Political Battles Over Funding CUNY

by Vince Boudreau, Dean, Colin Powell School

I’ve recently discussed the changing pattern of funding for public higher education and the pressures that those shifts have imposed upon tuition-paying students. Despite arguments about tight state budgets and financial crises, that shift is mainly underpinned by a real change in the way public officials view higher education and about who should be responsible for its cost. As I sat to write the next chapter in this series, that dynamic became all the more clear in my mind as we—administrators and higher education professionals—consider Governor Cuomo’s recently announced budget proposal.

In the past decade, crippling financial crises have moved states across the country away from past robust support for public higher education. But these periodic crises merely punctuate the steady decline in state funding for public education over the last 25 years. New York State’s current cuts to CUNY and SUNY are taking place despite a billion-dollar surplus in the past year, contributing to an undesignated reserve fund estimated to reach 2.1 billion dollars by March 2016. Suddenly, most of the funding cuts seem to result from a choice rather than a tough decision driven by financial hardship.

The policy details underpinning that choice recently became more clear: In his recent budget declarations, Governor Cuomo is calling for 30 percent of current state funding to be passed on to New York City, reflecting the 30 percent of the CUNY board members appointed by the city. There’s a kind of logic to that explanation, but it’s not robust: It suggests that the state should allocate funds in proportion to its power to control (even indirectly) the disposition of those funds. The proposal contains a number of truly welcome provisions, such as monies to cover the cost of a new contract and to cover increased expenses due to inflation (both absent from last year’s budget). Both provisions, however, are contingent on the City assuming 30 percent of the public-funding burden.

The contours of the friction between Mayor De Blasio and Governor Cuomo are fairly well known, dating back to their tussles over early childhood education. But the standoff is not, in fact, unique. In the past weeks, The Chronicle of Higher Education reported Illinois State’s defunding the University of Illinois systembecause of a similar dispute among state level officials.

The fact is that, in this season of rising populism, it has become much easier for politicians to regard public higher education as a luxury enjoyed by a relatively small share of the voting public at the expense of the broader society. Across the country, the idea that education is an individual benefit that people should pay for individually (either at private schools or via increasingly expensive public universities) has displaced the idea of an educated, prosperous society and a capable workforce as a public good that we all share. Even where elected officials do not openly deride higher education as a luxury, they increasingly approach it in ways that allow the health of our great universities to take a back seat to political considerations—and that leads us back to the tug of war between New York State and the City of New York.

It’s worth considering what the Governor must be thinking as he makes these recommendations. Presiding over a New York that is sharply divided between the conservative and often economically depressed upstate districts and a politically different, more prosperous downstate New York Metropolitan area, the governor is asked to support two university systems, one largely serving the former and the other totally located in the latter. Why should he ask upstate voters to support CUNY when they have their own SUNY campuses, championed by local politicians, in their own areas? Moreover, a democratic governor has fewer incentives to bring a New York City system under his wing—the largely democratic constituents of the city can be counted to support his candidacy far more than the more mixed upstate constituencies. Why not stand with those upstate, and demand that New York City take care of its own?

Over the long term, the idea merits consideration. The financial formula that has sustained CUNY since the late 1970s was occasioned by the crisis of the city at that time, and while state-level funding kept CUNY in business ever since, the university also remained in more or less constant crisis, repeatedly called upon to justify its very existence to a statewide legislature that often verged on indifference. At minimum, moving CUNY to a more New York City-based funding structure would ensure that politicians who are directly responsible to our communities would be allocating the resources necessary to educate them. And if the funding battles are becoming more political than matters of financial necessity, closing the geographic and political space between those who attend our colleges and those who fund them makes sense.

