A study shows the market for fake degrees churned out by dubious diploma mills.

The Economics of Fake Degrees

The Economics of Fake Degrees

News and views from academia.
July 3 2014 8:08 AM

The Economics of Fake Degrees

My cat can get a Ph.D., and that’s a problem.

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The pioneering scholar of American medical shadiness was James Harvey Young, an emeritus professor of history at Emory University when he died in 2006, who first published on the subject in the early 1950s. Princeton University Press is reissuing American Health Quackery: Collected Essays of James Harvey Young in paperback this month. But while patent medicines and dubious treatments are now routinely discussed in books and papers on medical history, very little research has appeared on the institutions—or businesses, if you prefer—that sold credentials to the snake-oil merchants of yesteryear.

There are plenty still around, incidentally. In Degree Mills, Ezell and Bear cite a congressional committee’s estimate from 1986 that there were more than 5,000 fake doctors practicing in the U.S. The figure must be several times that by now.

The demand for fraudulent diplomas comes from a much wider range of aspiring professionals now than in the patent-medicine era—as the example of Pete, the canine MBA, may suggest. The most general social-scientific study of the problem seems to be “An Introduction to the Economics of Fake Degrees,” published in the Journal of Economic Issues in 2008.


The authors—Gilles Grolleau, Tarik Lakhal, and Naoufel Mzoughi—are French economists who do what they can with the available pool of data, which is neither wide nor deep. “While the problem of diploma mills and fake degrees is acknowledged to be serious,” they write, “it is difficult to estimate their full impact because it is an illegal activity and there is an obvious lack of data and rigorous studies. Several official investigations point to the magnitude and implications of this dubious activity. These investigations appear to underestimate the expanding scale and dimensions of this multimillion-dollar industry.”

Grolleau, et al. distinguish between counterfeit degrees (fabricated documents not actually issued by the institutions the holder thereby claims to have attended) and “degrees from bogus universities, sold outright and that can require some academic work but significantly less than comparable, legitimate accredited programs.” The latter institutions, also known as diploma mills, are sometimes backed up by equally dubious accreditation “agencies.” A table in the paper indicates that more than 200 such “accreditation mills” (defined as agencies not recognized by either the Council for Higher Education Accreditation or the U.S. Department of Education) were operating as of 2004.

The authors work out the various costs, benefits, and risk factors involved in the fake-degree market, but the effort seems very provisional, not to say pointless, in the absence of solid data. They write that “fake degrees allow their holders to ‘free ride’ on the rights and benefits normally tied to legitimate degrees, without the normal investment of human capital,” which may be less of a tautology than “A=A” but not by much.

The fake-degree consumer’s investment “costs” include the price demanded by the vendor but also “other ‘costs,’ such as … the fear of being discovered and stigmatized.” I suppose so, but it’s hardly the sort of expense that can be monetized. By contrast, the cost to legitimate higher-education institutions for “protecting their intellectual property rights by conducting investigations and mounting litigation against fakers” might be more readily quantified, at least in principle. 

The authors state, sensibly enough: “The resources allocated to decrease the number of fake degrees should be set equal to the pecuniary value of the marginal social damage caused by the existence of the fakes, at the point of the optimal level of fakes.” But then they point to “the difficulty in measuring the value of the damage and the cost of eliminating it completely.”

So: If we had some data about the problem, we could figure out how much of a problem it is, but we don’t—and that, too, is a problem.

Still, the paper is a reminder that empirical research on the whole scurvy topic would be of value—especially when you consider that in the United States, according to one study, “at least 3 percent of all doctorate degrees in occupational safety and health and related areas” are bogus. Also keep in mind Ezell Bear’s estimate in Degree Mills that 40,000 to 45,000 legitimate Ph.D.s are awarded annually in the U.S.—while 50,000 spurious Ph.D.s are purchased here.

“In other words,” they write, “more than half of all people claiming a new Ph.D. have a fake degree.” And so I have decided not to make matters worse by purchasing one for my calico cat, despite “significant experiential learning” from her studies in ornithology.