Comment on Tenure-BECKER

The traditional justification for academic tenure is that otherwise professors would be unwilling to express unpopular views for fear of being fired. This argument for academic tenure is extremely weak in the United States where several thousand colleges and universities compete for professors. In fact, tenure only became common at American universities in the 1920's. It is possible for academics with extremely unpopular views to gain an appointment with tenure at different institutions, as seen from the tenure of faculty who deny the holocaust, or a Ward Churchill at The University of Colorado with outrageous views on terrorism and other issues. The case for tenure is stronger in countries where governments control all universities, and can block academics with unpopular opinions from gaining and keeping appointments. Yet even that argument has become weaker with the rapidly growing international market for good academics. Are there other persuasive arguments for academic tenure? Some have been made in the economics literature, including the alleged difficulty in judging the quality of teaching and research, the non-profit nature of universities, and still others. I have not found any of them persuasive- for example, there is rather widespread agreement in most departments about which are the good teachers, and also to a large extent about who has produced the more influential research. The American Constitution gives Federal judges lifetime tenure so that they would be free to decide cases without fear of political reprisals for unpopular decisions. In posts on March 12th and 19th of 2005 I argued against the lifetime tenure of judges as encouraging judges to remain too long, especially now when they are likely to live into their eighties and into their nineties within a couple of decades. A single long term of between 14-20 years would entirely eliminate any political influence over their decisions due to any fear of losing their positions. It would also weaken the opposition to the appointment of judges with strong views since they would not be deciding cases for thirty years or more. Civil servants have tenure because of similar political considerations, but top-level government officials do not have tenure presently, and are selected by the administration in power. It is hard to see why low-level government employees should have tenure either since they do not make any politically sensitive decisions. Perhaps tenure would be justified at certain intermediate levels, but that would at best cover only a small fraction of all government officials. Companies often give de facto tenure to employees who have worked for them for a long time, except when the companies get into financial difficulties. This is readily explained since long-term employees usually have made significant investments in what is called firm-specific human capital. This term means knowledge and skills of employees that are more valuable at the company where they have worked for many years than at other companies. In order to encourage such investment, and to discourage inefficient quits, companies give a combination of implicit tenure and higher wages to their long-term employees. Note that tenure alone would not be sufficient to encourage these investments and discourage quits. It has to be combined with higher earnings to long-term employees. Indeed, high enough earnings to employees with much firm-specific investment would be sufficient to discourage quits without tenure. But bargaining between workers and employees should lead to at least de facto tenure because that is more efficient if employees are more productive at this firm than at other firms. It is efficient because both workers and companies would be better off if workers with much relevant firm-specific investment stayed at the companies where they have worked for many years. Firm-specific investment provides some of the "commitment" that Posner discusses since employees are obviously more committed to companies where they are more productive. Similarly, the company would be more committed to these employees than to other employees. Commitment is also related to loyalty to an organization and to employees. Loyalty in any organization is extremely important, both loyalty from employees to the organization, and from the organization to its employees. That can be encouraged by higher earning as performance improves, and by good and considerate treatment of employees. It would be in the self-interest of organizations to keep their loyal employees, so no explicit tenure rule seems desirable to encourage the retention of loyal members of an organization, no matter what work or profession they engage in. Since de facto tenure is in the self-interest of companies as well as workers, the value of tenure does not provide justification for laws against firing older workers, or laws that require costly severance pay to long-term employees. Union contracts that make long-term employees less subject to layoffs may in some circumstances provide useful codifications of implicit tenure. However, this could be inefficient when more senior union members have a disproportionate influence over union bargaining. In any case, one would expect companies without unions to have an incentive when that is efficient to codify hiring and firing rules. In fact, most large non-union companies already have these rules.

Comments

[Mi Luo]

I do have some doubts on whether tenure system is sufficient for encouraging employees, either professors, judges or company workers, to sustain the incentive to work as conscientiously as before. Concerning the tenure system in universities in some countries, it is surely doubtably inefficient (I should say we had better bear in mind that differences exist between countries). Professors, most of the time, are encouraged to spare time and effort on things irrelevant to their teaching and research responsibilities. The problem rather exists in the system itself. Perhaps higher payments for employees who have worked for longer time should be preferable, since it increases the opportunity cost of quitting the job. But when it comes to tenure, many things become more blurring.

[Richard Buttimer]

I generally agree with your comments on academic tenure (and I am a tenured professor myself), but think you fail to consider one additional reason that Universities offer it: academic administrators are generally held accountable only to costs that appear in their budgets, and under that measure tenure is a very cheap compensation system. Virtually all of the costs that you and Posner mention (which I agree are real and significant) are long-term in nature and will never show up on a university budget.

Now, consider if you are an administrator that is trying to hire a faculty member in a field for which there is substantial external competition, such as finance, law, medicine, biotech or engineering. For those fields, we typically see academic salaries that are at a significant discount relative to the private sector. The primary reason that academics in those fields are willing to take the lower salaries is because they undestand that they will have a both a lower variance of salary and more job security in academics. Clearly tenure plays a big role in helping set this discount. If tenure were eliminated, it is likely that academic salaries, at least in those fields, would have to rise substantially to compensate for the reduced job security.

