Inflation and tuition

Is Tuition fair?

Is tuition fair: the case of Quebec? (by M. Hilke, April 23, 2012)

Let’s have a look at the facts. Currently, the tuition is $2,167.80/year for 30 credits, which is the typical student load. In the nineties it was about a thousand dollars a year, which represents a roughly 100% increase over a 20 year period. Out of province students pay higher tuition rates with the exception of students from some French speaking countries. In addition, students need to pay $1 622.62/year for various other fees (McGill sources). These fees include insurance, registration, student services and others and vary from university to university. We will not consider these additional fees since they vary strongly across universities. In terms of tuition, the Quebec government is now proposing to increase the tuition by $1625 over a five year period (a 75% increase). Is this fair?

The numbers: the enrollment at Canadian universities had the following income distribution profile (Statistics Canada 2007) as shown in the enrollment graph. The average enrollment increases from about 30% for the low income group to a little over 50% for the higher earners. The dependence of enrollment on income level affects the cost of studies for a given income group, since only a fraction of the group would pay the tuition. It is therefore important to take the enrollment distribution into account when discussing the true cost of tuition.

The most important contribution to the universities comes from the Quebec government, which represents 7.8% of its total budget. In 2011, the part of Quebec’s revenue, that stems from individuals was composed of 29% from individual income taxes and 23% from the Quebec consumption tax (TVQ). Therefore, each individual who pays these taxes contributes to the budget of the universities. It is reasonable to assume that about half of the income before taxes is spent on consumables, taxed at 10% through the TVQ in addition to the income tax, whose tax depends on the income level. For individuals, the Quebec income tax rates are 16%, 20% (above 40k$) and 24% (above 80k$) with a personal amount of 10k$. For example, for someone earning 60k$/year, the annual contribution to universities (without tuition) would be about 530$/year. These numbers apply to everyone, regardless to whether they went or not to university.

On top of the taxes, each individual who goes or went to university pays the tuition over typically 3 years once in a lifetime but corrected by the ratio of individuals who attended university for a given income group. For the income group earning 60k$ this leads to a 29.5k$ lifetime contribution to the university as shown in the enrollment graph. We can compare this number to the total university budget per student, which is about 30k$/year in Quebec. However, this number doesn’t reflect the true cost per student since universities do more than just teach students. Indeed, Quebec universities play an important role in scientific research, technological innovation, health sciences, government consulting and in the arts. The true cost of educating undergraduate students is therefore probably closer to 10k$/year (or 30k$ assuming 3 years of university studies), which is about the amount an individual earning 60k$/year would contribute to the university over his or her lifetime.

How will this picture be affected by the proposed tuition increase? In the university contribution graph we show the amount individuals spend on universities, prorated by income, and for different levels of tuition. The red boxes correspond to the current level of tuition, where we see that the rate is slightly higher for the lowest income group, but then increases the higher the income (a progressive distribution). For the proposed tuition level (blue boxes) the rate is significantly higher for the lowest income group and then almost flat for the 20% to 100% income group (a flat rate situation). This illustrates the importance of providing scholarships to low income groups in order to compensate for the higher relative cost. When assuming an even higher tuition, such as the one in Ontario ($6600/year), the distribution becomes regressive (the higher the income the lower the rate). On the other extreme, if Quebec were to reduce the tuition to $1000/year, the distribution becomes progressive for all income levels.

In conclusion, a tuition increase will always burden the lowest income group the most. Hence, without providing any additional assistance to this income group even a small tuition is always unfair. For the rest, the situation is quite different. Indeed, with the current level of tuition in Quebec, the cost of a university education closely follows the Quebec income tax rate progression, since the rate on university expense progresses from 0.7% to 1% versus 16% to 24% for the income tax rate, with increasing income level. If the income tax rate can be called fair so would the current level of tuition. The situation, however, changes for the proposed tuition increase, where the rate on university expense would almost be constant at 1% and independent of income (neglecting the low income group who would be hurt most). Is this still fair? Not sure, but it’s not unfair. Hence, assuming enough scholarships for the low income group, the tuition would go from fair to not unfair in five years.

