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Happel, S K; Jennings, M M --- "An economic analysis of academic dishonesty and its deterrence in higher education" [2009] LegEdDig 36; (2009) 17(3) Legal Education Digest 19


An Economic Analysis of Academic Dishonesty and Its Deterrence in Higher Education

S.K Happel and M.M. Jennings

25 (2) J Legal Stud Ed, 2009 pp 183–214.

The underlying contract in higher education is that students, in exchange for demonstration of individual skills and predetermined levels of understanding, are evaluated objectively by faculty and rewarded by the reflection of a grade-level performance on their permanent records. The degree represents the institution’s imprimatur with regard to the student’s training and achievement. If academic dishonesty is prevalent, the grades awarded are skewed because the measurement is not an isolated one of achievement, mastery, and performance. The skew in the evaluation metrics becomes apparent once employment begins. As the newly hired employees perform at levels consistent with their real abilities, and not with their actual grades, the reputations of other graduates may be affected because the poor performance of these dishonest students damages all who are affiliated with the institution. The question then becomes one that is the focus of this article: how do individual students and institutions as a whole deal with the negative signal of academic dishonesty?

Academic dishonesty – cheating – includes plagiarising, receiving credit for work not one’s own, copying assignments, copying from another’s exam, taking another’s exam, not doing individual work on individual assignments, failing to contribute to team projects, and other forms of deception about work and performance.

A survey by Pennsylvania State University, Rutgers University, and Washington State University reveals that 56 per cent of Masters of Business Administration (MBA) students admit that they took notes into exams surreptitiously, stole work from others, and engaged in other forms of cheating. Masters students in the social science programs weighed in with a 39 per cent admission factor. The same study, ‘Academic Dishonesty in Graduate Business Programs: Prevalence, Causes, & Proposed Action’, which was published in the Academy of Management Learning & Education, surveyed 5,331 students at 32 graduate schools in the United States and Canada between 2002 and 2004. The study concluded that 47 per cent of non-business students admitted to some form of serious academic dishonesty during the previous school year.

Most general studies on college cheating conclude that the rate of cheating is at about 75 per cent of all students. Not only is the basis of the student/university contract being weakened with extensive academic dishonesty, the evaluation system itself begins to carry an inherent flaw in credibility.

A fallacy of composition arises in which, as individual students pursue their individual careers and self-interests, they can be hurt by the institution’s presumed and assumed reputation, however fallacious it may be, in the marketplace. This narrowly focused self-interest approach has far-reaching impact, affecting the marketability of the students who perform at top levels without resorting to academic dishonesty.

Rather than focusing on the issues of moral development and the inherent rightness or wrongness of cheating, the problem may be best addressed through application of economic analysis by both students and administrators when cheating incidents arise. Upon uncovering extensive cheating among our own graduate students, we initially chose the path of righteous indignation, in the form of moral outrage, as the means we believed would be effective in curbing cheating. Feeling a sense of betrayal by students we had trusted, we wrote an editorial that appeared in the Arizona State University campus newspaper, the ASU State Press, and which was then reprinted in the state’s largest newspaper, the Arizona Republic.

In response to the editorial, and rather than acknowledging the issue and addressing cheating, the ASU administration, including the president and provost, sent pointed emails questioning whether any major problems with academic dishonesty existed on campus. Their survey of deans found a group echoing the classic sentiments of denial, ‘There is not a serious cheating problem at ASU’. Perhaps they were correct in an economic sense – an optimal amount of cheating was being produced and consumed.

The reaction of students to our public discussion of academic integrity issues was mixed. Some MBA students were outraged at the editorial, and they too denied that there was a significant problem with cheating. They naturally demanded a retraction up and down the administrative chain of command. Yet many other students and colleagues responded positively, often with expressions of relief that the elephant in the room had finally been recognised for its presence and could now be discussed. Letters to the editor and follow-up articles in both newspapers called for action. In response, the ASU Faculty Senate began steps in the fall of 2003 to address pervasive cheating.

Under F.A Hayek’s view of accurate information as a commodity, the pursuit of truth requires that any breach of integrity related to that knowledge necessarily demands a condemnation. Academic dishonesty affects the quality and trustworthiness of the information commodity, the knowledge about the performance and abilities of the students graduating from colleges and universities.

Other economic principles also have application to the college and university role in the marketplace. From a microeconomic perspective, if property rights are defined and all externalities are internalised, then the Coase Theorem implies that an optimal amount of cheating, which is not zero, arises to achieve market efficiency. Simply stated, the Coase Theorem holds that ‘the initial allocation of legal entitlements does not matter from an efficiency perspective so long as they can be freely exchanged’. As discussed more fully below, cheating will never be completely eliminated. Microeconomic theory emphasises the trade-offs and incentives involved.