Although my guess is that this would be a positive NPV tradeoff for universities, administrators have disincentives to implement such a policy. The increased salary would be immediately reflected in their budgets, but any benefits the policy created are likely never to show up in a monetary budget, or if they do to do so only over such a long horizon as to be of little value to the administrator. When you consider that most college presidents and deans only remain in their posts for a relatively short period of time relative to the average employment-tenure of a professor, it becomes easy to see why academic administrators would continue to allow tenure. For public universities there does not seem to be any group (other than taxpayers) that would not suffer from this disincentive. Even legislators would seem to have a relatively short-term horizon that would tend to focus them on the short-run monetary savings the tenure system allows while ignoring the long-run real costs.

I think the really interesting question to be asked is this: for the academics that are out there and reading this page, how much of an increase in your annual salary would it take for you to be willing to give up the current tenure system? I suppose the question should be asked in dollar and percentage terms, and it would be useful to know the fields of the various respondants.

[Arun Khanna]

Tenure system in universities should be reformed by a compulsory peer review (inside and outside peers) at age 65. If peer review is favorable then Professors should continue on as long as they want to, if it is not favorable Professors should go on a retirement track.

In my subjective view, the existing tenure system in academia simply subsidizes glorified RAs (Marginal Assistant Professors who after their 3 year lackluster review jump ship to industry) at the expense of other Professors. However given the issue of attracting good Ph.D. students, this cross-subsidization might be a rational second-best economic solution.

[Dude]

R. Buttimer says, "The primary reason that academics in those fields are willing to take the lower salaries is because they understand that they will have a both a lower variance of salary and more job security in academics."

Not true. My brother could make MUCH more money as a doctor, but chose to pursue academic research because it is what he loves to do. I chose industry over academics because DARPA grants post-9/11 go to short-term projects, not long-term "interesting" research.

We both agree that any rational person should get a JD/MBA (much easier than a PhD) and earn big bucks in industry.

[Dude]

One more comment on academic tenure. I agree that lifetime tenure is probably a bad idea because it can encourage sloth. Instead, profs should get long-term renewable contracts. Assistant prof gets 5 years. If renewed, he becomes an Associate prof and gets 10 years. Judge his work again and, if renewed, he gets bumbed up to Prof and another 10 year contract. Continue until retirement. Isn't 10 years enough to demonstrate substantial progress, even for high-risk projects?

[Wes]

Isn't 10 years enough to demonstrate substantial progress, even for high-risk projects?Well, if the project is fundamentally impossible then an entire lifetime is not going to be enough to demonstrate substantial progress.The problem is that if someone is actually doing cutting edge research then they simply don't know whether or not their project is fundamentally impossible. Fame and glory are not achieved by doing things that other people already know are possible.

[nate]

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[Gary]

One more thing about tenure. As far as Ive seen, in many cases its not completely clear cut whether an assistant professor actually should get tenure. Invariably, this leads to too much subjectivity in the ultimate decision making. In this vein, I believe one of Professor Becker's own students, James Miller (now at Smith College), was (scandalously) initially refused tenure largely because of his political views which didnt conform with the liberal senior faculty. He subsequently appealed and won his appeal. In any case, it's not clear that the those granting tenure have any strong incentives to make the right decisions. Thus, tenure can invariably lead to a sort of "rent seeking" whereby young professors seek to ingratiate themselves to senior faculty, something Ive observed again and again.

[Mark Wilson]

There have been some interesting deviations from academic tenure in the recent past. About five years ago Boston University began to offer faculty a choice of two contracts: the traditional tenure-track or a 10-year contract with no option of continuation. Annual salaries for the 10-year contract were about 10% higher than the tenure track. As I recall, this was a market determined wage differential. This gives us an estimate of a shadow price of tenure.
I have not heard if this system has persisted, but it does make the important point that the employee bears a price for his/her job security.

[N.E.Hatfield]

Dude, Industry? What Industry? That's been either outsourced or offshored. Where have you been? Oh! That's right I forgot. We can all now become Bankers, CEO's, CFO's, Stockjobbers, Insurance Brokers and Lawyers; lie, cheat, steal, and defraud one another and call it an Economy. ;)

[Donald A. Coffin]

In the academic setting, my own preference is for rolling 5-6 year contracts, with the contract being extended for one year when a faculty member receives a satisfactory performance evaluation. This allows faculty to undertake longer-term research, service, and course-development/teaching projects, but removes the "lifetime" security of tenure.

We all know that tenure is really no longer a lifetime appointment, as the grounds for ending employment now include financial exigency and persistent poor performance (at least that's true at many institutione). We also know that universities have begun to use more part-time and non-tenureable full-time faculty, so a smaller percentage of college faculty have tenure now, or are eligible for tenure.

What is necessary, I think, is for a serious empirical investigation of the issue, taking seriously the arguments on both sides, and attempting to find evidence, not anecdote, bearing on the value of tenure, not for the individual, but for the institutions and for society.

[N.E.Hatfield]

Was and is Ricardo empirical or anecdotal in his analyses? And that, is the real issue when it comes to employment and economic practices.

[Janos Simon]

"Mathematicians do their best work when young" is often, but not always true. In particular the "mathematician over 40" as synonimous with "dead wood" is very often wrong.

Wiles obtained the proof of Fermat's Last Theorem after age 40.
von Neuman did most of his work on computers in his forties and fifties. His work on cellular automata was interrupted by his death.
Kolmogorov developed algorithmic information theory ("Kolmogorov Complexity") in his sixties.

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