It's amazing how Will Hutton misses the point again
It's entirely astonishing to find that Will Hutton has missed the point again. Here he's talking about education, the costs and returns to it. And he manages to use as examples the very facts that prove his argument wrong.
Although the proposition was that there would be a range of fees, few universities charge less than £9,000 a year. Indeed, average fees are about £8,400. Accommodation and living costs have to be paid for on top, so that almost whatever university a student attends or whatever the degree taken, he or she will end up with about £45,000 of debt.
OK, £45k of debt. It's a lot I agree. But is it worth it?
There are insufficient jobs that pay enough to allow even a fraction of each year's 340,000 students to escape the trap. The average salary is £26,500. Only about 10% of the population earn more than £41,000. Even allowing for the fact that wages usually rise faster than prices (though they have not since 2006), it follows that many, perhaps even the majority of, students will struggle to fully pay back their debt.
Will doesn't think that the extra earnings of those graduates, for most of them at least, make up for the debt costs they've got to pay back.
OK, let's agree so far. What is therefore the solution?
For Hutton it is that everyone should be taxed more so as to pay those fees on behalf of the students rather than making them borrow to pay them themselves.
Unfortunately, those facts that he's using lead us to entirely the opposite conclusion. If we've got a cost that is higher than the benefit then this is a signal that we should stop doing this thing. Hutton is indeed arguing that the cost of a university education is higher, for many to most people, than the benefit that comes from having one. This is true whoever is paying the bills. Therefore we would rather like to have fewer people going to university.
But that leaves us with another problem. For some people university is definitely worth it. For others not. So how do we select those for whom it is and those for whom it is not?
Well, actually, that's one of the things that a price structure does for us. We make clear the costs of something and people will decide themselves whether they're willing to pay that price. That is, whether it is worth it for them. Whether Media Studies from an ex-technical college is worth £45,000 isn't something that you, I or Hutton should be deciding. It's something that people considering doing Media Studies at an ex-tech should be deciding. So too with English at Cambridge or physics at King's.
Do also note that once we have prices clear we don't have to assume that people will then decide purely on the financial return: Everyone will ascribe some value to the 3 years of uni, some might even ascribe value to the intellectual stimulation, whatever the degree.
But the important point here is the basic one. Hutton is arguing that university does not make sense in terms of value added for most students. He therefore proposes subsidy for those students. Which is ridiculous. If the activity is not value adding we don't want more of it, we want less of it.
If you've not got the skills then maybe it's the institutions?
There's been much fussing about education and skills these past few days as a result of another information release showing that various countries have higher educational skills than others. And also that various countries have higher incomes than others. An example here:
The good news for Americans in a new international study of adult skills is that the U.S. ranks near the top in gross domestic product per capita, behind only Norway. The bad news is that Americans are so far behind in their skills that it’s hard to see how they can stay at the top for long. The figures are contained in a report by the Organization for Economic Cooperation & Development called OECD Skills Outlook 2013.
That's not quite the way that I would read it myself.
Think through this for a moment. Wealth, GDP, income, call it what you will, it's a function of two things, the endowment and the efficiency with which that endowment is used to produce the wealth, income, gilt and pelf. So, if we're got one nation full of dumb lardbutts which is still one of the richest in the world while we've others heaving with the highly educated and knowledgeable which are poorer then we've got to assume that the efficiency with which that endowment is exploited must be higher over there with the lardbutts. We could go to the PJ O'Rourke extreme at the other end of course and note Russia where chess is a spectator sport yet they're boiling stones for soup.
This is important: that education, that human capital, yes, it is indeed an addition to the endowment off which that GDP is created. But then so also are the various institutions through which it is exploited. So these figures do not quite show what everyone has been saying: that everyone had better get their education act together. Desirable though that is of course. For we are also able to note people with lots of that human capital which do not exploit it efficiently. To these countries we should be saying that you too need to get your act together: change those institutions.
And here's the thing. Just casting an eye along those whose income position is markedly higher than their human capital one, they do seem to be the places running some variant of that Anglo Saxon capitalism and free market racket. Perhaps those places do need to sort out their education: but the greater efficiency also shows that everyone else needs to sort out their institutions.
Free school meals aren't as tasty as they sound
All children at infant schools will be given free school meals from 2014, Nick Clegg has announced, at a cost to the taxpayer of £600m.
On the face of it, the policy is extremely bad. Children of parents earning less than £16,190 and/or receiving income support or other kinds of welfare are already entitled to free school meals, so, other than children whose parents are unaware that they are eligible, the main beneficiaries of this policy will be the children of middle-income families.