However, acting to implement this change in funding will require discussion and planning, and should not be a matter to be introduced in the brief period between a budget’s proposal and its adoption. Any concern for the health of our public education system demands careful consideration and the time to approach the change without impacting the quality of education on CUNY campuses, or its accessibility to our students. In the current political moment, any consideration of a graceful or measured transition in CUNY’s funding structure has taken a backseat to politics. But the best politics in this case would eschew the brinksmanship of a man-made budget crisis that casts the university in the role of Solomon’s baby. We have three months to make that case before the current proposals—or revised versions of them—find their way into the new budget.

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Have you seen A New Light in Harlem?

Our original upload to YouTube got over 600 views in just a matter of days! We had to do a *tiny* bit of clean-up, so we uploaded a new version (click below).

The film features interviews with General Colin Powell, Dean Vince Boudreau, and faculty, students, alumni, and board members, spotlighting the amazing community we have up here on the City College campus.

Do you know a young person who wants to be a leader in public service? Get access to world-class preparatory coursework and field experience without amassing piles of debt?

Are you a scholar, educator, or community organizer looking to break down walls between the Academy and the surrounding community? Who knows that in order to find better answers to pressing questions of the 21st century, we need to hear more voices?

Watch and learn more about the mission of the Colin Powell School—”A New Light in Harlem.”

 

Meet Usha Pitts, Diplomat-in-Residence

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For just over a decade, the City College of New York has held a privileged position among New York-area universities by hosting the Diplomat in Residence (DIR). Sponsored by the Department of State, the DIR spends two years on campus imparting their specific knowledge and experience as foreign service officers to students interested in foreign or civil service jobs, as well as various fellowships and internships through the State Department.

In addition to meeting with students for one-on-one advising and hosting informational sessions in the NY region (CT, NY, NJ, PA), the DIR also teaches a masters level class on foreign diplomacy exclusively through the Colin Powell School’s International Relations program.

Meet Usha Pitts, our incoming DIR. Here she introduces herself to the CCNY community, talks a bit about her foreign service career, and her new role as Diplomat in Residence. Connect with her on Facebook to get updates on scholarship applications, appointment hours, and events in your area.

You’ve lived in many countries in your adult life; where are you from originally?

I grew up in Acton, a middle class town outside of Boston. Even though it was the suburbs, we had enough land to raise chickens and goats. I also had a bunch of parakeets. My parents were an interracial couple, which was unusual in the 1970s, and especially for a town that was 98% white. I never felt uncomfortable in my home town, but I did start traveling at a young age and left high school early; I needed a bigger playground.

How did you come to work in the Foreign Service? Can you talk about your path to becoming the New York Metro Diplomat in Residence at City College?

Even though I look African American, I was named after my Mom’s friend, an Indian woman. I had never met “the real Usha,” so when I was 11, I traveled alone to India to meet her. That was a big trip for a sheltered girl from America’s suburbs: I saw street kids, polio victims with shriveled legs, beggars… I also caught some kind of tropical virus and was sicker (and closer to death) than I have ever been in my life. Well, when you’re 11, experiences like that can be more exciting than scary.

A few years later, when I was 16, I spent the summer building latrines in rural Mexico. And from there, I was hooked. I never stopped traveling. I took the Foreign Service Exam when I was 22, but didn’t pass, so I just kept traveling, working and studying until I eventually got in.

By then I was 28. In fact, most Foreign Service Officers are in their late 20s or early 30s when they join. The age requirement is only 18 years old, but most people need to get some life experience under their belt first. That’s why I always recommend that people join the Peace Corps or spend a few years in a professional career before joining the Foreign Service.

Where has your career with the Foreign Service taken you?

I’ve been a Foreign Service Officer for nearly 18 years, posted to Panama, Russia, Cuba, Italy, Austria, and most recently Brazil. I’ve had a different job in each country, from reporting on human rights abuses to promoting English education to helping Americans get visas for their adopted babies. The Foreign Service is a great career for people with short attention spans, because you change countries (and jobs) every couple of years. On top of it, you have to bumble your way through yet another foreign language.  You are constantly learning, always adjusting–and so is your family.

How do you approach your role as Diplomat in Residence? What most excites you about this role? What priorities are you setting for your time here?

