The Economics of Student Protests

Over the last few weeks, university politics has captured headlines as students across the country occupy sections of their campuses and demand that their schools divest from Israel in protest of its contentious war in Gaza. Last week for Compact Magazine, Luigi and Nobel Laureate Oliver Hart stressed that one lesson from these protests is that universities need to make transparent their investment strategies and how they contribute to the school’s financial operations, including financial aid. Increased transparency can inform ethical debates about divestment, but can it solve them? Even if students get what they want, will it matter? Or should they be focusing their efforts elsewhere to maximize impact? Who gets to make the decisions about the ethics of college endowment investments, and how should votes be divided between different stakeholders — students, faculty, alumni, and donors? This week on Capitalisn’t, Bethany and Luigi record a late-breaking episode tackling these foundational questions that underlie the governance of today's universities.