Higher-education accreditation: market regulation or government regulation?

• Author: Hall, Joshua
• Position: Essay

In recent public debates regarding higher education, considerable attention has been paid to the general accreditation of higher-education institutions. In 2006, for example, the so-called Spellings Commission issued a report that calls for significant changes in accreditation:

Accreditation, the large and complex public-private system of federal, state and private regulators, has significant shortcomings. Accreditation agencies play a gatekeeper role in determining the eligibility of institutions and programs to receive federal and state grants and loans. However, despite increased attention by accreditors to learning assessments, they continue to play largely an internal role. Accreditation reviews are typically kept private, and those that are made public still focus on process reviews more than bottom-line results for learning or costs. The growing public demand for increased accountability, quality and transparency coupled with the changing structure and globalization of higher education requires a transformation of accreditation. (U.S. Department of Education 2006, 15)

The commission also criticizes accreditation for maintaining the status quo. A later finding is that "[a]ccreditation and federal and state regulations, while designed to assure quality in higher education, can sometimes impede innovation" (16).

In this short article, I briefly explore accreditation in higher education and the extent to which it represents market regulation or government regulation. I look at the extent to which general accreditation of colleges and universities as practiced in the United States has emerged from the needs of students, colleges, and universities or has been planned from the top down. If accreditation is an emergent phenomenon, like a marketplace, then as social scientists we should be extremely skeptical of attempts to "fix" what may not be broken. (1)

The Demand for Quality Regulation

The quality of some goods and services is easier to observe than that of other goods and services. For example, it is fairly easy to determine a book's quality while thumbing through it in a bookstore. It is more difficult, however, to ascertain a physician's quality by seeing a picture of her in a white coat or speaking with her for a few moments. If consumers believe that certain qualities are desirable, but they cannot divine these qualities ahead of time, they may be willing to pay for regulation. Conversely, firms in product areas where quality is difficult to ascertain ahead of time may also demand regulation in order to assure consumers that their products are valuable or safe.

Like all investment decisions, the decision to invest in human capital is fraught with peril. As Williams College economist Gordon Winston puts it in a 1999 Journal of Economic Perspectives article, "People investing in human capital through a purchase of higher education don't know...