Unit 3: The Cost-Effectiveness of Distance Education Institutions

This unit addresses the issues of cost effectiveness and cost efficiency. Cost effectiveness is how good or useful the final outcome or product is. In Rumble’s explanation to the OMDE 606 Fall 2006 class he says that “one is effective if one’s products are relevant” to the client. Cost efficiency, on the other hand, refers to how adept one is at minimizing the costs to achieve the same goal. For example, if you spend less to produce a product then another company does, then you are more cost efficient.

To compare the cost of efficiency between open and distance learning and conventional education you divide the cost per student of ODL by the cost per student of CE. If this result is less than 1, then ODL is more efficient. If greater than 1, then CE is more efficient.

This section is particularly relevant for if I have to determine, in a blended learning environment, whether to develop a conventional approach to training, or an ODL approach to training. For example, If A = CE and B = ODL, then:

If Cost A <= Cost B AND effectiveness A <= effectiveness B, then explore further.

If Cost A > Cost B AND effectiveness A <= effectiveness B, then choose ODL.

If Cost A <= Cost B AND effectiveness A > effectiveness B, then choose CE.

If Cost A > Cost B AND effectiveness A > effectiveness B, then explore further.

Generally speaking, what I learned, is that while initial fixed costs are high, and variable costs per student remain the same, the overall costs will level off and eventually start to drop as more students enroll….in other words the total costs will drop based on economies of scale. Also, To lower variable costs, for example, one would reduce student teacher interaction (Hulsmann, 2008). To lower fixed costs, for example, one would use less expensive media tools (Hulsmann, 2008). Further, through cooperation among interested parties, costs, such as the cost of content development, can be reduced (Hulsmann, 2008). Specifically, if content can be shared or reused, the it can reduce the fixed costs.

References

Hülsmann, T. (2008). From Baobab to Bonsai: Revisiting methodological issues in the costs and economics of distance education and distributed e-learning. In W. J. Bramble, Panda, S. (Ed .), Economics of distance and online learning (pp. 233-269). London : Kogan Page.