In the past, the Foreign Service was a bastion for privileged, educated, east-coast men.  Even when women started joining the Foreign Service in greater numbers in the 1970s, they still had to resign their jobs if they got married. Things have changed, but we can do more to diversify our ranks.

These days, the State Department has 16 Diplomats in Residence scattered around the country. We work hard to reach people who wouldn’t necessarily consider joining the Foreign Service–Native Americans from the Midwest, Latinos growing up in Miami, Chinese-Americans from the West Coast, first-generation children of immigrants–people who didn’t necessarily grow up with a silver spoon in their mouths. We recognize that a good diplomatic corps has to represent the United States, and we can’t do that if we don’t reflect the diversity that makes our country great.

I cover New York, New Jersey, Connecticut and Pennsylvania, but I rarely have to leave Manhattan–or even City College–to find the kinds of people we want to attract to the Foreign Service. After so many years abroad in weird situations, I feel very privileged to be here in New York with City College as my new home.

Partly in appreciation of City College, I would like to see one of our seniors or alumni get accepted to the Rangel Fellowship program this year. This fellowship offers $90k for graduate school, plus a five-year stint in the Foreign Service. The application deadline is February 3, so anybody interested in this fellowship should come see me!

What can students gain from working in the Foreign Service? 

There is the very obvious benefit, in that you get paid to see the world. (That’s why I wanted the job.) You also get free housing, good schools for your kids, and a pretty lavish lifestyle, given that an American salary goes a long way when you’re living abroad. As I got older, I also came to better appreciate the intangible benefits–serving my country, promoting American values, bringing attention to important global or local issues, and spending time with interesting and even courageous people. Few careers can offer that kind of fulfillment.

New Investments for a ‘Changing Financial Landscape’

Vince Boudreau, Dean

 

 

 

 

 

 

 

 

 

 

by Vince Boudreau, Dean, Colin Powell School for Civic and Global Leadership

This summer, the Pew Charitable Trusts published a report that got my attention. The report, Federal and State Funding of Higher Education: A Changing Landscape, broke down the numbers and found that as state funding continues to dwindle, federal support has increased. This is a crucial shift in the financing model for public education, with tremendous implications for the Colin Powell School, its students, and the future of public education.

While state contributions typically show up as support for specific institutions, federal dollars generally arrive as grants, loans, and tax relief to individual students. Historically, state aid to institutions accounted for the lion’s share of public funding to colleges like The City College of New York. But in recent years, shifts in funding profiles made state and federal contributions to education more equal. Hence, even as we bemoan the drop in state support for our campus—in the past five years, state funds fell from 48 percent of our operating budget to just about 30 percent as of this year— the hidden story has been that federal dollars have been rising at just about the same rate. On our books, they show up as tuition revenue rather than public support—but the amount of public monies devoted to higher education have remained more stable than an exclusive focus on state contributions suggest.

Understanding this new funding context means understanding that if we lose students—if we fail to help them navigate their way through the complex of admissions, registration, and financial aid—we are losing public tax support as it is currently and increasingly being allocated.

This shift in financing is an unwelcome one, but trend lines over the past 25 years are unambiguous: states are retreating from their support of public universities. We have always been concerned with student retention, because we’ve always been concerned about our students’ success. Going forward, we have also have financial reasons why we must address student retention, which should begin by clearly understanding the concerns of a typical Colin Powell School student.

Our students are likely to come from an underrepresented social or ethnic group. Many of our students belong to families living below the poverty line. Surveys have shown us that 80 percent of CCNY student respondents were born in a country outside of the United States (while less than 20 percent are here on student visas). Together, those figures suggest that huge sections of our student population are seeking to make a home for themselves in the United States. But it also suggests that many may be inexperienced and ill-equipped to navigate the administrative hurdles that one must clear to get state and federal grants, loans, and tax credit. Our student may be the first in her family to attend college—and perhaps, therefore, also the first to contemplate filling out a financial aid eligibility form. She probably works a substantial number of hours each week. She may also bear the responsibility of steering immigrant parents through governmental systems and societal norms. She may not have health insurance. She may not be documented. She may have come from a deeply distressed public school.