From the university’s perspective, because academic dishonesty carries adverse reputation effects, after some threshold level, resources with high opportunity costs must be devoted to the problem. These resources include preparing different forms of exams to deter cheating, having many proctors monitor exams, using faculty and administrative time to prosecute academic dishonesty cases keeping in mind the necessary due process requirements, printing mountains of brochures and handbooks needed to confront the issue, and even developing new seating arrangements.

Prisoner-dilemma situations may arise in which the very good students engage in academic dishonesty because of systemic forces and the lack of incentives for honesty or enforcement (disincentives) for dishonesty.

Within an environment of extensive cheating, students may gravitate toward majors where copying/plagiarising has historically been minimal or where they feel there are high academic and integrity standards. Top students may also join college clubs and professional organisations known for their codes of conduct and leadership.

There is general unwillingness to engage in strict definitions of cheating and few uniform penalties exist when dealing with academic dishonesty today. An extreme view on academic dishonesty requires that all forms of cheating are equally wrong, so any form should result in the same punishment (dismissal from the institution). However, academic dishonesty does exist in various degrees of severity, from relatively minor offences such as a quick glance at another’s test to major fraud where someone is hired to take an exam or even an entire course for someone else.

Whether the foregoing benefits – underqualified students receiving diplomas, student time economies, and the perception that much cheating involves minor infractions –are sufficient to overwhelm the direct costs of enforcement, institutional prestige, and personal costs to non-cheating students seems questionable. More social benefits must be present to provide an explanation for ongoing problems and even growth in academic dishonesty.

Broader social benefits may lie with younger and now even older generations challenging the limits of what is and is not acceptable behaviour. Rules about academic dishonesty declare established views of ethical and professional behaviour. So some students challenge authority in a controlled us-versus-them environment. But many will learn innovative skills in this challenge that make for individual success in a well-functioning free-market economy.

A final point related to explaining the persistence of academic dishonesty relates to the cost side. If sanctions are to be enforced, there are due process requirements. For the most part, courts have held that enforcement of academic integrity policies relates to an educational right and requires, at a minimum, the administrative agency standards for due process. Some faculty may know and understand the rules and the requirements of proof and due process, but many do not. Consequently, many faculty appear to be quite reluctant to enforce academic dishonesty policies within the prevailing culture.

A consideration of markets for academic honesty/dishonesty for students and for faculty offers insights into possible reforms.

In this market, current students may be demanders, suppliers, or both. The demand curve for cheating by current students is determined by the relative price of cheating, income, and tastes, ceteris paribus. The relative price includes the monetary sums paid or favours extended for help on exams and papers along with the risk of getting caught and suffering penalties. Pricewise, as websites advertising low-priced papers and theses abound, and as the odds of harsh punishment drop, the quantity of student cheating demanded increases.

Initially, demand may be quite inelastic for many students. But eventually a price will be reached (P1) where demand becomes quite elastic due, for example, to negligible enforcement or the realisation that almost everyone is now cheating.

As income levels increase, we expect demand for academic dishonesty to increase because we consider it to be a normal good. Rising levels of national income allow more students to attend college, thereby increasing the number of incidents or the overall index. Further, higher real household income points to greater demand for academic dishonesty if wealthier households put tremendous pressure on their children to succeed at all costs, or if they readily bail out their children at any cost. Children from wealthier households have high opportunity costs of time, so they may be more disposed to division and specialisation effects to get through college. The argument that cheating leads to the production of an inferior good is then extrapolated to mean that that rising income, especially at the household level, will, in the interest of higher quality goods, result in a shift in favour of more honesty – a notion we strongly question.

Offsetting the price and income effects that lead to more cheating requires a strong emphasis on moral and ethical values – a taste factor to economists, but one that cannot be ignored. Academic dishonesty is now an issue that starts in middle schools, intensifies in high schools, and then pervades US universities because of existing social attitudes.

The supply curve for voluntary cheating is generated by available copies of past exams and by some current students, former graduates, friends, dropouts, paper-writing firms, teaching assistants, and staff willing to sell insider information. Entry is fairly easy. As the relative price (return to) cheating rises, the quantity supplied increases; and the entire supply curve shifts out when those (firms) offering various means for ‘supplementing’ academic performance increase or when technology changes.

The supply of honesty to this market comes directly from current students and indirectly from parents and others who are setting values for students. University administrators can enhance the process by rewarding individual faculty members who deal with cheating effectively and enhance the reputation of the institution.

Along with the markets for academic dishonesty and honesty by current students and faculty, there are also the markets by administrators, legislators, the local community, and quite critically, potential employers. Externalities abound as the flow of knowledge across markets on who is actually engaging in academic dishonesty is incomplete. Because of the screening difficulties, it appears that many employers over the years have not strongly demanded ethical behaviour from new employees, which in turn reduces market pressure on universities. Change may result when employers must bear the cost of background checks used to verify the information provided by colleges and universities about students. Those costs could include certification processes, both industry and employer based, created and used to verify the graduates’ knowledge bases once presumed to be present because of colleges’ and universities’ imprimaturs via degrees.

