March 07, 2007
On Tenure

Steve Levitt asks:

It must not be that simple because few schools have tried [to abolish tenure], and my sense is that those that took a stab at it capitulated quickly and reinstated tenure. What am I missing?

Greg Mankiw responds:

One question that Steve does not address is how department hiring would work in a world without tenure. Now, senior hiring is done by existing senior faculty. If those faculty could start firing one another, the political dynamics of hiring would become complicated and probably untenable. (Here is a related paper.) A university without tenure would likely have to move toward a more hierarchical system with a "boss" in charge of hiring and other major decisions. That is, one cannot abolish tenure and expect university governance to remain the same. Deans would likely have more power over hiring. In my experience, anything that gives deans more authority is a step in the wrong direction, for deans have less information about what is going on in the field or in the classroom than the faculty do.

My take: I probably value tenure less than most faculty members, but I'm not as dismissive as Levitt. To me (as with Mankiw's concern about faculty hiring), tenure solves a principal-agent problem. Berry College asks me to do lots of things that have little or no value in the labor market; for example, this past weekend I participated in an event for prospective students. In a world without tenure in which I could be dismissed, I'd be much less likely to do things that are valuable to Berry College but not valued in the labor market. Instead, I'd spend much more time on research to maintain my market value. I should add that my estimate of how economists' skills are valued in the market is about 3/4 based on research, roughly 1/4 based on teaching, and virtually nothing (beyond an assessment of collegiality) based on service. My estimate is intended as an average--places like mine place more value on teaching while doctoral institutions probably place less value on teaching.

Although I suggest that tenure may exist, at least in part, to solve a principal-agent problem, I'm not claiming it is the optimal solution. (As an aside--I think the institution of "making partner" in law firms and the like is analogous to tenure.) Nor do I deny that tenure protects the lazy; however, there are some limited ways (e.g., freeze or cut their pay) to deal with folks who retire on the job.

I've opened comments for a couple of days; I'll probably close them on Friday to choke off the spammers.

Posted by E. Frank Stephenson at 08:52 AM in Misc.


I have come to favor tenure, when I used to think it a bad institution.

The reason is that it protects, and selects, for the most part.

It protects by giving people freedom to work on better projects, and to have wider choice in subjects.

It selects by choosing only those people who will continue to work hard AFTER tenure.

Now, many lazy people NOW got tenure years ago, when it was easier. But I watch the people I have seen get tenure in the past fifteen years, at top departments, and nearly EVERY ONE publishes more, the work is better, and they do university stuff like talk to prospectives and attend graduation.

This may not be true for economists, or other interplanetary travellers. But it has been surprising to me how often people work harder and better once the threat is removed. That leaves the real reason, protection from political or personal bias.

And, G. Mankiw nails the comparative static result. All departments would be ruled by powerful heads, and closely overseen by even more powerful deans. Icky-icky-oo.

Posted by: Mike Munger at March 7, 2007 09:25 AM

Frank, one way to think about tenure within a free-market/classical-liberal mindset is to compare it with surgeons working at a hospital. On the one hand, if they're incompetent, the hospital has an interest in being able to get rid of them. But if they're actually very competent, but mavericks w.r.t. "the rules," or favor techniques or approaches which would irritate the hospital bosses but actually help patients, then it would be good if they _couldn't_ fire them. Academics works the same way. If Prof. A is incompetent or dishonest in objective and demonstrable ways, he or she should be dismissed, and indeed most institutions AFAIK have tenure-defeating provisions for things like not showing up for class or plagiarism or armed robbery. But if Prof. B pursues an unpopular or un-PC research agenda, it's actually better for the institution to have a built-in protection for that prof, rather than have the prof always looking over his shoulder at an angry mob. It's truth-seeking, not American Idol.

Posted by: Aeon J. Skoble at March 8, 2007 12:01 PM

I agree with the comments above, but have another take on it as well: tenure is a non-cash form of compensation. If Universities were to get rid of tenure, the cost of retaining faculty would go up very quicky. Granting the "annuity" of tenure is a way of paying a faculty member without having to take a hit in the cash budget. There is, of course, a real economic cost to it, but it does not affect the current-period budget.

This is also why I think that the schools that have tried to abandon tenure wind up reinstating it: they simply cannot afford the higher costs the have to pay in the long run to retain faculty.

Here is an interesting question: how much money is tenure worth? That is, how much would one have to be compensated to agree to permanently give up tenure. I'm not talking about a case where say a faculty member leaves school A to go to B and gives up tenure - in those cases the person realizes that will, in all likelihood, get tenure at school B and so will leave for much less of an increase in wage than if they were really losing tenure for good. My question is how much would it take to get one to permanently give up the opportunity to earn tenure? Clearly it will depend upon both the school one is at and one's assessment of their future marketability, but my guess is that most faculty in econ or finance at major research schools would require a very substantial lump-sum payment to make such a change.

Posted by: Richard Buttimer at March 9, 2007 10:09 PM

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

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