The British origins of the US endowment model
David Chambers, Elroy Dimson 20 October 2014
Yale University has generated annual returns of 13.9% over the last 20 years on its endowment – well in excess of the 9.2% average return on US university endowments. Keynes’ writings were a considerable influence on the investment philosophy of David Swensen, Yale’s CIO. This column traces how Keynes’ experiences managing his Cambridge college endowment influenced his ideas, and sheds light on how some of the lessons he learnt are still relevant to endowments and foundations today.
In recent years much attention has been given to the so-called ‘Yale model’, an approach to investing practised by the Yale University Investments Office in managing its $24 billion endowment. The core of this model is an emphasis on diversification and on active management of equity-orientated, illiquid assets (Yale 2014). Yale has generated returns of 13.9% per annum over the last 20 years – well in excess of the 9.2% average return on US college and university endowments. Other leading US university endowments have followed this model (Lerner et al. 2008).
investment, endowments, university endowments, college endowments, Universities, Keynes, asset management, diversification, Great Depression, Great Recession, buy-and-hold, equity investing, portfolio management, Yale, Cambridge
Assessing Italian research quality: A comparison between bibliometric evaluation and informed peer review
Graziella Bertocchi, Alfonso Gambardella, Tullio Jappelli, Carmela A. Nappi, Franco Peracchi 28 July 2014
Assessing the quality of academic research is important – particularly in countries where universities receive most of their funding from the government. This column presents evidence from an Italian research assessment exercise. Bibliometric analysis – based on the journal in which a paper was published and its number of citations – produced very similar evaluations of research quality to informed peer review. Since bibliometric analysis is less costly, it can be used to monitor research on a more continuous basis and to predict the outcome of future peer-reviewed assessments.
Measuring research quality is a topic of growing interest to universities and research institutions. It has become a central issue in relation to the efficient allocation of public resources, which – in many countries and especially in Europe – represent the main component of university funding. Many countries – Australia, France, Italy, the Netherlands, Scandinavian countries, and the UK – have introduced national assessment exercises to gauge the quality of university research.
Frontiers of economic research
Universities, research, citations, science, academia, research quality, peer review, research assessments, bibliometrics
US university science: The shopping mall model
Paula Stephan 20 March 2014
US universities resemble high-end shopping malls. They use nice buildings and good reputations to attract good students and good faculty. To pay for this, external funding – once viewed as a luxury – is a necessary condition for tenure and promotion. This column argues that this model emerged at the initiative of universities not the federal government. Today’s stress is the harvest of what universities and faculty sowed in the 1950s and the 1960s.
Universities have relied heavily on federal funds for research for many years. Yet, since 2005, federal funds have been flat in real terms, with the exception of funds received through the American Recovery and Reinvestment Act (ARRA). More importantly, the hope for a substantial increase in federal funds is dim.
Education Productivity and Innovation
R&D, Universities, external funding
Do we need highly cited departmental chairs?
Amanda Goodall, John McDowell, Larry Singell 31 January 2014
Much of human knowledge is produced in the world’s university departments, yet little is known about how these hundreds of thousands of departments are best organised and led. This column explores the association between the personal research output of a department head and the department’s subsequent performance. Results suggest that if a department wants to improve its reputation in the world, then the chair should be a highly cited researcher.
The advancement of scientific knowledge is the primary responsibility of approximately 300,000 academic departments housed in more than 20,000 universities worldwide, yet little is known about the factors that determine the productivity of those departments. chairs – or ‘Heads of Department’ – play a central role in the academic departments that make up universities. They manage daily operations, hire faculty and professional staff, and work closely with senior university administrators, most of whom were themselves once departmental heads.
Universities, Management, higher education, academia
Herding cats? Management and university performance
John McCormack, Carol Propper, Sarah Smith 07 November 2013
The conventional wisdom is that managing academics is futile. This column challenges this view by comparing management performance in UK universities with measures of research and teaching quality. Universities with better management have better performance. This holds for all types of universities, and the results are not driven by differences in resources. Recruitment, retention, and promotion are the most important aspects of management in universities, but management at the level of academic departments – not human resources departments – is what matters.
The common view holds that managing academics is like herding cats – difficult and ultimately pointless. But this view of management contrasts with growing evidence that good management practices are like a good technology – they increase productivity (Bloom and Van Reenen 2010). Further, this finding holds for organisations in the public sector as well as in the private sector, and in many different countries across the world (Bloom et al. 2012).
Education Labour markets
Universities, Management, higher education, academia, human resources
It’s not what you know, but who you know: The role of connections in academic promotions
Manuel F. Bagues, Natalia Zinovyeva 16 September 2012
To reduce favouritism in university promotions, Spain recently introduced a centralised system with random assignment of evaluators. This column presents evidence from a unique data set showing that favouritism still matters. Prior connections between candidates and evaluators have a dramatic impact on promotion. The net result is that outcomes are more random and candidates with many connections and from large universities benefit the most.
European countries are increasingly concerned with the efficiency of their universities. An issue that has been discussed repeatedly is the lack of meritocracy in recruiting and hiring processes (Perotti 2002, Combes et al. 2008, Durante et al. 2011). In an attempt to improve the system, several European countries have reformed the organisation of universities during the last decade (Aghion et al. 2010). In this respect, Spain offers an insightful case.
Universities, Spain, promotions
The gender of American academic leaders matters
Ronald G. Ehrenberg 25 January 2010
Will having more women on the board of trustees at academic institutions increase the number of women in the faculty? This column presents evidence suggesting that if a board is one-quarter women, it reaches the critical mass needed to hasten gender diversity.
Over the last 30 years, the percentage of women receiving PhDs from American universities has increased from around 25% to 45%.
Universities, gender, leaders
Why it matters who leads research universities
Amanda Goodall 02 January 2010
The best US universities outperform their European counterparts. This column says part of the gap is due to how universities choose leaders. Outstanding scholars are more likely to be selected as presidents in the top US universities, a move that is associated with improved research performance.
It is well known that the top European research universities underperform compared to their American counterparts. The evidence is summarised with policy recommendations by van der Ploeg and Veugelers (2008a,b). The authors raise the need for improved governance, in particular that governments should give universities greater autonomy to manage their own affairs. Leadership is an important part of governance, and again Europe lags.
Universities, research, leadership
Is Europe lagging behind the US in university technology licensing?
Annamaria Conti , Patrick Gaulé 30 July 2009
European universities produce high-quality scientific research, but they licence it to industry far less than US universities. This column introduces new survey evidence on university licensing and assesses the gap between the US and Europe. It highlights European universities’ shortcomings in generating technology transfer revenue, despite their desire to do so.
In an increasingly knowledge-based economy, it is widely believed that the quality of university-industry linkages is important for growth. On several occasions, the European Commission has argued that while European research institutions are good at producing academic research outputs, they are not successful in transferring these outputs to the economy – the so called ‘European Paradox’ (European Commission 2007). Reforms in the organisation of technology transfer are thus needed to improve knowledge transfer from public research institutions to firms.
Education Productivity and Innovation
Universities, research, technology