So our students may have tremendous potential, but there’s a good chance that they come to college deeply unsure of this new environment. Yet the shifts in public financing to higher education make it more important than ever before that they figure things out quickly. As tuition increasingly becomes the way that public colleges secure their budgets, students become increasingly burdened in their role as conduits for that support. The hypothetical formula makes initial sense: Colleges can stabilize their budget by charging higher tuition to students who are eligible for more financial aid. But those assumptions shift responsibility form the college’s relationship with the state to the student’s relationship with the federal education bureaucracy.

And here lies one of the dirty little secrets of public education, particularly in places committed to supporting the aspirations of underserved men and women: While we bemoan the corrosive impact of failing high schools, stressed neighborhoods, poverty, and social instability on educational outcomes, an unimaginably large number of students leave college, or limp to the finish line because they cannot figure out how to navigate the numerous bureaucracies they encounter. Before we lose the students with poor math skills, or an inability to write, we lose countless others who fail to solve some puzzle with its roots in the administrative bureaucracy.

Take, for example, a scenario that is as common as it is frustrating. Over the last few years, restrictions on financial aid have grown increasingly complicated, and computer audits of student courses more unforgivingly sift courses that are deemed necessary from those that do not. Students navigating major and general education requirements need to be more focused on taking required courses, or they risk losing financial aid—typically in the year or month before they graduate. In consequence, some never do.

And then there is the issue of simply having enough qualified people to give the face-time and support that students need. As institutional funding for colleges falls, the easiest and earliest cuts often take place in these service offices, leaving them staffed with fewer—and less experienced— professionals. This leaves us less able to respond to this new context, where institutional solvency is dependent on student retention. Registration, admission, bursar, and financial aid offices need to be regarded as the frontlines in our effort to retain students. Where these offices have eroded, we must shore them up.

All of these factors combine into a complex of new barriers to student educational success, producing a deeply altered tone surrounding public education. Our public universities are, more than ever, cash-strapped and struggling. But they are also, as never before, asking students (rather than legislators, educators, and administrators) to be the problem-solvers, bringing revenue onto campus and helping balance the books. That reverses generations of good education policy and an established sense of who should be looking after whom.

Get Your Guns: The Negative Network Effect

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by Matthew Nagler, Associate Professor, Department of Economics and Business, Colin Powell School

In the wake of the tragic mass shootings on a college campus in Roseburg, Oregon, President Obama and others have called for stricter gun control laws. Yet others, including many close to where the shootings took place, are saying increasingly that they feel they need to own a gun. (See, for example, the recent front page story in The New York Times, “Common Response After Killings in Oregon: ‘I Want to Have a Gun’.”) The dramatic tension between President Obama’s gun control advocacy and others’ calls for greater access to guns relates to a phenomenon I identified in a 2011 article in the Journal of Industrial Economics entitled, “Negative Externalities, Competition, and Consumer Choice.” I called the phenomenon “negative network effects.”

A network effect exists when an individual’s demand for a product increases with the number of people who currently use the product. Social networks, for example, are successful because so many people are on them. As more people join, the desire of others to be on that same platform increases. Network effects can cause a “bandwagon” to occur—the more people join, the more people want to join. They can also cause the reverse to happen: When some people reject a product for which use by others is critical, others find the product less valuable and they too may reject it. Because of bandwagons, demand for a network good can often be prone to tipping points, at which a critical moment is suddenly reached where the product becomes literally irresistible (or else—just as suddenly—eminently disposable).

