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Government and The Changing Role of Education

Education As a Public Good, Standards and Efficiency, Equity and Accountability, Private Sector Alternatives, Conclusion

Since about 1990 the assumption that the public sector should be responsible for all aspects of education has been increasingly questioned, in both developed and developing countries, for four main reasons. First, there have been doubts about the effectiveness and efficiency of public education. Second, there are doubts about the equity and accountability of public education, which particularly affect the poor. Third, there is an increasing awareness of initiatives by educational entrepreneurs, and evidence to suggest that competitive pressures can lead to significant educational improvements. Fourth, there has been a need to restrain public expenditure in order to reduce budget deficits and external debts, and, consequently, a need to find alternative sources of educational funding.

About the fourth reason little more can be said, apart from the fact that this has motivated governments and international agencies to look to the possibility of an increasing private sector role. But potentially countering each of the other three reasons is the notion that education is a public good, and hence requires government intervention for its provision. Before reviewing relevant arguments, it is important to stress that the whole issue is controversial. Consequently, it is worth noting at the outset some recent overviews of the whole debate.

Largely unsympathetic to an increasing role for the private sector are philosopher Harry Brighouse, sociologists such as Stephen Ball, the Karl Mannheim professor of sociology of education at the University of London, and the journalist Alex Molnar. Brighouse, who is affiliated with both the American and the British reform movements, presents philosophical arguments against extending educational choice, particularly stressing how they will promote inequity. He is, however, sympathetic to some arguments about the way private sector could raise standards and be more efficient. Ball and his colleagues have explored the way market reforms have occurred in to England, and they suggest the evidence points to a deleterious impact on equality of opportunity. Finally, Molnar has explored the increasing commercialization of American schools, and he argues that the profit motive and education should not be allowed to mix.

For the alternative perspective, a good place to start is with the economic historian Edwin G. West's seminal work Education and the State (1994), followed by the work of Andrew Coulson and James Tooley. West suggests that before the government got involved in education in England and Wales and the United States, there was widespread private provision of education, which was crowded out by the intervening state. Coulson takes up the historical case in ancient Greece (among other places), and providing detailed economic and conceptual arguments to support the case for markets in education, and he challenges the idea that public education can promote social cohesion and equality of opportunity. Tooley takes up similar themes, conducting a thought experiment to explore historical, philosophical, and economic arguments that suggest the desirability for an increased role for the private sector in education–including addressing the objections to for-profit education.

Playwright George Bernard Shaw once quipped that the Americans and the British are divided by a common language. Nowhere is this more obvious than when we speak of the role of government in education. The British, for reasons buried in historical time, call their most elite private schools public schools, and other countries such as India followed this usage. To avoid confusion, this article will follow the more logical American usage, where public schools are those funded by government, and private schools are those that are not.

Education As a Public Good

It is often argued that education is a public good, and that this implies a particular role for government. Economists define a public good as satisfying up to three conditions: (1) indivisibility, (2) nonrivalry, and (3) nonexcludability. Indivisibility can be illustrated by the example of a bridge over a river, which can be used by anyone without extra costs being incurred. Nonrivalry is virtually the same, except that it is the benefits available to every member of the public that are not reduced, rather than the amount of the good. For example, the good of hiking in the Grand Canyon could be, to a large extent, indivisible, in that many millions of people could do it without thereby hindering others also doing it. However, the greater the number of people who hike, the lower the enjoyment of those who wish to be in an empty wilderness–in which case the good is not nonrival. Finally, nonexcludability pertains when it is not feasible to exclude any individual members of the group from consuming the good. The classic economic example is of a lighthouse.

It would seem that education satisfies none of these conditions. It is clearly not nonexcludable, for a particular child can be excluded from a classroom or any other educational opportunity. The situation is similar for nonrivalry and indivisibility, for it is the case that if some children have the attention of an excellent teacher, then that teacher has less time for others, who therefore can obtain less benefit from the teacher. Indeed, it seems likely that it was precisely because of this nonrivalry or indivisibility that reformers wanted government to intervene in education–to alleviate this inequality of access.