That’s the wrong kind of redistribution. There is a decent case for helping the children of poor families who simply cannot afford to give their kids a decent packed lunch, but extending that to all children requires pretty big (and probably wrong) assumptions about parental fecklessness and state effectiveness.
But there is a complication. Trials that tested universal free school meals in schools across three local authorities between 2009 and 2011 found that extending meals to some students didn’t do much, but making them universal correlated with 1.9% and 4% improvements in literacy at Key Stages 1 and 2 respectively and 2.2% and 5.5% improvements in maths at Key Stages 1 and 2. (pp 143-144)
If those numbers really were caused by making free school meals universally available (and they were more cost-effective than alternative ways of spending that money), there would seem to be a strong case for the policy. However, the authors of the government’s impact report point out that, basically, they don’t understand why this relationship exists. Neither attendance nor behaviour were affected, so they assume that free school meals led to greater classroom ‘productivity’.
What if they’re missing something and the free school meals aren’t the causal factor? Or what if nationwide implementation has bad unintended consequences we can’t foresee?
That’s exactly what happened when California rolled out a state-wide class-size reduction programme, an example given by Nancy Cartwright. Despite doing well in randomized controlled trials in Tennessee, in California the programme had no real effect on outcomes. The sudden need for lots of new teachers meant that more bad teachers were hired; and not all of the factors that made smaller classes helpful in Tennessee were present in California. Evidence isn’t always as transferrable as we’d like it to be.
That’s not really a good reason to think the policy will fail, but it should temper our enthusiasm for rolling it out nationwide. What works in Wolverhampton might not work in West Sussex. Indeed, what works in a particular school in Durham might not work in another school across the county. In some schools, universal free school meals might be just what the doctor ordered. In others, headmasters might think that fixing their school’s dodgy central heating would be a much better use of the money.
Ultimately, it boils down to the principle we go on about again and again here at the ASI: devolving choice down to the most basic units possible. The available evidence does suggest that “universal free school meals” are a good policy, but that evidence is quite limited. The complexity of these things means that rolling it out nationwide might not achieve what we’d hope.
Better to give schools the money and the information and let them decide what to do with it. That way, instead of basing a national policy on the results of a few randomized controlled trials, the process of experimentation and discovery can be ongoing across the country.
Of course we should stop subsidising arts degrees
Not that we particularly do subsidise arts degrees, not in England we don't. Students now borrow to pay the course fees for the subjects they study which is as it should be. But some interesting research about why we shouldn't ever go back to subsidising arts degrees whatever else we do with tertiary education. The basic point being that hard and social science degrees contribute to economic growth. Arts degrees do not. The full paper is here but this is probably an easier summary.
Cristiano Antonelli and Claudio Fassio decided to open this Pandora box and concentrate on one impact: economic growth. They perform a cross-country study and take the number of graduates in each field as an indicator of academic output, and see where that leads us in terms of economic achievement. They make the distinction between engineering, hard, social, medical sciences, and humanities in a 11-year panel of 16 OECD countries. The horse race ends with two clear winners, engineering and social sciences, and two big losers, medical sciences and humanities, the latter having a significant negative contribution to growth.
The argument generally deployed is that having a better educated population increases economic growth: thus there should be subsidy to that education. Which is fine of course, but as this paper shows it does rather depend upon what sort of education produces the economic growth. And as we see, the social sciences and hard ones do indeed produce that growth and so there's an argument for subsidy. That the arts degrees do not produce that growth means that this particular argument for their subsidy fails.
But do note that last little part of it: arts degrees reduce economic growth. Quite why: well, have you ever actually looked at an arts degree syllabus these days? They might well instruct well on the importance of feminism to Jane Austen, say, but they do seem to misinform about everything else political and economic. Or it could be of course that it's just the opportunity costs: having intelligent people spending years arguing over the importance of feminism in Jane Austen is a drag on the economy when they could have been out designing bridges instead. Or even serving the coffees that their graduate degree will prepare them for.
But such gross cynicism aside this economic result does indeed lead to an interesting policy idea.
We're all familiar with the idea that there are externalities, that such externalities need to be corrected with the addition of a Pigou Tax. This is simply the flip side of the argument that positive externalities (like, say, the public good of economic growth coming from science education) should be subsidised. Those science and social science degrees produce that increase in economic growth which is indeed a public good worthy of subsidy. Those arts degrees produce a negative externality which must be corrected by a Pigou Tax.
At which point the correct policy is obvious: we should charge the arts students twice the normal fees in order to subsidise the science students. It's a win/ win situation I feel.