A lot has been written about network effects by economists and other social scientists, but most of the writing is about what I refer to as “positive network effects”: situations where a person’s adopting a product increases the perceived benefit to others of using the product. In my article, I discovered the “evil twin” of this phenomenon, in which a person’s adopting a product increases the perceived cost or risk of not using the product: a negative network effect. I identified several examples in my article, but perhaps the most archetypal is SUVs. In “The Strategic Significance of Negative Externalities,” published in the journal Managerial and Decision Economics, I used data to estimate the negative network effect in the SUV market. That is, I measured the rate at which the increased uptake of SUVs caused other people to feel they needed one, too—in this case the desire is related directly to the perceived risk of colliding with someone else’s SUV.

Just like a positive network effect, a negative network effect can eventually result in a bandwagon. And this is exactly what is now being observed in Oregon: the more people have guns, the more other people perceive they are at increased risk if they don’t have a gun. Their reaction is not necessarily driven by actual numbers of people owning guns. Just the mere perception of the ubiquity of guns, fostered by how often shocking stories about gun violence appear in the news, can create the negative network effect. True or not, it was the perception of the Oregonians interviewed in the New York Times article that they would be safer, given how many guns they believe are out there and their increased perception of risk, if they themselves got a gun.

My research on this phenomenon suggests a clear role of public policy: when a bandwagon effect is imminent, we risk reaching a tipping point in which rapid uptake of the bandwagon product—in this case, guns—could occur. What government can do is apply a “nudge.” If it can increase the disincentive to own a gun, interest in gun acquisition might be suppressed just enough to prevent the tipping point from being reached. We might even tip toward a safer, alternate reality in which a lot fewer people have guns—and in which those who do own them hold them for reasons other than the fear of other gun owners.

Dr. Matthew G. Nagler is an Associate Professor in the Department of Economics and Business at the City College of New York. He also holds an affiliate appointment with the Graduate Center at the City University of New York. He has held positions as an antitrust consultant, a marketing professional, and a staff economist at the Federal Communications Commission. Dr. Nagler is the author of numerous refereed journal articles relating to applied microeconomics, industrial organization, behavioral economics, and social economics. He received his Bachelors Degree in Economics from Cornell University and his Ph.D. in Economics from the University of California at Berkeley.

The Public University: Seeing the Whole Picture

Vince Boudreau, Dean

 

 

 

 

 

 

 

 

 

 

 

by Vince Boudreau, Dean, Colin Powell School for Civic and Global Leadership

What does it mean to be a public university? For decades, there were two distinct definitions—so bound together that when they became estranged, nobody seemed at first to notice.

On the one hand, public education referred to a finance model in which citizens and government officials pledged support for those working in its schools, and so allocated money from public coffers for that purpose. Students in public universities could expect to pay less for their tuition, and people living in states and cities anticipated supporting that education through their tax expenditures.

A second meaning evoked broader and more soaring ambitions and, for generations, the American public understood that the university system was the greatest of equalizers. Universities helped construct just and prosperous societies; they shored up the foundations of democracy; they contributed insight that helped us resolve some of our most pressing social issues. These universities existed at the intersection of our collective need to be smarter, and our egalitarian inclination to seek progress in the aggregate, to rise or fall as one people. Everyone, in this view, had a stake in the vitality of public universities.

But this collective understanding didn’t hold. In discussions about the role of public education, there was soon confusion—not with what public education was for, but with who it was for.

People began approaching public education with suspicion. Misplaced concerns about undeserved individual entitlement began to shoulder aside our original aspirations. We began to equate support for public education as essentially the transfer of resources with individual students—beneficiaries of largess—and began speculating on who among them, as individuals or categories, deserved that support. This is an impoverished and narrowly calculating formula that no longer allows for a deeper sense of social purpose. In essence, places like City College were forced to revisit our most important founding discussion, first broached in 1847: Was a university education for the elite only, or for everyone?

