The tragedy of Michael Bloomberg’s latest act of mega-philanthropy

Former New York mayor (and potential 2020 Democratic presidential candidate) Michael Bloomberg has given $1.8 billion to his alma mater, Johns Hopkins University in Baltimore, to use for financial aid.

This is a momentous gift. Veteran education reporter Nick Anderson writes that it is “believed to be the largest private donation in modern times to higher education.”

And it comes with a high-minded rationale. Bloomberg explains in a New York Times op-ed, “This will make admissions at Hopkins forever need-blind; finances will never again factor into decisions. The school will be able to offer more generous levels of financial aid, replacing loans for many students with scholarship grants. It will ease the burden of debt for many graduates. And it will make the campus more socioeconomically diverse.”

I am torn about this gift. It’s not the grotesque waste the way that, say, Nike founder Phil Knight’s vanity $400 million scholarship at Stanford or financier Stephen Schwarzman’s $150 million performing arts center at Yale were. Johns Hopkins is dramatically poorer than those schools; Stanford’s 2017 endowment was $24.8 billion, Yale’s was $27.2 billion, while Johns Hopkins had $3.8 billion. That’s not a tiny amount, but it does make gifts to Hopkins a little less egregious.

Bloomberg’s cause is also considerably better than those of Knight or Schwarzman. Knight wanted a pseudo-Rhodes Scholarship with his name on it; Schwarzman thought that Yale — Yale! — really needed more fancy auditoriums. Bloomberg was motivated, he writes in his op-ed, by a conviction that “No qualified high school student should ever be barred entrance to a college based on his or her family’s bank account,” a laudable ideal.

And there’s the rub. While I don’t think this gift is necessarily harmful, it’s a wasted opportunity, for at least two reasons. One, it’s not the best way to use $1.8 billion to further the goal of increasing the number of poor and working-class Americans who can afford to attend and, more important, finish college — a more sensible framing of the cause that Bloomberg is embracing than focusing merely on the admissions process. Two, boosting college completion in the US is probably a worse use of money, from a humanitarian perspective, than some other causes Bloomberg could have chosen.

The problem with giving to Johns Hopkins

I have no personal beef with Johns Hopkins University, the institution. If anything, I should probably disclose that I donated my kidney at Johns Hopkins Hospital, and I have nothing but nice things to say about the doctors, nurses, and staff there.

But in general, I don’t think you ought to donate to colleges that most Americans have heard of. That’s not where the problems with higher education are, and it’s not where money can do the most good. It might feel good to give to his alma mater (I donate to the shelter where I got my cat), but $1.8 billion is too much to pay for sentimentality.

The problem of rising tuition in the US differs across institutions. But the vast majority of people in the US go to public, government-supported institutions of higher education. The National Student Clearinghouse Research Center estimates that as of spring 2018, there were 7.4 million people enrolled full time in public institutions offering either two- or four-year degrees, and only 3.4 million enrolled in private four-year colleges (the number of people in private two-year colleges was negligible).

What’s more, most Americans don’t attend selective schools like Johns Hopkins. About 75 percent of undergraduates go to a school that accepts more than half of its applicants, and only 4 percent go to schools where the acceptance rate is below 25 percent. Hopkins’s acceptance rate is about 12 percent.

Changing things at Hopkins, or even changing things at Hopkins and inspiring other selective schools to do likewise, doesn’t change the situation for the vast majority of college students who won’t attend an elite institution.

What could Bloomberg have done instead to advance his stated goal of increasing access to college for low-income people? Well, one major driver of rising tuition at community colleges and other non-selective four-year public schools is declining support from state governments. 45 of the 50 states spent less, per student, on public colleges and universities in 2018 than they did in 2008, before the recession, according to the Center on Budget and Policy Priorities. In nine states, including quite populous ones like Pennsylvania, Illinois, and Arizona, funding was down by more than 30 percent.

When I looked into this problem in greater detail in 2013, I found that the tuition at non-selective public schools rose even though spending didn’t — per-student spending at community colleges actually fell from 2000 to 2010 by more than 40 percent. The tuition was making up for a lack of government funding. The situation at community colleges improved a bit in the subsequent few years, but largely because enrollment fell faster than spending, driving up per-enrollee spending.

If Bloomberg wanted to address college affordability for the large mass of students, especially low-income students, he should’ve addressed that problem. Maybe he could have donated to the Maricopa County Community College District in Arizona, a state that’s cut higher education particularly hard since the recession; it has more than 220,000 students to Johns Hopkins’s 20,000 (grad students included). It could certainly use the money more.

Alternatively, Bloomberg could use his political skills and start a campaign to push states to use their tax revenues to fund community colleges and other non-selective public schools more fairly. He certainly has some experience with this, using his fortune to fund political efforts to shut down coal plants, pass gun control, and fight the tobacco industry in the US and abroad. A multi-state effort to push places like Pennsylvania or Arizona to fund their schools more adequately could have many times the impact of the Johns Hopkins gift.