Schools don't need a new curriculum, they need freedom
Today’s announcement of the reforms to the national curriculum have been met with both praise and displeasure from varying sides of the debate, with Anthony Seldon, head master of Wellington College, heralding the new curriculum as giving essential “building blocks” to allow children to progress with more complex ideas, whilst Brian Lightman, general secretary of the Association of School and College Leaders reacted more critically, suggesting that, “unlike previous versions of the national curriculum, which were drafted with a heavy involvement of teachers and school leaders, these proposals have been driven and closely directed by politicians without that professional input."
However, it is not the allegedly more demanding content of the curriculum which is concerning, nor the way in which many regard it as too heavily under the control of politicians rather than teachers themselves, rather, the continued way in which the government forces what it feels is right upon parents and school children, instead of giving them influence over what their own child learns. Not only does this exemplify the overarching nature of government in the UK, but the emphasis this new curriculum puts on force feeding facts to pupils, under the pretence of providing them with “core knowledge”, besides removing any individuality or element of choice, also is likely to reduce interest in the subjects amongst the pupils, as its less independent nature prevents the students from taking the initiative and developing their study into areas which interest them.
Furthermore, this “one size fits all” approach to the curriculum does not take into account those children with special educational needs, who are approximately 20% of the student body in the UK. This only highlights the problems with the inflexibility of the government and this new curriculum, and shows the need for more choice within schools and for parents to allow them to ensure that all children can receive an education appropriate to them.
Fortunately, this new curriculum is not being enforced on the country’s academies, whose independence allows them to better provide for children individually. However, it must not be forgotten that in fact, although the government has less direct control over academies (e.g. they are not subject to the new curriculum) this may be replaced by the influence of the academy’s main sponsor, rather than parents, so they may not be ideal for providing a more independent education.
Whilst academies are not necessarily the only or ideal solution, currently they appear to be the best available option, due to their relative independence. In addition the way in which they specialise in one area of study allows parents to find a school more closely in line with their children’s strengths and weaknesses. On the other hand they have been criticised as being too selective, meaning that schools choose pupils, rather than the other way round, removing their key justification. Therefore, although they are a step in the right direction, more needs to be done to create both a more flexible curriculum and school system, as while they make up over 50% of English secondary schools, they represent only 13% of the overall maintained sector, which badly needs an injection of freedom.
Why Gove is right to back for-profit schools
A report in the Independent based on alleged leaks by Department for Education civil servants suggests that Michael Gove is preparing plans to allow academies and free schools to be run as profit-making institutions, bringing cash into education from hedge funds and venture capitalists. Although many on the left are hostile to the idea of profit-making schools, as they are to profit-making in general, the evidence suggests that Gove is right, and that this could result in the rapid expansion of free schools delivering a high quality education.
It is obviously a good thing when parents, teachers and local businesses work together to establish a free school, and there have already been several examples that point to an extension of educational opportunity as a result. But they only have the motive to do this once and in their own area. Any lessons they learn stay relatively local, and the numbers of such schools set up depends on the availability of capital. The advantage of for-profit schools is that they bring investment. The cash needed to set up a new school is a major hurdle to be climbed, and outside investments helps it to be climbed. Secondly, the lessons learned can be applied to other schools set up in other areas by the same investors. Once there are chains of schools, the successes achieved by each can be extended to the others and built upon. When for-profit investment is allowed, the numbers of new schools will increase dramatically.
In Sweden, which pioneered free schools and permitted for-profit ones to be established, the free schools are now one in five of the total, and 65% of the independent ones are for-profit schools. Since the mid-90s free school numbers have gone from 122 to 1,091, and parental satisfaction with the for-profit schools there is far higher than it is for the government schools.
The argument that for-profit schools "divert money out of the classroom," as opposition spokesman Stephen Twigg has alleged, is absurd. This is akin to saying that for-profit food stores divert money from the table. In fact our food is supplied both plentifully and cheaply and of high quality by suppliers doing it for profit. That is why it has attracted the investment to make it widely available. We do not need to imagine what food would be like if it were provided at state outlets on a non-profit basis. We do not need to imagine it because we saw the example in the Soviet Union: low quality, short supplies and interminable queues. If the leaks are correct, Gove should be applauded for doing the one thing that will give millions of children an alternative to the low quality education that still pervades parts of the state system.
Think Piece: Good and bad arguments against positive discrimination
The US Supreme Court has just left one Texan affirmative action scheme in place, but it has recently busted schemes elsewhere. I discuss what libertarians should think about positive discrimination and affirmative action.