We founded the Colin Powell School after a decade of building out scholarship and fellowship programs that recognized the great potential and outstanding achievements of some of our very best students. As we did so, we hoped both to provide for them in extraordinary ways what others receive as a matter of course, and to suggest the potential of so many outside of these programs. It was good work. But we moved from programming that centered on a collection of leadership programs to a school serving over 2,600 students because those opportunities should not have been extraordinary—but rather the routine provision of a public education institution that functioned as it was originally intended. Building out this capacity is the current and great task of our school.

We must reframe discussions on the costs of the public university. A crucial starting point is that any conception of public that separates beneficiaries from the social whole is inadequate. Cutting financial support for public institutions results in higher social costs of living in a place where opportunities are hoarded and prospects for advancement seem dim and distant. We measure those costs in violence, in hopelessness, in sickness and insecurity. We measure them in the widening spaces between those who are privileged and those who are not—in de facto economic re-segregation, in under-employment, in achievement gaps and school-to-prison pipelines. We measure them, as well, in the horrible certainty that vast stores of talent, generation upon generation, lie wasted.

We are, in fact, in the middle of a great crisis in our ability to think of ourselves as a whole people, and to plan for the prosperity of that whole. Over the past decades, the decay of the middle class has not happened in isolation—it has taken place in direct relationship to the decay of visionary institutions set up to create and nurture the middle class.

As state budgets around the nation are cut, often the first thing that is affected are our schools. The way forward cannot be assembled from so-called merit-based programs, designed to reward individuals over ostensibly less talented or deserving peers. Opportunity should not be a prize or an award, but a basic provision of our systems and institutions.

In blog posts to come, I’ll be exploring the way this mission plays out at the Colin Powell School for Civic and Global Leadership, building on this discussion of why we should care about public education in the first place. We’ll look at what happens within the walls of our school, how and when students begin to make sense of the college setting, and the myriad ways in which they sometimes don’t. We’ll also explore some of the other, broader purposes of the public university, including its capacity to speak in particularly necessary ways on some of the most important questions that confound our nation. We’ll also look at the legacy of public education on our social fabric and the ways that things may have shifted. In the end, I’ll discuss what we’re working to achieve at the Colin Powell School–to maintain the truest vision of public education in an environment grown increasingly hostile to our founding purposes.

2015 Commencement Speech: General Colin L. Powell

Notes on ‘The Hunting Ground’: CUNY Community Screening and Conversation

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by Julia Suklevski

Based on the well-publicized number of sexual assault cases on college campuses across the United States, many might assume that these assaults are occurring at an alarming rate. They would be correct. But this is no recent phenomenon. For decades, the epidemic that has been impacting our nation’s college students was something that administrations did not want to admit was actually happening. This resulted in injustice for survivors, their experiences invalidated by the institution that was to provide them equal access to a safe learning environment.

I serve as a volunteer Domestic and Other Violence Emergencies (DOVE) Program Advocate at New York-Presbyterian Hospital in Washington Heights, and I’m a student studying in the Women’s Studies department at City College. So domestic violence and sexual assault are issues I think about and discuss often, and why I, along with Arlene Verapen, was inspired to help bring an important documentary,The Hunting Ground, a film that has been screened on college campuses all over the nation, to further the discussion at The City College of New York.

The Hunting Ground (2014), a documentary that premiered at the Sundance Film Festival this year, was screened on April 22nd and April 23rd, to members of the City College community, as well as concerned members of the public. The film, directed by Academy- and Emmy Award-winning documentarian Kirby Dick, follows two survivors turned activists for a grassroots movement to strengthen alliances between survivors of sexual assault and the public. These advocates used their voices to raise awareness about how college administrations handle cases of sexual assault and violations of Title IX.

Annie Clark and Andrea Pino, who were sexually assaulted during their first year of college, are highlighted in the film for their dedication to the idea that survivors of sexual assault do not have to remain victims of policies and barriers that prevent them from seeking justice. They advocate for thorough investigations of their respective university’s Title IX violation, an equality law that institutions receiving federal financial aid must uphold. Title IX protects students from experiencing discrimination on the basis of sex in educational programs and activities at universities that receive federal funding. Discrimination on the basis of sex can include sexual harassment or violence, such as rape, sexual assault, sexual battery, and sexual coercion.

