycle of decline. Hence

could be reason for fixed fee
instead of variable fee.
But 9k too much and
contradict Smith - excludes
poor from accessing university.

Questions #3
Should a free market system of lecturers be applied to
Exeters Economics degree?
A- It should be applied because it will improve the teaching standards dramatically.
B- It should be applied because the students deserve to choose their lecturers/courses
because they will be paying the themselves
C-It should not be applied, students will not know who the best lecturer/course is
within a short period of time
D- It should not be applied, John Maloney is the best lecturer in the department, and
so his course would be oversubscribed and many people would be left out of the


Practicality of Smiths policies must be questioned

Endowments should be used to finance other aspects of the university such as
infrastructure and for scholarships to students, rather than for used solely for
lecturers income.
Increasing private education not practical

still require government spending- bursaries

& would not be available to all elitist institution