Back in 1990, a group of Cornell economists handed out coffee mugs to half the students in a classroom. The mugs bore the university seal and retailed for about six bucks in the campus store. The other half of the room got nothing. Then, the economists opened a market, asking sellers to name their price and buyers to name theirs. According to standard theory, the mugs should have flowed to whoever valued them most. Since the distribution was random, roughly half the inventory should have traded hands.
Almost none did. The newly minted mug owners demanded an average of seven dollars to part with their windfall. The empty-handed students wouldn’t pay more than three. Same mug. Same room. Same twenty minutes of ownership. Just possessing the thing had doubled its perceived value, and the market seized up.
Richard Thaler dubbed this the endowment effect, a concept that eventually earned him a Nobel Prize. But if you want to see it operate at an industrial scale—costing vastly more than a few ceramic cups—skip the behavioral lab. Just sit in on a program review committee meeting at a small, tuition-dependent university. Find a Thursday afternoon, a conference room with oatmeal-colored carpet, and watch seven tenured faculty and two deans decide, for the ninth consecutive year, to preserve a major that just graduated four students.
Bring a mug. You’ll fit right in.
The Program in Question
Every campus has one of these, if not several. Let’s sketch a composite; you can fill in your local details. We’ll call it the B.A. in Something Once Central. Founded in 1967, when the institution was flush and the discipline ascendant, its founding professor—now an oil portrait in the library—was a figure of genuine consequence. In its heyday, the program boasted ninety majors. It still has a dedicated seminar room, a modest endowed lecture fund, a shelf of festschrifts, and an annual banquet where the same eleven people raise the same three toasts.
Today, it graduates four students a year. Occasionally five. One memorable spring, it was two—and one was a double major who earned most of her credits in another building. Keeping this curriculum on life support requires two and a half full-time faculty lines. These professors could be teaching the overflowing gen-ed sections that actually keep the university’s lights on. Instead, they lead a senior seminar for three students, functioning less as a class than a wildly expensive book club.
Run the math that nobody in the oatmeal room wants to acknowledge: the program hemorrhages several hundred thousand dollars annually. The money seeps out of the institution like water through a cracked foundation—invisibly, continuously, and always categorized as someone else’s line item. The bursting, waitlisted nursing program upstairs, which turns away qualified applicants because it lacks faculty lines, is footing the bill. The prospective students who walked away because the university couldn’t afford to launch a data science major are paying for it. The cost is just routed through enough intermediaries that no one actually watches the cash leave the drawer.
Yet every year, the committee convenes. Every year, the program survives. Ask the group why, and they will offer plausible, humane reasons. But strip away the rhetoric, and nearly all of them amount to a seven-dollar mug wearing tweed.
What the Mug Is Actually Doing
Behavioral economists usually explain the endowment effect through loss aversion—Kahneman and Tversky’s revelation that losing something hurts roughly twice as much as gaining the equivalent item feels good. Give up the mug, you feel the loss; acquire it, you feel the gain. The ledger should balance, but the human nervous system is a crooked bookkeeper. The prospect of losing what you hold eclipses the prospect of gaining what you lack.
Translate this to higher ed. Axing a legacy program feels, viscerally, like losing six figures’ worth of institutional identity and history. Launching a replacement feels like a speculative, unproven, and faintly vulgar gamble. It was never a fair fight. The comparison was rigged the moment the legacy program acquired the one trait guaranteed to inflate any asset’s perceived value beyond reason: existence. The program matters because we have it. We have it, therefore it is who we are. And you don’t cut who you are—you only betray it.
Pay attention to that shift, because it hijacks every one of these meetings. The agenda poses an economic question. The room answers an existential one. A provost asks if the university can afford two and a half lines for four graduates; the faculty hears a debate over whether the university remains the idealistic place they joined thirty years ago. Naturally, the discussion derails. They aren’t attending the same meeting.
Accomplices are always present. Sunk cost arrives early: We’ve invested fifty years in this program, the logic goes, treating past expenditure as a mandate for future spending rather than money already burned. Status quo bias handles the logistics, ensuring that keeping the program is the default—requiring no vote, no memo, no political courage. Terminating it, meanwhile, demands a process so public and grueling that a dean might hesitate to spend the necessary political capital. Finally, loss aversion guarantees that the single retired alumnus who might write an anguished letter to the trustees looms larger than the four hundred prospective students who silently chose a competitor last cycle. The letter writer is real. The four hundred are a statistical abstraction. We all know who wins.
A Digression Concerning Apple Trees
Out in the orchard country of the Shenandoah Valley, some growers still tend blocks of apple varieties the market abandoned decades ago. York Imperial. Stayman. These are apples with real history, varieties that once filled rail cars and boasted gorgeous, lithographed packing labels that collectors now hunt down at estate sales. The trees still bloom every April. They still bear fruit. And every fall, some fraction of that harvest goes to the processor for pennies a pound, or simply rots in the grass for the deer and yellowjackets. Almost nobody walks into a grocery store looking for a York Imperial anymore. The growers know this, and have known it since the Carter administration.
Ask an old orchardist why the block is still standing, and you’ll get the program review meeting condensed into two sentences: My grandfather planted those trees. They’re good trees; it’d be a shame.