However, if it is not a public good in this sense, education does seem likely to have neighborhood effects, or externalities–defined by economists as when an activity undertaken by one party directly effects another party's utility. That is, there are likely to be benefits to the community or society at large (if there are educational opportunities available) in terms of equality of opportunity, social cohesion, democratic benefits, law and order, economic growth, and so on. Crucially, these externalities are likely to exhibit a large degree of nonexclusion (it is costly to exclude people from these benefits or costs) and there are usually considerations relating to nonrivalry or indivisibility (the external benefits or costs are likely to be available to all with near zero marginal costs). For example, a society lacking in equality of opportunity could be a dissatisfied, lawless society. One could exclude oneself from the problems of such a society, but only at the expense of burglar alarms, bodyguards, high fences, or by restricting one's movements. It is in this sense that education could be referred to as a public good; and it is in this sense that it could legitimately be argued that education needs government intervention to ensure its provision and obtain these externalities.

From these considerations, the discussion would need to focus on the perceived effectiveness, efficiency, and equity of public education, and the presence, or lack, of private initiatives. These concerns bring us squarely back to the major reasons adduced earlier for questioning the role of government in education. So, what of these reasons?

Standards and Efficiency

As far as the first reason is concerned, while doubts have arisen in many countries about standards in public schools, it is not until comparisons are made with private schools in the same countries that the role of government is significantly questioned. This comparative approach started with an 1982 American study by James Coleman, Thomas Hoffer, and Sally Kilgore, which predicted the score on a standardized test for an average public school student if he or she were to attend a private school. The study found that private schools were more effective at developing the cognitive abilities of students. After responding to criticisms that innate ability had not been controlled for, a follow-up study substantially confirmed the results.

Numerous studies since then have been carried out across a wide range of middle-and lower-income countries, all of which have found that private schools not only are more effective educationally (when controlled for socioeconomic factors), but are also more efficient. For instance, studies from the World Bank began by looking at achievement in verbal ability in Thailand, following up with studies of achievement in language and mathematics in Colombia, the Dominican Republic, the Philippines, Tanzania, and Thailand again. The studies explored the proportional gain in achievement score if a randomly selected student, with the characteristics of an average public school student, were to attend a private rather than a public school, holding constant the student's socioeconomic background. While there was a large range, the studies all showed the superiority of private education in terms of raising these cognitive abilities. In Colombia the results showed that private schools were 1.13 times more effective than public schools, averaging for verbal and mathematical achievement. In the Dominican Republic private schools were about one-and-a-half times more effective in raising achievement in mathematics; and in Thailand, again for mathematics, private schools were 2.63 times more effective than the public schools.

One obvious objection was that private schools can succeed where public schools cannot because of increased resources. However, when the same researchers probed this issue, they found the opposite to be the case. Comparing the cost per student in a private and a public school gave results ranging from a low of 39 percent in Thailand to a high of 83 percent in the Philippines. Combining these two sources of information, the researchers were then able to gain an answer to the question: "For the same per-pupil cost, how much more achievement would one get in private than in public schools?" The answer ranged from 1.2 times (Philippines) to a massive 6.74 times more achievement (Thailand) in the private than in the public schools.

Finally, Geeta Kingdon's evidence from India reveals similar findings. Kingdon controlled for twenty-one potentially confounding variables–including parental and family income, number of years of mother's education, number of books in the home, and student aptitude–for her study of a stratified random sample of schools in urban Lucknow, Uttar Pradesh. She found that the (unaided) private schools were 27 percent more effective at teaching mathematics, and slightly more effective at teaching language, than the public schools. But when per-pupil costs are brought into the equation, the results become quite striking. In the (unaided) private schools the per-pupil cost was less than half that in the public schools (38 rupees compared to 80 rupees).

