EDUCATION IS JUST ANOTHER COMMODITY:

I see three principle advantages to online education, 1) leverage, especially of the best teachers; 2) time savings; 3) individualized teaching and new technologies.

Leverage

The importance of leverage was brought home to me by a personal anecdote. In 2009, I gave a TED talk on the economics of growth. Since then my 15 minute talk has been watched nearly 700,000 times. That is far fewer views than the most-watched TED talk, Ken Robinson's 2006 talk on how schools kill creativity, which has been watched some 26 million times. Nonetheless, the 15 minutes of teaching I did at TED dominates my entire teaching career: 700,000 views at 15 minutes each is equivalent to 175,000 student-hours of teaching, more than I have taught in my entire offline career. Moreover, the ratio is likely to grow because my online views are increasing at a faster rate than my offline students.

Teaching students 30 at a time is expensive and becoming relatively more expensive. Teaching is becoming relatively more expensive for the same reason that butlers have become relatively more expensive-butler productivity increased more slowly than productivity in other fields, so wages for butlers rose even as their output stagnated; as a result, the opportunity cost of butlers increased. The productivity of teaching, measured in, say, kilobytes transmitted from teacher to student per unit of time, hasn't increased much. As a result, the opportunity cost of teaching has increased, an example of what's known as Baumol's cost disease. Teaching has remained economic only because the value of each kilobyte transmitted has increased due to discoveries in (some) other fields. Online education, however, dramatically increases the productivity of teaching. As my experience with TED indicates, it's now possible for a single professor to teach more students in an afternoon than was previously possible in a lifetime. [...]

Time Savings

Tyler Cowen and I have created a new online education platform, MRUniversity.com, short for Marginal Revolution University, after our blog of that name. In putting together our first course, Development Economics, we were surprised to discover that we could teach a full course in less than half the lecture time of an offline course. A large part of the difference is that online lectures need not be repetitive.

Dale Carnegie's advice to "tell the audience what you're going to say, say it; then tell them what you've said" makes sense for a live audience. If 20% of your students aren't following the lecture, it's natural to repeat some of the material so that you keep the whole audience involved and following your flow. But if you repeat whenever 20% of the audience doesn't understand something, that means that 80% of the audience hear something twice that they only needed to hear once. Highly inefficient.

Carnegie's advice is dead wrong for an online audience. Different medium, different messaging. In an online lecture it pays to be concise. Online, the student is in control and can choose when and what to repeat. The result is a big time-savings as students proceed as fast as their capabilities can take them, repeating only what they need to further their individual understanding.

We get even more savings by eliminating the fixed time-costs of attending class. Before I even begin my lecture, many of my students will have driven half an hour just to attend the class, followed by another half an hour to get home. And with online lectures there is no looking for parking! Combining these savings with more concise lectures and we get big time savings.

Time Shifting

As with a play, offline teaching requires that every customer consumes at the exact moment that the supplier produces. As with a movie, online education is consumed and produced more flexibly. In the online world, consumers need not each consume at the same time, and suppliers need not produce at the moment of consumption.

It's costly to coordinate consumers and suppliers, and the increase in cost reduces the amount of education consumed. I teach a class at George Mason University, 7:20-10 pm on Tuesday nights. I suspect that this is not the preferred time to learn for any of my students, and it's certainly not the preferred time for me to teach; it's merely the best time to coordinate me and as many students as possible.

The inflexibility of offline teaching also reduces the quality of teaching and of learning. Despite caffeination, by 9:30 pm fatigue sets in, and my teaching quality begins to fall. I am not as sharp at 9:30 pm as at 7:30 pm, and neither are my students. As the quality of both sender and receiver declines, less is communicated. As a result, it makes little sense for me to try to teach complex ideas after 9:30 pm. I try to structure my class to accommodate, but sometimes it's not possible and I end up either teaching less or teaching less well.

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