If a university’s administration fails to uphold the Title IX policy by not responding promptly and effectively to sexual harassment or assault, it creates a hostile environment for the survivor. This hostile environment gives the student the right to proceed with filing a report to the Department of Education that the university is in violation of Title IX. Clark and Pino did just that at the University of North Carolina-Chapel Hill following their assaults. They inspire thousands of individuals across the nation’s universities to explore this option if they also experienced poor follow-through of their reported sexual assaults. Women’s Studies Program Coordinator Arlene Verapen says, “Opening the eyes of the general population is important for change. Annie’s and Andrea’s stories are catalysts for an important movement on college campuses. Educating our community about Title IX is the key to finding justice.”

The documentary goes on to explain the many layers and complexities that hinder survivors from receiving the justice they deserve. Universities are large institutions that receive funding from the government, as well as private donors and alumni. Its reputation oftentimes trumps the dignity of the survivor. In a society where rape culture is not only disturbingly present, but in some cases, encouraged, it is unfortunately easy to see how the epidemic continues to grow, silently but with great force.

Post-screening panel. From left: Professor Ackerman; Romy Fabal, Student Health Services Staff Nurse; Teresa Walker, Executive Director of Student Health Services; Michelle Baptiste, CCNY Title IX Coordinator; and Julia Suklevski.

Professor Patricia Ackerman, Director of the Women’s Studies Program at City College, moderated the community conversation following both screenings. Members of the panel included myself, Michele A. Baptiste, the Title IX coordinator for CCNY, Romy Fabal, Student Health Services Staff Nurse; Teresa Walker, Executive Director of Student Health Services; Dr. Laura Iocin and Dr. Erin Jeanette of the Counseling Center; and Professor Teresa Lopez-Castro and Professor Lesia Ruglass of the Psychology Department. The Office of Public Safety was also present.

As someone who has had individuals very dear to me experience sexual assault and did not receive adequate support from a school administration, it pains me to think that so many individuals have no option but to remain silent about assault. As a trained advocate and crisis counselor to survivors of sexual assault and domestic violence, I was heartened to see the number of people who made time to attend the screening. It was a powerful moment during a crucial time: we must continue to push awareness and ongoing dialogue in order to combat decades of negligence and injustice.

The Emperor’s New Vitamin

Courtesy: www.flickr.com/photos/stevendepolo/

by Matthew G. Nagler, Associate Professor, Economics and Business, Colin Powell School for Civic and Global Leadership

About six weeks ago, the New York State Attorney General’s office released a report accusing GNC, Target, Walgreens, and Walmart of selling fraudulent dietary supplements. The AG had DNA-tested 24 products from the retailers representing seven supplement types— including such popular products as gingko biloba and St. John’s Wort. All but five of the products were found to contain DNA that was either unrecognizable or from a plant other than what the product claimed to be—including in some cases little more than powdered rice or house plants.

These findings were no big surprise to Edward J. Kennelly, Professor of Biology at Lehman College and the Graduate Center of the City University of New York (CUNY), Fredi Kronenberg of Stanford University, or Bei Jiang of Dali University in China. The three biologists collaborated several years ago on a study of black cohosh, a plant-derived supplement marketed over-the-counter as a cure for hot flashes. They analyzed 11 products and found that three contained no black cohosh, while a fourth that did contain it was also contaminated with a “cousin” plant species. The results of their study are published in the Journal of Agricultural and Food Chemistry.