Addressing academic dishonesty openly and visibly carries the risk that the outside world will conclude that the institution faces a large problem that is unique because of the inaction of other institutions with regard to academic dishonesty. The prisoner’s dilemma affects the institutions victimised by it.

In March 2005, the Faculty Senate’s Student-Faculty Policy Committee (SFPC) came forward with resolutions for the Faculty Senate. After some strenuous arguments about proctors, each of the six resolutions was approved:

Resolution 1. Whereas all universities face ongoing issues of academic integrity and dishonesty (cheating, plagiarism, deception), whereas new technologies (cell phones, other electronic devices) make testing ever more difficult, whereas ASU strives for the highest standing as a renowned teaching institution, and whereas ASU seeks ethical behaviour and individual performance from its students, be it resolved that the institution highly values a culture of academic integrity, one that is respected by students, faculty, university administrators, and the community at large.

Resolution 2. In order to enhance a culture of academic integrity, be it resolved that the brochure on academic integrity is widely distributed and discussed by student affairs, personnel and academic advisors with all incoming freshmen and transfer students.

Resolution 3. In order to enhance a culture of academic integrity, be it resolved: that a website present the University’s stance on academic integrity and dishonesty that is signed by the President of the University, the President of the Faculty Senate, and the Undergraduate and Graduate Student Association Presidents; that faculty be strongly encouraged to have this website listed on the first page of the course syllabus and to address cheating and plagiarism from the start of the semester; that a faculty handbook be developed that summarises the fundamental rules on cheating, institution support, and types of testing methods in reference to the extent of cheating.

Resolution 4. In order to enhance a culture of academic integrity, be it resolved that up-to-the-moment anti-plagiarism software is made readily available for all faculty wanting to employ them and that their usage is announced in class.

Resolution 5. In order to enhance a culture of academic integrity, be it resolved that a pool of proctors is established in each college to monitor large sections on exam days and that the University formulate procedures and training guidelines.

Resolution 6. In order to enhance a culture of academic integrity, be it resolved that each college designate an individual who serves as the lead authority when cheating problems arise in the college, who receives from faculty any instances of cheating that involve written sanctions, and who twice a year meets with the other designates to derive numbers on the overall extent of cheating an plagiarism cases and to develop steps to be taken to address specific problems.

Overall, ASU is following the crime reduction model of sociologist James Q Wilson that was used by Mayor Rudy Giuliani to improve the social fabric in New York City. Stop the most visible and common day-to-day violations (cheating on exams in large lecture classes) to convince people that a new culture has emerged.

The reforms were announced to the public in the Arizona Republic on April 3, 2005, in an editorial that reflected the positive step of ASU taking a lead role on a national problem. Fundamentally, ASU President Michael Crow’s concept of a ‘New American University’ means great teaching and great research, but much more importantly, it means a culture of academic honesty that all graduates and the community at large can respect.

Whether more cheating and plagiarism occurs in colleges today compared to the past is not an easy question to answer. But we have strong clues that the culture students have lived in, academically and otherwise, has influenced their attitudes and those attitudes seem to make them more prone to cheating than previous generations. Since preschool, they have been in highly supervised environments in which group learning, team projects, and feeling empowered become more important than getting the precise answer. They have grown up in a highly permissive ethical environment in which winning takes precedence over everything else. They are doted on by parents and teachers. Parents of generations X, Y, and Z often will do almost anything for them, but also put on them tremendous pressure to do well in school. Students idolise athletes who use banned performance-enhancing drugs to achieve fame and money, and they see top business leaders defrauding the public and often receiving only minor punishments in the process. In short, their frames of references and life experiences differ substantially from the students surveyed in the past.

Moreover, college students today come from high school environments, accustomed to cheating, and often highly skilled at it. They have a strong sense of entitlement, believing they are customers of universities and that customers are always right. Many can look you directly in the eye when faced with cheating and plagiarism charges and, in all sincerity, say that they did not do anything wrong (because in their world they believe they did not).

While American universities have enjoyed top standing in the world for decades, this position is at risk if college degrees no longer provide the appropriate signalling to the outside world. The trust so necessary for both markets and good teaching is destroyed, and an anything-goes environment takes over. The moral and ethical values present in this proposed reinstatement of integrity in the academy are perhaps a step toward restoring the moral and ethical values inherent in free markets.

By changing the culture in universities, we serve the marketplace by sending out graduates who understand the critical role of integrity and trust in systemic functions and have been trained to live those principles. If universities do not confront the problem now, then when? And if universities do not tackle dishonesty, who will? Rather than a vicious cycle downward, these reforms and cultural changes can start a virtuous circle upward not just throughout US institutions of higher learning, but also throughout the marketplace that will eventually hire the graduates. Major revolutions often begin with small steps. Small steps at individual colleges and universities could bring systemic reforms in the broader culture.


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