A hundred years ago, there was a tradition in the US that saloons would serve free lunch to guests who were paying for a drink. But the food would be salty, luring the customers to buy more beer. Based on this story, economists frequently use the expression “there’s no free lunch” to point out that anything that appears to be free always has a cost. That may be a hidden cost borne by the customer (the cost of the beer he hadn’t plan to drink), or a cost borne by someone else (such as the society).

In the internet era, we can watch videos, send emails, stream music, and search the web at zero cost. So who pays? In most of the cases, the revenue that makes this possible comes in the form of data, which allows for tailor-made, and thus efficient, advertising. As another popular saying goes, “if you’re not paying for it, you are the product”.

But what about university courses? Massive open online courses (MOOCs), often taught by the best professors in the world, are offered for free to anyone who wants to indulge in a new topic. A key message in ONL 181, emphasized in Kay Oddone’s blog, is that sharing knowledge does not diminish it, that there is no cost of passing on the flame of education. As a teacher, I agree, but as an economist my gut reaction is to think about the costs…

In the case of the MOOCs, I believe that most of the funding comes out of the universities’ marketing budgets. The MOOC can reach an enormous number of potential students, and if their knowledge flame is lit their willingness to pay tuition fees increases. Accordingly, the universities ask their most dynamic professors to do the MOOC lectures! The view is supported by Weller (2014, Ch. 4), arguing that the costs of MOOC creation is covered by added registration to other courses. Another revenue source can be to sell textbooks and other materials required for the MOOC.

However, many of us taking ONL 181 work at universities where education is free of charge in the traditional programs too. Well, not free of course, but paid for by the society rather than by the students.

In my opinion, the case for the MOOC is great from a societal point of view. It can allow the flame to spread to people who would otherwise never set foot at a university campus, and the cost to society of doing so is very low. The MOOC is also ideal for professional development courses, where the cost of coming to daytime campus courses is high, and the students are mature enough to take responsibility for their learning (Barak, Watted and Haick, 2016, show that successful MOOC participants are intrinsically motivated and self-determined).

To realize the MOOC potential, however, I think we need to rethink the way universities and individual university teachers are compensated for online education. In Sweden, the university is paid for students who finish their courses. To make the MOOC economically sustainable, we should think of compensation models that factor in that many students take courses for other purposes than the certificate itself (as emphasized in this movie by this movie by Dave Cormier).

 

References

Barak, M., Watted, A., & Haick, H. (2016). Motivation to learn in massive open online courses: Examining aspects of language and social engagement. Computers & Education, 94, 49-60.

Weller, M. (2015). Battle for Open: How openness won and why it doesn’t feel like victory. Ubiquity Press.