NEUDC Draft Presentation

1
The State and the Market in Education Delivery
Implications for Implementing the RTE Act

• Karthik Muralidharan
• University of California - San Diego NBER J-PAL
• School Choice National Conference, New Delhi
• 16 December, 2009

2
Background

• Central role for education in the uplifting of
  historically disadvantaged communities in all
  countries
• Especially relevant in Indian context, where the
  rigidities of caste perpetuated inequalities in
  education access across generations, making
  improved education access a critical component of
  social policy
• As recently as 1971, the data shows substantial
  under-provision of public goods (schools,
  clinics, roads, electricity) in areas with higher
  scheduled caste and tribe populations (Banerjee
  and Somanathan, 2006)
• But combination of political empowerment
  (especially of scheduled castes) and policy focus
  on universal provision has substantially reduced
  inequalities in access to primary education
• Sarva Shiksha Abhiyan has been a success in terms
  of access and enrollment with over 95 of
  children enrolled in school

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The Challenge of Education Quality

• However, successes on the quantity front mask
  severe problems in education quality
• 60 of children aged 6-14 in India cannot read a
  simple paragraph, though over 95 enrolled in
  school (PRATHAM, 2008)
• Research shows that the returns to education
  (both at the individual and aggregate levels) are
  driven more by the quality than the quantity of
  education (Hanushek and Woesmann, 2008)
• The lack of education quality severely limits the
  ability of education to serve as a vehicle of
  social mobility
• As the locus of job creation moves to the private
  sector from the public sector, the premium is on
  skills as opposed to paper qualifications
• Most policy discussions on quality of education
  focus on increasing public spending, but very
  little on improving effectiveness of the money
  that is spent
• Teacher accountability and effectiveness is the
  central issue (90 of recurrent spending goes to
  teacher salaries)

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All India Teacher Absence Map (Public Schools)
State Teacher Absence ()
Maharashtra 14.6
Gujarat 17.0
Madhya Pradesh 17.6
Kerala 21.2
Himachal Pradesh 21.2
Tamil Nadu 21.3
Haryana 21.7
Karnataka 21.7
Orissa 23.4
Rajasthan 23.7
West Bengal 24.7
Andhra Pradesh 25.3
Uttar Pradesh 26.3
Chhatisgarh 30.6
Uttaranchal 32.8
Assam 33.8
Punjab 34.4
Bihar 37.8
Jharkhand 41.9
All India 25.2
Source "Teacher Absence in India A Snapshot"
(Michael Kremer, Karthik Muralidharan, Nazmul
Chaudhury, Jeffrey Hammer, Halsey Rogers),
Journal of the European Economic Association,
vol. 3, no. 2-3, April-May 2005, pp. 658-67
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The Emergence of Private Schools

• One response to the lack of performance of
  government schools has been a near explosion of
  private schools in the past several years
• 50 of children in urban India and 20 of
  children in rural India attend fee-charging
  private schools (IHDS 2005, ASER 2008)
• These are not the fancy private schools that
  people in urban areas typically think about, but
  rather budget private schools that cater to
  poor and lower middle class parents (Muralidharan
  Kremer, 2007 Tooley 2009, etc.)
• Main sources of competitive advantage are
• Higher accountability (175 times more likely to
  fire absent teachers)
• Flexibility/Responsiveness to what parents want
  (Eg. teaching English early)
• Significantly higher student outcomes
  (attendance, test scores) even after controlling
  for observable differences in family background
• Much more cost effective (smaller classes, less
  multi-grade teaching, though spending/child is
  3-4 times lower than spending in government
  schools)
• The critical driver of private school economics
  is lower teacher salaries (which allows hiring
  many more teachers), and better accountability

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Salary Distribution by School and Teacher Type
Source Calculated from data collected as part of
ongoing research by author in rural Andhra Pradesh
7
Public School Failure and Private School Entry
Source Public and Private Schools in Rural
India by Karthik Muralidharan and Michael Kremer
in School Choice International, MIT Press, 2008
8
Exit versus Voice

