Economic Bubbles

Abstract

Chapter 3 address the higher-education cost bubble, why it is unsustainable, and the ways it will likely burst, using a computational model of research universities to explore possible futures for these universities. It is not possible to predict what mix of the scenarios of interest will actually emerge, although the forces driving these changes are already evident. Universities need strategies and investments that enable robust responses to whatever mix of scenarios emerges. The higher-education cost bubble will inevitably burst, probably facilitated by increasingly powerful and sophisticated technology platforms. Universities need the right portfolio of investments in the hedges that will assure success despite the bursting of the bubble. Without such changes, many institutions of higher education will disappear amidst this “creative destruction.”