The New York Times has an article about differential tuition at public schools.
Starting this fall, juniors and seniors pursuing an undergraduate major in the business school at the University of Wisconsin, Madison, will pay $500 more each semester than classmates. The University of Nebraska last year began charging engineering students a $40 premium for each hour of class credit.
And Arizona State University this fall will phase in for upperclassmen in the journalism school a $250 per semester charge above the basic $2,411 tuition for in-state students.
Here's an interesting statement in the article:
Even as they embrace such pricing, many officials acknowledge they are queasy about a practice that appears to value one discipline over another or that could result in lower-income students clustering in less expensive fields.
Here's something from an earlier post I wrote at The Sports Economist on premium ticket pricing in Major League Baseball that sounds very similar:
One reason why teams would not employ a differential pricing strategy is that their fans do not have different willingnesses to pay for particular match-ups. But there’s another reason. People I’ve talked to with Major League Baseball say league officials have generally frowned upon the practice of premium match-up pricing because they would rather not acknowledge that one team’s entertainment value is higher than another’s. But given that fans have different willingness to pay for particular match-ups, this lack of acknowledgment carries a steep opportunity cost for baseball teams.
The value of a product, at its root, is determined by buyers. The quality of the product is an important component of this value and consumers will obtain information about the quality of a product from many different sources, including observing prices (because higher quality is not costless to provide). So, yes, raising the price of a good relative to another good can send signals about relative quality. But how important is this signal at the margin?
In terms of majors, there are a lot of other ways to infer the quality of a product, word of mouth, for instance. In addition, since education is an investment, students can compare the starting salaries of those, say, with electrical engineering majors (approximately $52,000 in 2007) to those with sociology majors (approximately $32,000 in 2007) to get a bit of a gauge on the return on their investment. The article notes that starting salaries are not a perfect indicator of the return on investment, but because of discounting and uncertainty about the future, the starting salaries of undergraduates upon graduation are very important in the decision to take a particular major.