• People who are dissatisfied with a relationship
  can try to improve their outcomes either through
  exit or voice (Hirshman, 1972)
• To a large extent (but not completely),
  accountability in markets works through exit (and
  the threat of it), while accountability in
  political spaces work through voice
• The concepts are inter-linked in that increasing
  the power to exit, can also increase voice
  because it is more credible
• Schools are interesting because they combine
  elements of market (possibility of moving to
  private schools) and political spaces (community
  control and collective action)
• So attempts to empower disadvantaged communities
  should either strengthen voice or enable exit (or
  both)
• Assumes that demand is not a constraint (and this
  appears to be the case)
• Traditional thinking on improving accountability
  has focused much more on voice (decentralization,
  parent-teacher associations, etc)

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Evidence on the Effectiveness of Voice

• Mixed evidence on PTAs
• Correlations show that the existence of PTAs has
  no relation with teacher absence, though a more
  active PTA is correlated with lower teacher
  absence
• Suggests limited effectiveness of a supply-side
  initiative to create PTAs
• No evidence to suggest decentralization reduces
  absence (to date)
• We use NUEPA handbooks to code an index of
  education decentralization (planning, information
  management, etc)
• Find no relationship with teacher absence (at
  least with current forms of decentralization may
  be better with more complete devolvement)
• Mixed evidence on the impact of information on
  teacher absence
• Banerjee et al. find no impact of providing more
  information to Village Education Committees in UP
  regarding their powers and quality of education
• Pandey et al. do find positive effects of an
  information intervention in MP
• Key challenges to the effectiveness of voice are
• Limited authority of communities over teachers
• Even if the authority were vested in the
  communities, there would be a need for effective
  collective action, and risks of local elite
  capture would remain

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Voice in the face of Elite Exit

• The effectiveness of voice depends on the power
  of those exercising it
• The challenge for schooling is that the voice
  channel is progressively weakened by the exit of
  the elite from being recipients of public
  schooling (true for other public services as
  well)
• In our all-India sample (collected in 2003)
• Over 80 of govt. school teachers send their own
  children to private schools
• In villages with a private school, members of the
  Gram Panchayat are around 20 more likely to send
  their own kids to the private school
• But absence rates are around 17 lower if all GP
  members had their own kids in the government
  school
• Of course, the direction of causation might be
  the opposite
• The main point is that of multiple equilibria
• In one, the govt. school is good and every one
  sends their kids there voice is strong quality
  is maintained
• In the other, the govt. school is weak private
  schools show up elites migrate there poor have
  no exit options and limited voice (worst of both
  worlds)

11
Enrolment and Outcomes by School Type

• Our most recent data (collected across 5
  districts in Andhra Pradesh in 2008) show that in
  villages with a private school, the patterns of
  enrollment by school type and caste are
• General 31 Govt. 69 Private
• OBC 39 Govt. 61 Private
• SC 69 Govt. 31 Private
• Not surprising given that private schools charge
  fees (typically around Rs. 150-200/month)
• Correlations show that the learning levels in the
  private schools are significantly higher (0.75
  SD) than those in private schools
• These are not causal estimates and could reflect
  unobserved variables
• But the private school effect persists even
  after controlling for school and household
  characteristics
• Process indicators also suggest the superiority
  of private schools
• Most revealing indicator is parental revealed
  preference
• What does it say about the quality of the product
  (govt. schools) if you cannot even give it away
  for free? Even with a positive subsidy!

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Combining the Best of Both Worlds?

• The strength of markets for schools (with
  competition among suppliers and basic regulation
  on safety etc.) are that they are
• Customer-centric, flexible, and responsive
• Accountable
• More likely to engender innovation
• But the main weakness is that the market does not
  care for you if you dont have purchasing power
• The idea that governments have to provide
  education, health, etc is based not just on
  public good considerations, but also on the
  notion that it is the only way to ensure
  universal access
• Government provision typically does do a better
  job of providing universal access, but severe
  problems on the dimensions above
• The idea of school vouchers/scholarships
• Fund students and not schools
• Parents can choose any school they like public
  or private (subject to basic regulation), pay
  with a voucher, and the school is reimbursed
  directly by the government (can empanel eligible
  private schools for quality control)

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Implications for Empowerment