It would be a shame. The sentiment is perfectly accurate and entirely beside the point. The growers who actually survived the shifting market understood this distinction. The ones still farming are the ones who took out the grafting knife. They topworked the old blocks over to Honeycrisp, Gala, or whatever consumers were actually buying. In doing so, they discovered a truth the sentimental framing obscured: the rootstock was never the problem.
The roots were excellent—fifty years deep, drought-proof, established in a way no new planting could rival. What had to go was only the wood above the graft line, the part determining the fruit. Same roots, new fruit. The orchard survived because the grower separated the true inheritance (the living root system) from its current expression.
Universities almost never make this distinction, and it costs them dearly. Hold the graft line in mind. We’re coming back to it.
The Brand Equity Problem Nobody Prices
Here is the argument that finally moves trustees when a decade of spreadsheets hasn’t: Dead programs don’t just lose money. They dilute the brand.
A university’s brand equity—the leverage that allows it to charge tuition and fill a class—is essentially a claim about quality and relevance. Outsiders evaluate that claim by taking the catalog at face value. A prospective family scrolling the list of majors doesn’t know which programs are thriving and which are institutional taxidermy. They see sixty-three majors and assume sixty-three functional departments. When the campus tour walks past the Something Once Central seminar room and the guide’s voice drops half an octave, or when the student newspaper runs its annual piece asking why the department has more emeriti than students, the damage spreads. When an accreditor publicly notes “concerns regarding viability,” the whole institution takes a hit. Weak programs act as a solvent. They dissolve the credibility of the strong ones standing adjacent, because the market prices the portfolio as a blend.
The committee thinks preserving the program protects the brand. The math runs the opposite way. Hauling visible dead weight signals that the institution either cannot see its own decay or lacks the competence to address it. Neither interpretation plays well at a college fair. Meanwhile, the flagship programs—the ones with waitlists and stellar outcomes—starve for the resources that could elevate the university’s reputation. Thanks to the endowment effect, the institution clings to its six-dollar mug while the deed to the house yellows in a drawer.
How to Get the Mug Out of Their Hands
You can’t defeat the endowment effect with a sharper spreadsheet. Fifty years of behavioral research confirms that this bias survives full information; the Cornell students knew exactly what the mugs cost. To sunset a program, you have to redesign the decision architecture so the bias works for you—or at least stops fighting you. A few moves reliably accomplish this.
Reverse the default. It’s the most powerful lever available, yet higher ed rarely touches it. Currently, continuation is automatic; closure requires an act of institutional violence. Flip the script. Mandate that any program falling below a specific enrollment floor for a set number of years lapses automatically, unless its advocates make an affirmative case for renewal. Suddenly, loss aversion switches sides. Faculty must argue to acquire a renewal rather than defend against a loss. Status quo bias, which spent decades guarding the corpse, now protects the sunset clause. Same people, same data, inverted gravity.
Ask the zero-based question aloud. Knowing what we know today, if this program did not exist, would we vote to create it, at this cost, for this enrollment? This strips away the illusion of possession, forcing the room to evaluate the major as a buyer rather than a seller. The Cornell experiment proves how massive that psychological gap is. In practice, this question quiets a room faster than any deficit figure, because everyone already knows the answer and has spent years structuring the agenda to avoid saying it.
Separate the people from the program before the meeting starts. Much of the resistance in the oatmeal room is just fear masquerading as principle. Professors defending the major are defending their livelihoods. If closure equals unemployment, they will fight with the strength of the cornered, and they will win. So, take the threat off the table. Guarantee the lines. Redeploy the faculty into the gen-ed curriculum, the honors college, or the new initiative the closure will fund. Announce a precise teach-out plan for current majors. Then, hold the vote. You will be astounded by the intellectual flexibility that emerges once the mortgage is safe.
Give the thing a funeral. It sounds soft, but it isn’t. Institutions, like families, can’t release what they haven’t honored. Terminate a program with a Friday-afternoon memo, and you create a martyr—a grievance that will spawn a fiftieth-anniversary reunion. Retire it with a symposium, an oral history, and a named lecture fund, and it becomes heritage. The line between a martyr and an ancestor is purely ceremonial, and ceremony is cheap. Budget for it.
And remember the graft line, because the orchard is the whole argument in miniature. The genuine endowment of the Something Once Central program was never the specific credential printed in the catalog. It was the roots: the faculty’s expertise, the alumni loyalty, the ingrained habits of close reading or quantitative rigor. All of that survives topworking. The medieval studies department morphs into a digital humanities program, retaining every manuscript scholar. The geography department pivots to GIS and analytics, suddenly becoming the most employable unit on campus. The wood above the graft changes, but the roots—fifty years deep—feed the new fruit. Institutions that grasp this stop viewing sunsets as amputations and start treating them as horticulture. The ones that don’t just 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 organically. The sellers held out for seven, the buyers wouldn’t top three, and the mugs stayed put. They remained allocated by luck rather than value—at least until the period ended and everyone went home.
Universities don’t get to just go home, but the class period ends regardless. Demographic cliffs don’t attend committee meetings. The enrollment market clears whether the faculty senate participates or not. That clearing takes the form of the mergers and closures currently arriving at a clip of a couple per month—each one a campus that clutched its mug to the bitter end. Left unchecked in a conference room with oatmeal carpet, a quirky behavioral bias about coffee mugs reveals itself as a bias about survival. Grab the grafting knife. The roots are still good.
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