Bet on a Boiler

I wonder if the "Bet on a Boiler" program described in the article has adverse selection or moral hazard problems.

The Weekend Interview. How to Save American Colleges
by: Kate Bachelder
Apr 25, 2015
Click here to view the full article on WSJ.com

TOPICS: Education

SUMMARY: The Purdue president Mitch Daniels on freezing tuition, how to reduce student debt, and busting the accreditation cartel.

CLASSROOM APPLICATION: Students can discuss and evaluate whether it is "where you go to school" or "how you go to school" that determines economic wellbeing and job satisfaction, the reasons for increasing college tuition, and reasons for students to fail to acquire critical thinking and writing skills during college.

QUESTIONS: 
1. (Introductory) Evaluate whether it is "where you go to school" or "how you go to school" that determines economic wellbeing and job satisfaction.

2. (Advanced) According to Mitch Daniels, what are the problems with the Free Application for Federal Student Aid?

3. (Advanced) More than 35% of college students at a range of four-year institutions showed no growth between freshman year and commencement in areas like critical thinking and writing, according to research by Richard Arum and Josipa Roksa in their 2011 book "Academically Adrift: Limited Learning on College Campuses." Where does the fault lie for this lack of improvement in critical thinking and writing skills?

4. (Advanced) The interview states, "Mr. Daniels also offers a quick economics tutorial about 'Giffen goods,' products for which demand grows even as their price increases-like, say, a college education today." What are Giffin goods? What are Veblen goods? Which is higher education : a Veblen good or a Giffin good?

Reviewed By: James Dearden, Lehigh University

Labels: Education, Asymmetric information