• The point is not to claim that all private
  schools are superior to govt. schools (this is
  not the case)
• Rather, the point is that the disadvantaged
  should have the same capacity to exercise choice
  as those who are better off
• Why should disadvantaged groups be subject to the
  vagaries of state provision, when nearly anyone
  who can afford to secede to the private sector
  chooses to do so?
• Vouchers are a more powerful tool than
  reservations, because they can benefit the entire
  community as opposed to the few who manage to
  secure seats in reserved categories
• Vouchers are also a much more flexible instrument
  because the value can be calibrated to account
  for the extent of disadvantage
• Much more likely to engender innovative supply
  responses
• Relevant to all levels of education

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Concerns about Vouchers/Choice

• Are private schools really the solution?
• Family differences could be the main driver of
  differences with govt. schools
• Private schools are also club goods who market
  themselves by their exclusivity and by who they
  exclude as much as who they include
• Many schools may exclude children from
  disadvantaged communities even with a voucher
• Can poor/illiterate parents make well informed
  schooling choices?
• Will it lead to fraudulent enrollment and kids
  not going to school?
• Could it lead to a balkanization of schools along
  ideological/ religious/ethnic lines?
• Schools are also about producing a shared civic
  identity and not just knowledge and skills
• Does it mean giving up on the public system and
  the government abdicating responsibility for
  education?
• Let us address each of these concerns

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Summary

• Aim of this talk has not been to promote private
  schools, but to present the facts on public and
  private schools and to provoke thinking about
  alternative means to empowerment beyond state
  provision
• The economic case for vouchers is not based on
  public vs. private but rather on the idea
  that increased competition and choice will
  improve both public and private schools
• But the most compelling reason to consider the
  idea is on grounds of equity and social justice
• Vouchers are not a panacea to the problem of
  quality education (many private schools are also
  bad), but can provide disadvantaged communities
  choices similar to those available to better off
  groups
• Several practical questions need to be answered
  but these are empirical and not theoretical
  questions and are best addressed by conducting
  small pilot projects with rigorous impact
  evaluation
• The 25 provision in the RTE Act provides an
  opportunity for such pilots
• We are conducting one such pilot project in
  Andhra Pradesh with Azim Premji Foundation to
  study the impact of such a scholarship program
• Designed to be directly relevant to the
  implementation of the 25 provision

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Design of AP School Choice Pilot and Study

• Aim is to provide poor children in rural AP with
  increased choice to attend a school of their
  choosing by providing a scholarship to cover the
  fees of private schools
• Baseline test conducted for all UKG and Class 1
  children in 180 villages in 5 districts of AP
• Parents of children who took the assessment and
  had never been in a private school were invited
  to apply for the scholarships
• All fees, books, uniforms, materials covered
  (paid directly to schools) meals and transport
  were not covered (average scholarship value of
  Rs. 3,000/year which is 25 of per child
  spending in govt. schools)
• Scholarships can only be used in recognized
  private schools
• Excess demand for scholarships, allocated by
  lottery
• Schools cannot pick and choose better kids
  have to accept all or none of the lottery winners
  (APF signs agreement with all participating
  schools - participation is completely voluntary)
• Annual assessments at the end of each school year
• Allocation of scholarship by lottery allows us to
  estimate the impact of private schools in value
  addition without being confounded by other
  variables
• The process also generates a lot of learning for
  scale up and for figuring out the operating
  principles by which this component of the RTE can
  be notified

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Implications for RTE Notification

• The idea of leveraging private schools does not
  take away the relevance of using voice to
  improve the quality of govt. schools especially
  on issues of teacher performance and
  accountability
• But, it is a long route to accountability that
  will take a longer time, while every passing year
  is another cohort that has experienced poor
  quality education
• Telling quote from Sarpanch in MP (an SC himself)
  on why he sent his children to the private school
  instead of trying to improve the govt. school
• Jab tak main ye school ko sudhaar sakoon, tab
  tak mere bachchon ka bhavishya hamesha ke liye
  bigad gaya hoga
• Expanding private schooling options (through the
  25 clause of the RTE) has the potential to
  empower entire disadvantaged communities as
  opposed to the select few who benefit from the
  status quo policies to promote social justice
• Well worth thinking hard about the details of how
  this will be implemented in practice and how it
  will be evaluated