Mark Steel: The price is always right (whatever it is)

What I learned about economics this week is that it doesn't matter what price something is. This is because the number of British people applying for university has gone down by 12 per cent since last year, but the Government says this is nothing to do with the fees being trebled.

This is marvellous news for business. It means, for example, that farmers can start charging £8,000 for a box of eggs, and then make a statement that "There is no reason why this will reduce the demand for eggs. We will even offer low-interest loans to ensure even the poorest people in the world will still be able to enjoy hundreds of eggs every day."

David Willetts, in particular, says the increase in university fees hasn't affected the number of applications, so with that level of economic expertise he should be given a place on The Apprentice. Lord Sugar would look at him quizzically and say, "David, the other team sold 200 bottles of their aftershave, but you didn't sell any. Any idea why?"

"I can't put my finger on it," he'd answer and Sugar would say "Do you think it's because you were charging £3m a bottle?"

"Oh no, the price would have no impact on sales. I learned that on my free university course," he'd say.

Willetts has said the decline "isn't an underlying trend". And he's right, because it isn't underlying, it's glaringly bloody obvious. But this is the art of making simple statistics seem complicated, so he'll explain, "If you add to those who have applied some other people, such as those who haven't applied, you'll see the overall figure has actually gone up. And the wider picture is mixed, because in certain courses, such as studying frog's burps as a second language, the number of applications remains the same as last year."

The perplexing aspect is the Government's attitude towards everything else is that the free market should rule. And the first rule of the free market is that when prices go up, the demand will go down. But apparently the one thing this doesn't apply to is university courses. It's like a creationist saying "God made everything, except for jellyfish, wasps and maggots, they were made by evolution".

The heartening side to these figures is the courses that have suffered the steepest decline are those for nursing and similar frivolous professions. Thankfully the essential subjects, such as economics, are still booming, so in the future there will be plenty of people to assure us the reason fewer people are being looked after in hospital is nothing to do with it costing £500 a night to stay there, unless you go to the pauper's ward where there are no nurses left.