Prices at College Dining Halls

 In today’s economy, colleges and universities have a high price tag and many students find that they are struggling to afford things as simple as a meal plan. Most college meal plans are several thousand dollars each year and many students choose not sign up in an effort to save money. The major issue with this is that students and the universities argue over the cost of meals that is rebated when a student does not sign up. According to most administrations, schools should only have to rebate the marginal cost of food alone, lets say, $1.25 per meal. Yet students argue that the marginal cost should include more costs, such as the saved space from fewer students using facilities and the reduced labor expenses on food preparation. This would raise the marginal cost to $6.00. What I contend is that with the price of college tuition at a constant high, colleges should be more conscientious of setting their dining hall prices and should consider the cost to students.

 

In my opinion, the students have a valid argument worth significant consideration. By having fewer students in the dining hall, universities have fewer expenses. There is less to put out for labor, capital and whatever other expenses are associated with food preparation. By logic, the money that colleges collect to invest into food preparation should be rebated to students who choose not to use dining services.

 

On the other hand, colleges argue, especially those that are private, that they have the right to charge what they choose and rebate a specific cost. They feel that they still need the labor expenses for other students and that the students who get rebated should only be rebated the cost of the actual meal. However, colleges should consider that when planning the initial plans of the dining hall they should at minimum, define the line strongly between costs of food and what the student will receive back. There should be one price for both the cost of food they charge for students and the price the students will receive back. This way the students will feel that the rebate price is fair. Colleges should also consider building the dining hall at a certain size initially, not too big. This way they can gauge how many students actually continue the dining plan all four years and leave room to grow so that they are not paying overhead costs for a smaller population.

 

But consider this, if $1.25 is what colleges figure as a person eating, how is it justifiable to charge students who choose the dining hall plan $6.00 for the cost of their meal. Many colleges argue that this cost includes the cost of hiring chefs, electricity for the dining hall, silver wear, clean up workers and even the water bill. Although this makes sense, there needs to be a modification of the way colleges charge students. If they are to charge $6.00 for a meal then colleges should rebate the same price back as to avoid confrontation with students.

Colleges: the new Cartels

It’s not a mystery that college is expensive in the United States; and that private institutions are priced higher than all others. But have you ever paid attention to the way prices of private institutions rise? It seems as though when one university raises their price, the others follow suit. In many ways, these colleges operate like cartel oligopolies. Characteristics of cartels include: monopolistic behavior and maximizing on profit through implicit collusion; and when you think about it, that is exactly what private colleges do.

 

In today’s economy, students and their families look for the best education. Measured by test scores, gpa etc. students pray and hope they will be accepted into the selective private institution of their choice. In reality, they are smart to do so since the economic return on private institutions is large. The problem is that private institutions know this as well. The demand for these schools is so high that top institutions have their hand choice of kids and also the ability to increase their sticker price whenever they choose. In this way, private institutions behave exactly like a drug cartel would: capitalizing on their demand and maximizing profit.

 

However, not everyone shares this mindset. Many rationalize the increased sticker price from private colleges and argue that they are valid. Unlike state colleges and universities, private institutions do not receive tax dollars or federal funding. Private colleges keep costs rising in order to fund the difference. Others argue that today, kids have expectations higher than they did in the past. Things that were once luxuries like Internet and air conditioning are now requirements and colleges must update in order to continue attracting prospective students. There are even some economists who argue the most logical argument of them all: inflation. Universities, like all business, are subject to inflation. Food, water, fuel etc. increase for them like it does for everyone else; therefore tuition must rise. Although these arguments make sense, none of them account for why there is never a decrease in tuition price.

 

I believe that for private institutions, it is easy to convince the board of trustees, etc. to raise prices especially to account for inflation, external sources etc. However, trying to convince all decision-making parties to lower prices based on economic shifts is not so easy. Why lower tuition costs when there are thousands of applicants prying at the door for a spot in that private institution?  The reality is: despite economic issues and causes for tuition raises, the rising demand for college has tolerated increasing prices and that exceed economic forces. Private colleges and universities continue to behave like a cartel simply because they can. If people are willing to pay it, then why not continue to use implicit collusion to drive funds? If people continue to allow these tuition raises then they cannot expect a change in tuition anytime soon. The future availability of the “American Dream” is not the fault of the Universities. They are a business, and just like any other business, they capitalize on profit. It is however, the fault of those who continue to support this cartel-like business.

Art in the Beholder’s Eye

Claude Monet, as one of the most expensive artists in the world, has, long after his death, people spending millions of dollars on his artwork. The reason for this is, to me, unclear; to some, art’s value is dictated by use of color, to others the value is derived from subject matter. In short, art’s value cannot be determined using an exact science. Therefore, I do not believe that art in its basic form is a sound financial investment. While a Monet will always have value and is very unlikely to fall in price unless destroyed, the average piece of art is in no way guaranteed to maintain value and as an investment piece would likely underperform. While many people would argue that investing in stocks poses an even greater risk than investing in art, the opposite is true; although the stock market can be volatile, using hard data and projections, it is possible to fairly accurately predict the movement of the stock market, art, however, is based solely on the trends of modern preferences and the price of a piece by Monet for example, cannot be predicted over the long run because there is very little data that exists on any specific piece.

Claude Monet

Using this piece by Monet, Water Lilies, Evening Effect as an example, it is easy to see how art is not a measure of investment but rather a measure for the human experience. I find a certain beauty in this painting that takes me back to my childhood days in Finland, however, the same feeling is not necessarily transferable to all individuals. Others may see it as a conglomeration of paints fit only for the walls of an elementary school. This is the nature of art. Painting is a way of capturing a moment on canvas. Paintings have for millennia been used as a way of recording important events and chronicling the evens of an era. While this piece by Monet may fetch ten million today, fifty million tomorrow, and twenty-four, ninety five one hundred years from now, the image will remain, forever showing us the image of a lake with lilies at evening. The surrealist paintings of the 20th century capture the prevailing moods of the populous and each one tells its own story.

Paintings by Van Gogh, Monet, and Cezanne will likely never lose much value unless the painting is disturbed, and the best of their paintings will always be worth millions. However, investment in such items is simply unreliable. What is bought at auction for 100 million can, depending on the economy or simply demand, be sold for only 80 million at auction in four years. What dictates the price of different pieces of art are of course things such as size and quality (how damaged the piece is), but most of the time a piece’s value is simply a measure of an individuals or groups attachment to an painting. Why else would Card Players by Cezanne be worth over two hundred million more than View of Auvers, also by Cezanne. How we see a piece determines its value, that is why art is more important as a measure of the human experience than as merely an investment. There is a beauty in art not found in the average stock.