Exercise 1.1:
Why does my building have handicap accessible restrooms on the second floor when there is no elevator to allow a person in a wheelchair to get to the second floor at all?

It is often the case that, when an older building is renovated, elevators are not added. It is also often the case that wheelchair accessible restrooms are built on floors which are themselves inaccessible to individuals in wheelchairs. On the surface this seems to be a waste of money, since accessible restrooms are more expensive to equip than non-accessible ones. So why do architects and the owners of buildings choose to take what appears to be the more expensive solution? There are at least three possible explanations.

First: There is a similarity here with the Braille on drive-through teller machines. It is likely that it is easier (and less expensive) to construct all the restrooms in a particular building in the same manner. This is most likely to be so when there are only a few floors and one must contain accessible restrooms. However this is not the only reason why such construction would occur.

Second: It is very rare that a building is renovated without plans for elevator access to all floors. It is, however, quite common for cost cutting measures (particularly on university campuses) to cause the construction of the elevator to be delayed for several years. It is clear that the cost of putting in non-accessible restrooms on non-accessible floors and then having to replace them later when the elevator is installed is greater than putting in accessible restrooms in the first place and having them ready for the elevator. If we were to watch the buildings for an extended period of time, the placement would make sense.

Third: There is yet another potential motivator for this behavior. The Americans with Disabilities Act of 1990 (see http://www.usdoj.gov/crt/ada/adahom1.htm) requires equal access to facilities regardless of physical disability. There are many ways to comply with this act. Not all university classrooms must be accessible. However, the presence of a disabled student in a class scheduled for a non-accessible room must result in the class being moved to an accessible space. Buildings must meet particular codes when being renovated, including the door handles and the availability of accessible restrooms. One way of thinking of it is that these codes are on a point system and each building must accumulate a minimum number of points. (It is actually much more complete than that, but as a rough outline a point system works.) Having accessible restrooms, regardless of whether those restrooms are on accessible floors, can accumulate points. It may be the case that if accessible restrooms are put on all floors, enough points are accumulated to avoid having to install an elevator at all! This is a case of clearly unintended consequences and is probably a motivator in theory alone.

Exercise 1.2:
How can Universities afford to provide full tuition waivers for the family members of employees?

It is quite likely that somewhere in your university, perhaps in your class, there is a student who does not pay tuition as a result of being in the immediate family of a university employee. As an example, three members of a certain economist's family are currently enrolled at the school where he is employed. Tuition at this school is roughly $15,000 per year. How can the university afford to provide a single economist with an employee benefit worth $45,000 per year—that's nearly doubling his pay!

If Susan must pay $15,000 per year to attend, doesn't giving Sara a tuition waiver cost the school $15,000? At first look it certainly seems so. However, when examined more closely it is clear how a university can afford to provide such a benefit for employees' families. The next time you are in class, look around the room. Is there an empty desk? If there is, how much do you suppose the marginal cost to the university is of having a student in that desk? An extra copy of any paperwork handed out, that person's body heat adding to the air conditioning bill (or reducing the heat bill as the case may be) and the added paperwork associated with processing that person's records are really the only additional costs to having one more person in the class. Of course this cannot go on forever since, eventually, the university would have to hire new faculty and build new buildings to accommodate a dramatic increase in the number of students, but, for that one (or few) addition(s) to the class, the marginal cost is essentially zero.

The perceived problem here is that the tuition charged to the student body must cover not only the marginal cost, but the fixed costs as well. The electric bill must be paid, the faculty and staff must draw their salaries, the debts of the university must be met, etc. If the current student body is charged a tuition that exactly covers these expenses (an unlikely event since most universities are subsidized by either earnings from their endowment or a budget from the state legislature, or both) then the addition of one more student will not change their tuition bill at all. So, when deciding whether to admit an additional student the university administration is correct in looking at the marginal cost and deciding that this is a worthwhile undertaking for employees.

So—the university is giving away the occupancy of an otherwise empty seat at a cost of nearly zero, while the recipient is gaining a benefit worth approximately $15,000. This is the ultimate win-win situation.

As a side note: do you find it surprising that room, board, and books are almost never included in this very common benefit to university employees?