Assessing the Rational Agent Response to Elimination of Tenure in Wisconsin State Statute

Thinking about “Exit, Voice and Loyalty” in Wisconsin

The Joint Finance Committee motion to remove tenure from state statute. Winners of the most competitive research awards the University of Wisconsin–Madison provides to its scholars have made a statement, found here.

We are especially concerned about provision 39 of the omnibus motion, which authorizes the Board of Regents to terminate faculty appointments for reasons of “program discontinuance, curtailment, modification, or redirection.” This is a profound departure from current policy, which allows termination of faculty appointments only for just cause after due notice and hearing, or in the event of a fiscal emergency. If passed into law, this provision would greatly weaken any guarantees of tenure provided by the Board of Regents. In essence, state statute would say that tenure at the University of Wisconsin does not mean what it means at every other institution: a guarantee that university administrators cannot arbitrarily dismiss faculty who have earned tenure through research, teaching, and service.

I have seen some individuals (as far as I can tell, typically not involved in knowledge generating sectors of the economy) who asserted that a move to weaken the protections of tenure would eliminate “dead wood”, and reduce costs.

It strikes me that it is useful to consider a rational agent model of individual decision-making, in response to weakening of tenure protections relative to other academic institutions, in assessing the plausibility of such arguments.

First, agents would make the relevant cost-benefit calculations. As costs (from uncertainty) rise, those agents with the highest value of outside options (relative to costs of moving) would move. On average, one would guess that the most accomplished would then tend to move.

Second, the idea of compensating differentials (look at any intro economics textbook) is relevant. If uncertainty is higher, then rational agents — particularly those coming from outside, perhaps as new hires — would tend to demand a higher salary relative to what otherwise would be the case.

Third, the removal of tenure protections could be taken as a signal by state leaders (in the legislature, in the executive) that the contributions by those involved in the academic enterprise are not valued. If leadership at the state level attempts to stifle dissent, then loyalty is reduced, and exit becomes a more attractive option. (Some will recognize this idea from Hirschman.).

So, if one’s objective were to drive out the most academically successful professors, raise cost per unit output of teaching/research (recalling UW brings in billions of dollars of Federal and other grants), and demoralizing the university faculty, then the JFC’s motion is the optimal route.

The entire statement can be found here.

Update: Addition coverage, Herzog/Milwaukee Journal Sentinel, Simmons/Wisconsin State Journal.