Pragmatic Revival

In 1990, at Cornell, a group of economists handed out coffee mugs. Half the students in a classroom got one, an ordinary mug with the university seal, worth about six dollars in the campus store. The other half got nothing. Then the economists opened a market. Sellers, name your price. Buyers, name yours. Standard theory said the mugs would flow to whoever valued them most, and since the mugs had been distributed at random, roughly half of them should have changed hands.

Almost none did. The students who owned mugs wanted, on average, about seven dollars to part with them. The students without mugs would pay about three. Same mug. Same room. Same twenty minutes of ownership. The mere fact of possession had doubled the thing’s value in the eyes of its possessor, and the market seized up like an engine run without oil.

Richard Thaler called this the endowment effect, and it eventually helped win him a Nobel Prize, and I would like to suggest that if you want to see it operating at industrial scale, at a cost several orders of magnitude beyond coffee mugs, you should skip the laboratory entirely and attend a program review committee meeting at a small tuition-dependent university, on a Thursday afternoon, in a conference room with carpet the color of oatmeal, where seven tenured faculty and two deans are about to decide, for the ninth consecutive year, to keep a major that graduated four students.

Bring a mug. You’ll fit right in.

The Program in Question

Every campus has one, and most campuses have several, so let me sketch a composite and you can fill in the local details yourself. Call it the B.A. in Something Once Central. It was founded in 1967, when the school was flush and the discipline was ascendant and the founding professor, now a portrait in the library, was a figure of genuine consequence. At its peak it enrolled ninety majors. It has a dedicated seminar room with its name on the door. It has a small endowed lecture fund, a shelf of festschrifts, an annual banquet where the same eleven people give the same three toasts.

It currently graduates four students a year. Some years five. One year, memorably, two, and one of those was a double major who took most of her credits elsewhere. It requires two and a half full-time faculty lines to deliver its curriculum, faculty who could be teaching sections of the overflowing gen-ed courses that actually pay the university’s light bill but who are instead teaching a senior seminar with an enrollment of three, which is less a class than an expensive book club.

Run the arithmetic that nobody in the oatmeal room wants to run and the program loses several hundred thousand dollars a year, every year, quietly, the money seeping out of the institution the way water seeps out of a cracked foundation, invisibly and continuously and always somehow someone else’s line item. The nursing program upstairs, bursting, waitlisted, turning away qualified applicants for want of faculty lines, is paying for it. The prospective students who never enrolled because the university couldn’t fund the data science major it kept deferring are paying for it. The payment is simply routed through enough intermediaries that no one ever has to watch the cash leave the drawer.

And every year the review committee convenes, and every year the program survives, and if you asked the committee why, they would give you reasons, plausible ones, humane ones, and nearly all of them would be the seven-dollar mug wearing a tweed jacket.

What the Mug Is Actually Doing

The endowment effect is usually explained through loss aversion, Kahneman and Tversky’s finding that losses hurt roughly twice as much as equivalent gains please. Give up the mug and you feel the loss of a mug; acquire the mug and you feel the gain of one; the ledger should balance, but the human nervous system keeps crooked books. The prospect of losing what you hold looms larger than the prospect of gaining what you don’t.

Now translate. Cutting the legacy program is experienced, viscerally, as a loss of six figures’ worth of institutional identity, history, and self-image. Launching the program that would replace it is experienced as a speculative gain, hypothetical, unproven, faintly vulgar. The comparison was never fair. It was rigged the day the program acquired the one attribute that behavioral economics has shown will inflate any asset’s perceived value beyond reason, which is existence. The program is valuable because we have it. We have it, therefore it is who we are. Who we are cannot be cut, only betrayed.

Notice what has happened there, because it happens in every one of these rooms. The question on the agenda was economic. The question being answered is existential. A provost asks whether the university can afford two and a half lines for four graduates, and the room hears whether the university is still the kind of place the people in the room joined thirty years ago. Of course the discussion goes badly. They aren’t having the same meeting.

There are accomplices, naturally. Sunk cost arrives early and sits near the front: we’ve invested fifty years in this program, the reasoning goes, as if the fifty years were recoverable, as if past expenditure were an argument for future expenditure rather than a description of money already gone. Status quo bias handles logistics, ensuring that continuation is always the default requiring no vote, no memo, no courage, while termination demands a process so elaborate and so public that merely proposing it costs a dean political capital she may want later for something else. And loss aversion, the senior partner, makes sure that the one retired alumnus who will write an anguished letter to the trustees is more vivid in everyone’s imagination than the four hundred prospective students who chose a competitor last cycle for reasons no one will ever write a letter about. The letter writer exists. The four hundred are a statistical abstraction. Guess who wins.

A Digression Concerning Apple Trees, Which Earns Its Keep

In the orchard country of the Shenandoah Valley there are growers still tending blocks of apple varieties that the market abandoned decades ago. York Imperial. Stayman. Varieties with genuine histories, apples that once filled rail cars, that had their own packing labels, gorgeous lithographed things collectors now buy at estate sales. The trees still bloom every April. They still fruit. And every autumn some fraction of that fruit goes to the processor for pennies a pound or falls into the grass for the deer and the yellowjackets, because almost nobody walks into a store and asks for a York Imperial anymore, and the grower knows this, and has known it since roughly the Carter administration.

Ask an old grower why the block is still standing and you will hear the whole committee meeting compressed into a sentence or two. My grandfather planted those trees. They’re good trees. It’d be a shame.