Baby bear in Mecklenburg

Today I have a story of the little bear in Mecklenburg. The baby bear went to her bed in the cave. But baby bear couldn't sleep so papa bear told her a story and lied down beside her. When the story finished, baby bear said: "it's too dark here in the cave, I can't see". So papa opened the door of the cave so that light from outside could get in. Then the fox roaming outside, saw that the door of the bear's cave was opened and decided close it so that he could freely wonder around without being seen by the bears. But the baby couldn't sleep and cried: "It's too dark", so papa bear said, "ok just open the door". The door was open again. Then the lamm came by and saw the open door of the bear's cave and decided to close it so that he too could freely move without disturbing the bears. But the bay cried: "It's too dark" and simply went and opened the door again. The papa bear while amused was trying to sleep too. The fox came back and saw that the door was open again, so the fox decided to close the door, while cleaning his fur in the pond in front of the cave and then open it again later once finished, so that the bears wouldn't notice. But baby bear was still not asleep so went and opened the door again. This time papa bear was a little less amused, but kept lying comfortable on his fur and to his great relief, baby bear fell asleap. So now papa bear went and closed the door so that baby bear would not be disturbed by the noises outside. Now the fox came back from his pond and went to the cave and opened the door. Content, and with a fox's smile he opened the door and said to himself: "the bears didn't notice anything" and went of to his foxhole. Papa bear even less amused, closed the door again and finally put his claws to rest.

Scientology

Yesterday night I saw Tom Cruise on The Hour. This was actually quite interesting and Cruise seemed to be quite a normal guy, unstable childhood with many moves and an unreliable father. Cruise is very driven, hardworking and determined, which led to his success. Then George mentioned scientology so I looked up scientology in order to better understand what it is about. Their main idea is to"clear" people form their reactive instincts and instead to focus on rational behavior. They claim that this reactive instinct stems from past experience, which are in our subconscience and influence our decision making. Hence, the focus is really on making oneself feel better by better controlling irrational impulses. Overall, this is understandably appealing to some people, specially those who deal with certain issues and like the idea of a rational solution. To some extend this sounds like a pretty standard therapy, which probably works in many cases. The more surprising aspect, I find is the packaging in terms of a religion. To me it sounds more like a therapy technique than a religion. What is religion? To me Religion is more about inter-personal relationships like love your neighbor in addition to a spiritual component, which is personal. But any attempt to rationalize religion is contradictory. If it is rational it is science and not religion. By definition, religion is a belief, hence not rational. So I really don't see how scientology can be considered a religion. It's basically a possible well being therapy imbedded in a very powerful organization.

Iran

Today's events seem like a potential turning point: Khamenei gave his word that the election was not rigged. My take on it, is that this is a clear sign of him trying to cling on to power. He could have very well have stayed above the fray and potentially support Moussavi, if indeed it turns out that the election was rigged. Moussavi is not such a big threat to the regime since he too is basically from the inner circle. Yet Khamenei decided not to take a chance and instead compromised his integrity by giving his word. This will likely change the perception of hm being something special and people now will just say, well he is like all other dictators and simply wants to hang on to power. He gave up his moral leadership today and with it the respect of half of the population. It's not clear to me how this will continue, but Khamenei will never again be perceived in the same way as before today.

About the election: it seems to me that it should be quite easy to prove by purely statistical means that the election was rigged (if it was indeed). All elections have typical standard deviations and by simply looking at correlations and standard deviations from votes, which obey some standard distribution it should be very easy to state things like "with 95% confidence this is not a process corresponding to a typical election". This would require looking at all the results by geography and time and to see if indeed results obey simple statistics (like it should in real elections) or rather have strong correlations, which cannot come from independent individuals (or individual clusters of individuals). I hope someone will look at that...or has.

The Pauli effect

Whenever Pauli was around an ongoing experiment something would go wrong. This is the Pauli effect and symbolizes the odd picture of this crazy theorist who by some supernatural powers influences his surroundings. In some sense it reminds me of the the spooky action of a distance in quantum mechanics, or entanglement. Indeed these ideas of entanglement are often seen as mysterious but in fact they are simply a property of non-locality. Things don't have to happen at a given time in a given space. Like this neat idea of a split 1 US$, where one half is in one box and the other half in the other box. Now the dollar is no more localized in one of the boxes but rather in both at the same time (non-locality of the dollar). This idea is really powerful since it allows the idea of "being everywhere" at the same time. This is also appealing not only in a physical aspect (the Pauli effect - perceived influence at a distance) but also in a more political context: can we influence distant events. In theory, this is definitely true, since a simple tweet here might influence events in Iran, for example.