I think the first time I was struck by the similarities (and differences) between health care, my area of economics, and higher education, my employment sector, was as I read Burt Weisbrod’s book The Nonprofit Economy. I had not focused much of my study on industrial organization and the book started my ongoing reflection on how the organizations and individuals in both sectors behave.

This week, the deepening VA scandal has caused me to wonder whether or how universities could avoid a similar fate.  As an economist, I see strong evidence of the power of incentives to impact behavior. I often find myself pointing out to others in higher education how people are reacting quite naturally to the incentives we have provided, and if we want different behavior, we might want to change the incentives.  I also am a strong advocate of measuring what we do and sharing those outcomes transparently with the world outside higher education.  Health care, too, has been pushed to do the same.

The VA scandal makes me try to find some lessons, in the power of incentives, assessment, and transparency for both positive and negative behaviors. It appears that VA managers were given strong incentives in their approach to outcomes assessment; and, when resources for not meeting expectations were in short supply, falsifying data started and became institutionalized.  Despite multiple reports of the problem, senior managers seemed unable to stop or change it.

What are the lessons for universities, as public and private groups push for more assessment and greater transparency? We’ve already seen multiple instances of universities providing false and misleading data to rating organizations. As the effort to measure what we do and share those measures with the public grows, how can we provide incentives for honest assessment and prevent these negative behaviors?  I don’t have any answers, but I think we need to think carefully and move cautiously and measure humbly and encourage dialogue with leaders, faculty, students, families and others on what we are trying to measure, what the data mean, and how we can provide incentives for continuing to improve learning in our universities.