It would be a shame. That’s the thing. The sentiment is entirely accurate and entirely beside the point, and the growers who survived understood the distinction. The ones still farming are the ones who got the grafting knife out, who topworked the old blocks over to Honeycrisp and Gala and whatever the market was actually buying, and who discovered a fact that the sentimental framing had hidden from them for years: the rootstock was never the problem. The roots were fine. The roots were excellent, fifty years deep, drought-proof, established in a way no new planting could match. What had to go was only the wood above the graft line, the part that determined what fruit the tree bore. Same roots. New fruit. The orchard survived precisely because the grower distinguished between what was actually the inheritance, the living root system, and what was merely the current expression of it.

Universities almost never make that distinction, and it costs them everything, so hold the graft line in mind. We’re coming back to it.

The Brand Equity Problem Nobody Prices

Here is the part of the case that finally moves trustees, in my experience, when the spreadsheet alone has failed for a decade. Dead programs don’t just lose money. They dilute.

A university’s brand equity, the thing that lets it charge its price and fill its class, is a claim about quality and relevance, and that claim is evaluated by outsiders who take the catalog at face value. A prospective family scrolling the majors list has no way of knowing which programs are thriving and which are institutional taxidermy. They see sixty-three majors and assume sixty-three functioning programs, and when the campus tour walks past the Something Once Central seminar room and the guide’s voice drops half a register, when the student journalist writes the annual piece asking why the department has more emeriti than majors, when the accreditor’s report uses the phrase “concerns regarding viability” in a document that is, let us remember, public, the damage lands on the whole institution. Weak programs are a solvent. They dissolve the credibility of the strong ones standing next to them, because the outside world reads the catalog as a portfolio and prices the portfolio as a blend.

The committee believes it is protecting the brand by preserving the program. The arithmetic runs the other way. Carrying visible dead weight tells the market that the institution either cannot see its own weakness or cannot act on it, and neither reading helps you at a college fair. Meanwhile the flagship programs, the ones with waitlists and outcomes worth bragging about, are starved of the very resources that would let them become the reputation. The endowment effect has the institution clutching its six-dollar mug while the deed to the house yellows in a drawer.

How to Get the Mug Out of Their Hands

You do not defeat the endowment effect with a sharper spreadsheet. Fifty years of behavioral research says the bias survives full information; the mug owners at Cornell knew exactly what the mug cost in the store. If you want the program sunsetted, you have to redesign the decision so the bias works for you or at least stops working against you, and there are a handful of moves that reliably do this.

Reverse the default. This is the single most powerful lever and almost nobody in higher education pulls it. Right now, continuation is automatic and closure requires an act of institutional violence. Flip it. Adopt a policy that every program below a defined enrollment floor for a defined number of years lapses automatically unless its advocates make an affirmative case for renewal. Suddenly loss aversion changes sides. The faculty must now argue for acquiring a renewal rather than defend against a loss, and status quo bias, which has spent decades protecting the corpse, begins protecting the sunset clause instead. Same people, same data, opposite gravity.

Ask the zero-based question and make everyone answer it aloud. Knowing what we know today, if this program did not exist, would we vote to create it, at this cost, for this enrollment? The question works because it strips away possession. It forces the room to evaluate the program as a buyer rather than a seller, and the Cornell experiment tells you precisely how large that gap is. In my experience the room goes quiet in a way that a deficit figure never manages, because everyone already knows the answer and has been organizing the agenda for years specifically to avoid saying it.

Separate the people from the program before the meeting, never during. Much of the resistance in the oatmeal room is really fear wearing the costume of principle. The professors defending the program are defending their livelihoods, reasonably, and as long as closure means their unemployment they will fight with the strength of the cornered, and they will win, because they care more than anyone else in the building. So take the threat off the table first. Guarantee the lines. Redeploy the faculty into the gen-ed curriculum, into the honors college, into the new program the closure funds. Announce the teach-out plan for current majors down to the semester. Then hold the vote. You will be astonished how much intellectual flexibility appears once the mortgage is safe.

Give the thing a funeral. This sounds soft and is anything but. Institutions, like families, cannot release what they have not honored, and a program terminated by a Friday-afternoon memo becomes a martyr, a grievance with a fiftieth-anniversary reunion. A program retired with a symposium, an oral history, a named lecture fund carrying the founding professor’s name forward, becomes heritage. The distinction between a martyr and an ancestor is entirely a matter of ceremony, and ceremony is cheap. Budget for it.

And return, finally, to the graft line, because the orchard was the whole argument in miniature. The genuine endowment of the Something Once Central program was never the major itself, the specific credential with its specific requirements printed in the catalog. The endowment was the roots: the faculty’s expertise, the endowed lecture fund, the alumni loyalty, the habits of close reading or quantitative rigor or whatever the discipline actually taught. All of that survives topworking. The medieval studies department becomes the digital humanities program and keeps every manuscript scholar it had. The geography department becomes GIS and analytics and discovers it is suddenly the most employable unit on campus. The wood above the graft changes. The roots, fifty years deep, feed the new fruit. The institutions that grasp this stop experiencing sunset as amputation and start experiencing it as horticulture, and the ones that don’t keep hauling York Imperials to the processor and calling it tradition.

The Market Clears Eventually

The melancholy footnote to the Cornell experiment is that the mismatch never resolved on its own. The sellers kept asking seven, the buyers kept offering three, and the mugs simply stayed put, allocated by luck rather than value, forever, or at least until the class period ended and everyone went home.

Universities do not get to go home. The class period ends anyway. Demographic cliffs do not attend committee meetings, and the enrollment market clears whether or not the faculty senate participates, and the clearing takes the form of the mergers and closures now arriving at the rate of a couple per month, each one a campus that held its mug to the end. The endowment effect is a bias about mugs and money. Left unmanaged in a conference room with oatmeal carpet, it turns out to be a bias about survival. Get the grafting knife. The roots are still good.