Equity and Accountability

Doubts about public education that inform the debate about the role of government in education also focus on the fairness of public provision, although this is countered by doubts that privatization could be more equitable. In many countries, however, it has been observed that, despite public expansion of funding and provision, the expansion has not reached all members of society equally. Particularly acute is the wide gap in terms of educational provision offered to urban and rural populations. In Indonesia, for instance, only 3 percent of urban children of primary school age did not receive any schooling; while in the rural areas this figure rises to 10 percent. These comparison figures also obscure the fact that gender disparities in rural areas are even more severe. In Pakistan, for instance, while 73 percent of urban females age seven to fourteen have ever attended school, this figure plunges to 40 percent for rural females in the same age group.

In the poorest countries, it might be thought that spending on basic education would be a government priority, since these have yet to achieve universal primary-school enrolment. However, this often does not happen. In Africa, for instance, per-student spending on higher education is about forty-four times higher than on primary education. In most African nations, the poorest 20 percent of the population get significantly less than 20 percent of public education subsidy, while the richest 20 percent receive significantly greater than 20 percent. Most dramatically, in Nepal, the richest quintile gets almost half of total public spending on education.

Some of the most dramatic evidence of the inequity of public provision, which also raises the issue of accountability, comes from India. The PROBE Team's Public Report on Basic Education in India (1999) looked at primary education in four states, where it surveyed a random sample of villages in which there were a total of 195 government and 41 private schools. The report outlines some of the "malfunctioning" that is taking place in government schools for the poor in these four states. The schools suffer from poor physical facilities and high pupil-teacher ratios, but what is most disturbing is the low level of teaching activity taking place in them. When researchers called unannounced, only in 53 percent of the schools was there any teaching activity going on. In fully 33 percent, the head teacher was absent. The PROBE survey reported many instances of "plain negligence," including "irresponsible teachers keeping a school closed or non-functional for months at a time" and a school where "only one-sixth of the children enrolled were present" (p. 63). Significantly, the low level of teaching activity occurred even in those schools with relatively good infrastructure, teaching aids, and pupil-teacher ratios. Even in such schools, "teaching activity has been reduced to a minimum, in terms of both time and effort. And this pattern is not confined to a minority of irresponsible teachers–it has become a way of life in the profession" (p. 63).

These problems highlight the "deep lack of accountability" in the public schools, for these problems were not found in the private schools. The PROBE Team found a considerably higher level of teaching activity taking place in the private schools, even though the work environment is not better in these schools. For the researchers, this "brings out the key role of accountability in the schooling system. In a private school, the teachers are accountable to the manager (who can fire them), and, through him or her, to the parents (who can withdraw their children). In a government school, the chain of accountability is much weaker, as teachers have a permanent job with salaries and promotions unrelated to performance. This contrast is perceived with crystal clarity by the vast majority of parents" (p. 64).

All of this evidence is leading some governments and international agencies to wonder whether or not public education can reach the poorest in society, or whether some form of public-private partnership–perhaps with publicly funded vouchers being available for use at any school, public or private–would be a better role for government to play if reaching the poor is its aim.

Private Sector Alternatives

The existence of private schools for the poor in India might come as a surprise. In fact, this is a growing phenomenon throughout the developing world, and relates to the third major reason for the growing questioning of the role of government in education, the emergence of apparently viable private-sector alternatives. Schools for the poor are commonplace across a range of countries, including in India, where recent research has revealed a whole range of schools charging about $10 to $20 per year for each student, run on commercial principles and not dependent on any government subsidy or philanthropy. These fees are affordable by families headed by rickshaw pullers and market-stall traders. Even so, many of these schools also offer significant number of free places (up to 20 percent) for even poorer students, allocated on the basis of claims of need checked informally in the community. Similar schools have been reported in many African countries as well.