Shortly after that study was completed, Mr. Kennelly and I met at a CUNY awards dinner. His research results had raised an important question: While, as scientists, his team had been able to identify fraudulent supplements in the lab, was there any way that consumers could ferret out the frauds? This, I knew, was a question economic analysis could answer. Soon Mr. Kennelly, his collaborators, postdoctoral student Chunhui Ma, and I joined together to do a market-focused study of black cohosh adulteration, the results of which are published in theInternational Journal of Marketing Studies. Our findings lent support to the notion that dietary supplements are an example of what’s called a credence good, a product for which the quality cannot be determined conclusively by consumers even after they buy and use it. Auto repairs offer the classic example. Suppose I take my car to a mechanic for a routine check-up, and he tells me that the transmission is about to fail and needs to be replaced. Fifteen hundred dollars later, I leave the repair shop and find my car drives no differently than when I had brought it in. I can’t tell whether the car needed the repair to begin with, or even whether the repair was executed. I have to take these things on faith. Dietary supplements function similarly–largely because no medication is 100 percent effective, and because sometimes people just get better on their own. This means a consumer cannot rely on what happens when she takes the supplement as an indication of whether it is a fraud or not.

But were consumers able to separate the good from the bad? To determine this, we used a modified version of what economists call “hedonic analysis,” in which the researcher takes the relationship of a product’s observable characteristics to its price as a measure of which characteristics are valued by the market. We turned the standard approach inside out, looking at whether something that the market clearly values but can’t directly observe—authenticity—influences a product’s price. This could tell us whether consumers were getting a clue about authenticity in sufficient numbers to move the market price up or down—by flocking to it or running from it—based on whether the product was or was not a fraud. It turns out they weren’t. They did not have a clue which products were the frauds and which were not.

When something is a credence good, there are two ways the consumer might be protected against fraud. One is through the force of reputation. But because with credence goods people cannot figure out for sure if a product was a fraud even after they use it, they have nothing unequivocal to pass along via word-of-mouth, in chat rooms, or in online product reviews. Consumers who look to reputational sources for helpful information are less likely to find it. Brands that have perpetrated a fraud can get away with it for a long time before enough negative feedback accumulates to effectively bring them down.

Indeed, credence goods and their reputation can be as unreliable as praise for the emperor’s new clothes. Suppose a few early adopters of a fraudulent supplement happen to get a good outcome and squawk about it online. This puts pressure on others to corroborate the positive hype. If the consensus is that the brand is a miracle cure, those consumers who have a different experience may question their own, correct perception and might stifle their criticisms. Things can persist this way for some time—with countless consumers throwing good money after bad.

So that leaves a second source of protection: regulatory oversight. In the United States, dietary supplements are regulated under the Dietary Supplement Health and Education Act (DSHEA). DSHEA’s rules regarding labeling and good manufacturing practices more closely resemble those that govern foods than the Food and Drug Administration (FDA)’s rigorous pharmaceutical regulations. Accordingly, supplements require no premarket clinical testing or approval. Since DSHEA was enacted in 1994, the number of products to which it has applied has grown from 4,000 to approximately 30,000.

Meanwhile, funding for supplement oversight has declined, with the result that the agency has recently faced severe constraints in its efforts to enforce its relatively meager rules against mislabeling and contamination. The Republican-dominated Congress that enacted DSHEA clearly intended for the consumer to take personal responsibility when shopping for supplements – to recognize that, as the labels say, any claims made by manufacturers are “not evaluated by the FDA.” But even if one assumes that buyers are up to the rigors of self-protection, shouldn’t they at least have the assurance that the supplement contains what its label says it does? Our study shows that even the most cautious consumer is unlikely to be able to determine the authenticity of a product.

We should be grateful for interventions by authorities with the ability to scrutinize supplements scientifically and call out the frauds. Like the little boy in Andersen’s story who called it as he saw it, they provide an indispensible service to the public. And, while it may be an unrealistic wish given our current Congress, our findings and those of the New York Attorney General point to an irresistible conclusion: It is time to revisit DSHEA and put in place stronger regulations on dietary supplements.

nagler

Matthew Nagler is an associate professor at the Colin Powell School of Civic and Global Leadership, City College of New York: http://mnagler.ccny.cuny.edu/     Note: This post has been edited from an earlier published version.