An economics professor has wisely applied one of the guiding principles of the free market to the problem of getting more students interested in STEM degrees: When things cost less, people buy more.

Wall Street contributor Daniel Akst has an analysis:

…Business leaders and others agree that the U.S. needs more engineers to boost innovation and productivity, but relatively few American-born students pursue such studies. Meanwhile, faced with reduced state funding, many public universities are now charging more for degrees that cost more to provide—including engineering. One study of undergraduate programs found such differential pricing at 57% of public research universities, and others have considered adopting it.

But raising the cost of an engineering degree appears to drive away students. Kevin Stange, an economist at the University of Michigan, looked at more than 140 schools and found that differential pricing for engineering resulted, within three years, in a 7.5% drop in the share of degrees awarded in engineering. Dr. Stange also found that the effect of price on demand was more pronounced among women and minorities, two groups underrepresented in the field.

The reasoning behind the price increases, which averaged 14.5%, is simple. Not only is it costlier to educate an engineer than an English major, but engineers have higher lifetime earnings, suggesting that over the long run they can afford to pay more.

But if higher prices deter engineering hopefuls, lower ones might draw more students to the field. States thus have a potentially powerful tool for developing a more productive workforce—if they can forgo some short-term income. Dr. Stange says that more research is needed before he can say reliably that lower tuition and fees will increase demand for engineering degrees.

He notes that some institutions raised prices yet saw the share of degrees taken by engineers increase, suggesting that it might be possible to raise revenue even while boosting engineering enrollment—perhaps by plowing the additional funds into upgraded courses and facilities.