The emergence of private education alternatives is not only about the poor, of course. Recent research has uncovered a whole range of interesting examples of educational entrepreneurs who are creating innovative and effective private alternatives. The International Finance Corporation found for-profit education companies in developing countries that had created chains of schools and colleges, often operated on a franchise basis, with strict quality control procedures in place (including using the international standards of ISO 9000 series). These companies invest in research and development to explore new ideas in pedagogy and curriculum. Examples include Objetivo/UNIP in Brazil, which has over half a million students from kindergarten to university level across its 500 campuses around Brazil; and NIIT, based in New Delhi, which offers computer education and training in its forty owned centers in the metropolitan areas, and about 1,000 franchised centers across India. It also has a global reach, with centers in the United States, Europe, Japan, Central Asia, Africa, and the Asia-Pacific region.

Notably, private entrepreneurs have harnessed information technology to the learning process. There has been a rapid growth of for-profit private-sector providers in education at all levels, creating elearning opportunities in developing as well as developed countries. Many of these are in direct competition with traditional public-sector providers, such as the University of Phoenix, with 90,000 students across thirty-two campuses and seventy-one learning centers. However, many traditional universities have also responded to the challenge by either creating for-profit subsidiaries themselves–New York University, for instance, set up its NYOnline arm, and Columbia University created a for-profit arm, Fathom Knowledge Network Inc., in partnership with Cambridge University Press, the New York Public Library, and the University of Chicago. Other for-profit companies are emerging to provide elearning for the K–12 market, including the appropriately named k12.com, led by William J. Bennett, the secretary of state for education during the Reagan administration.

The emergence and strength of these private-sector alternatives has impressed many governments looking to improve the quality and efficiency of public schooling. The British government is currently engaged in a process of contracting out failing schools and local education authorities to the private sector, trying to find best-value service wherever it can be found. But this process is not confined to developed countries. One notable example comes from India, where the Tamil Nadu state government wanted computer education in all high schools. Significantly, although allocating extra funds to this endeavor–about U.S. $22 million over five years–it didn't look to the public sector to provide this, but instead developed a model to contract out the delivery to private companies, who provide the software and hardware, while the government provides an electricity supply and the classroom. Significantly, companies that have won these contracts, such as NIIT, can also use the classroom as a franchised center, open to the school children and teachers during the day and open to the general public in the evenings and on weekends. The contracting out of curriculum areas such as this represents an important step forward in relationships between the public and private sectors, and provides an interesting model worth watching and emulating.


The debate will continue about the changing role of government in education, but there is considerable practical innovation and experimentation taking place globally that points to an acceptance of the changing role for government in educational delivery. Three types of reform can usefully be distinguished.

The first is the contracting out model, in which a state school has some or all of its educational functions contracted out to the private sector under accountability guidelines established by the local and/or central government. Education management companies such as Edison Schools in the United States and 3Es in England fit into this model, where all of the educational functions–pedagogy, curriculum, school management and improvement–are taken over by the private company.

Second, there is the demand-side financing model, which allows students to exit state schools–often when these are failing–and move to private schools through state-funded vouchers. Such schemes are found all around the world, including in the United States, Chile, Colombia, and the Ivory Coast, to name a few.

Third, there is the state-funded private school model, where either private schools are allowed to opt-in to state funding (as in Denmark and Holland), or new independent schools are specially created under government regulations to receive state funding, (as with charter schools in America, Canada, and China, and City Academies in England and Wales).

In Denmark for instance, the first private schools gained state subsidies in 1899. Now, any group of parents can claim the right to create a private school. Once established and running, the state guarantees to provide 80 to 85 percent of expenditures in the school. Some of these free schools are religious schools, but the majority are not: instead they are Rudolf Steiner schools, German minority schools, or simply independent academicallyminded schools. Such private schools are becoming increasingly attractive to parents, with enrollments rising from 8 percent in 1982 to 12 percent in 1998.


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