It’s also not clear to me that Bloomberg’s gift, alone, will lead Johns Hopkins to become a haven for low-income students. As economists Raj Chetty, John Friedman, Emmanuel Saez, Danny Yagan, and Nicholas Turner found in a landmark 2017 paper, the richest schools with the biggest endowments, which already have need-blind admissions processes like the one Bloomberg is bringing to Johns Hopkins, are pretty bad at enrolling actually poor students.

As of the class of 2013, 4.5 percent of Harvard students and 4 percent of Stanford students came from the bottom fifth of the income distribution. By contrast, 15 percent of Harvard students and 17 percent of Stanford students came from the top 1 percent, families making $630,000 or more a year. The schools were three to four times more likely to enroll scions of the ultrarich as they were to enroll low-income kids.

Johns Hopkins does a bit worse in terms of enrolling poor kids than Harvard and Stanford, and maybe Bloomberg’s gift will improve things on that front. But the evidence suggests that merely making Hopkins need-blind will not make it an engine of economic mobility.

What’s more, getting people to be able to afford to enter college isn’t the primary problem in the US right now. At least 60 percent of Americans aged 18 and over have been to college for at least a period. But only 31.4 percent have a bachelor’s degree or higher. Some of that gap is made up by people with associate’s degrees, but most of it is accounted for by the 46.5 million people who started college but never finished.

College completion isn’t a problem at elite institutions like Johns Hopkins, which has a six-year graduation rate of 93 percent. But nationally, only 60 percent of students who began college in 2010 graduated within six years. That’s why the conversation in education circles has, for several years now, focused on a “completion agenda,” with policy experts offering plans to make sure those who enter college finish it. Some of that has to do with an ability to pay, to be sure, and many plans aimed at increasing completion have a strong aid component (see, for instance, the Center for American Progress’s). But none of it has anything to do with Johns Hopkins.

The case against giving to higher education in general

I’m not alone in arguing that higher education philanthropists should move away from elite institutions; Malcolm Gladwell made an eloquent case along those lines on his podcast. But I want to go a step further and say I’m not sure improving college affordability is, in humanitarian terms, the best thing for Bloomberg to do with his money.

Expanding access to college is a very good thing. It probably would make affected people better off monetarily, and learning is valuable in and of itself. But we have to compare the value of helping American students, even low-income American students, to other uses of the money.

My standard go-to comparison is the Against Malaria Foundation, which offers bednets to people in sub-Saharan Africa, to prevent them, and particularly children, from being infected with malaria. According to the charity evaluator GiveWell’s “conventional” estimate, every $4,104 given to AMF prevents a death. You should take that number seriously but not literally; it’s impossible to be precise about this kind of thing, and it’s a very rough estimate. But let’s take that as a ballpark figure.

A naive, back-of-the-envelope calculation suggests that if Bloomberg gave $1.8 billion to AMF to spend on bednet distribution, he’d save the lives of more than 438,000 people.

Now, again, you shouldn’t take that precise number literally. $1.8 billion is vastly more than AMF’s annual budget, and the organization likely couldn’t expand that quickly, or expand while saving lives that efficiently.

But it doesn’t just have to be AMF. Here are some more rough GiveWell numbers from its latest cost-effectiveness spreadsheet: The Malaria Consortium, by giving out preventative malaria medications, can save a life for every $2,290 spent. Helen Keller International’s vitamin A supplementation program can save a life for every $3,226 spent.

Those numbers could be totally, wildly off, by one or two orders of magnitude, and still be better causes than expanding college enrollment in the US. And if Bloomberg were to exhaust those avenues, I have a few more ideas:

  • As Flint, Michigan, has reminded us, lead poisoning continues to impose massive social costs in the US. One cost-benefit analysis suggested that $1 spent on lead abatement produces between $17 and $221 in social benefits. That’s just one study, but the overall evidence base for the intervention looks much firmer than most education interventions.
  • Macroeconomic policymaking at the Federal Reserve influences trillions of dollars in economic activity globally but faces much less lobbying than policymaking in Congress, due in part to the frankly naive conceit that the Fed is “independent” of outside politics. As a result, there’s relatively little foundation money being spent ensuring that the agency that holds the fate of the global economy in its hands is making good decisions that prevent recessions and lower unemployment. It seems almost certain that the marginal lobbying dollar will do more good there than in student financial aid.
  • And then there are causes that have had next to no coverage. Suicides with pesticides are very common in the developing world and kill more than 100,000 people annually; banning certain highly lethal pesticides, as Sri Lanka has done, appears to dramatically cut suicide rates. I know of one highly effective group working on this problem, but it only works in a handful of countries, implying there could be room for more funders.

I’m pretty confident that those causes are more promising than funding college education in the US. I’m not 100 percent sure — I don’t have a large staff to do comprehensive cause selection research. Thankfully, Michael Bloomberg does! And he should do a bit more of it before he makes his next gift.


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