Many of the arguments libertarians make against affirmative action/positive discrimination do not hold. For example, it neither needs to interfere with equality before the law, nor does it need to imposed by state coercion. And in its favour, affirmative action may be one way to overcome some of unjust forms on inequality in our society. On the other hand, it is clearly not even close to the best way of dealing with unjust inequality. And some evidence suggests that these schemes actually hurt those they are designed to help. But without sufficient evidence perhaps the best short-term approach is to allow universities to experiment with their admissions process, so they can among them discover the best approach.
Ten reasons why the Left should like the ASI, 9: Choice
The Left ought to support our campaigns to put power over these services into the hands of the people who use them.
Some elements on the Left want the state services used to mould an egalitarian society, but others should side with the ASI in wanting to concentrate instead on improving those services in line with the needs and wishes of their users. The ASI views the centrally-planned top-down model as unsatisfactory and unresponsive, in that it delivers what its administrators think should be provided. The ASI instead has advocated and backed reforms that have state services responding instead to the choices made by recipients. Patients should have choices over where they are treated and, in consultation with their doctors, over which treatments they prefer. Parents should be able to choose which school their child attends. In both cases the state funding should follow from those choices and be directed to the institutions favoured by patients and parents.
Not everyone is equally equipped to make such choices, of course, but the ASI thinks that the choices made by those who are informed will lead the way in improving standards generally as others follow their lead. Much the same effect happens in the production of private goods and services; it is the informed customers who improve the goods and services for everyone else as suppliers try to attract them.
This introduction of choice to allocate state funding is not only a superior model in theory. It works in practice in some of the Scandinavian countries in both health and education, and succeeds there in raising standards as well as consistently attracting high levels of popular satisfaction.
Vouching for liberty in education
Victoria Monro was the runner-up in this year's Young Writer on Liberty competition.
Regrettably, one of the most sensible, pragmatic, and consequentially sound policy ideas of our time has never made it into policy – the education voucher.
The best version would be an education voucher, distributed annually to parents for each child, to be redeemed at any school of choice. In some cases, it would cover the full cost of a year’s tuition, in others, it would contribute to the cost with the parent topping up the remainder. The purpose of implementing a voucher is twofold. Firstly, it would provide an introduction of free-market practices to the sector, without being so radical as to be a complete privatisation.
It retains the element of public sector provision that would prevent an outcry – so-called “free” provision, whilst enabling the positive consequences that would speak for themselves, and remind the populace that a sector can be productive, successful and efficient without government intervention. Correctly applied across, it could pave the way for the gradual but meaningful movement towards a more economically-free society.
Secondly, the policy would reinforce the choice element of demand. The government would not be permitted to stipulate which institutions the vouchers could be used at, only which child is to be registered for education. New private schools could establish themselves as educational institutions and accept the vouchers as full payment, providing direct competition with the state alternatives. Like other private schools, they would have the ability to earn profit, and so new entrants would enter the market if they felt they could favourably compare both financially, and qualitatively, with the incumbent state comprehensives, whilst turning a profit. They undoubtedly could.
The idea of parents being allowed to choose schools due to location (“catchment area”) would be replaced by a business ethos – accepting parents and children, rather than turning them away based on their postcode. It would challenge the state-dominated status-quo.
Just like with most other service areas, people choose to purchase what gives them the most for their money. Educational quality is easier to measure than most, given as “quality” is based on exam results and league tables; this information about a school’s achievements is readily available from numerous sources.
There’s no reason for the State to maintain an iron-grip over how our children learn. Slowly, we can move to a situation where families choose and pay for the education provision themselves. This is the first step to getting there.
Incentivising excellence in education
There’s a broad mismatch between educational and broader societal progress that’s puzzling. How is it that schools are organised and education supplied today in basically the same way as they were a hundred years ago? The main difference between education and other sectors is the lack of incentives at work to raise performance.
The theory sounds simple: allow competition through choice, and the rest will follow. Of course, reality is not that simple. Choice operates within broader institutional structures that either support or undermine it. So system design, with attention to how to incentivise improvement, is key if we are going to see any genuine transformation in education.
In Incentivising excellence, I discuss how choice serves as a catalyst for improved quality, and propose reforms to this end. The proposals are underpinned by a comprehensive review of the international evidence that takes into account the methodological strengths and weaknesses of studies, while at the same time paying attention to the competitive incentives of different education systems.
The cross-national research, which focuses on long-term effects, finds that independent-school competition is positive for achievement in PISA, the OECD’s educational ranking system. Competition also reduces costs. The total efficiency gains are striking. This contrasts with PISA’s official report, which fails to note any benefits from competition. This report, however, is not an academic study and it is likely that methodological weaknesses are responsible for the results. There is consequently no reason to disregard the proper academic research on the subject.
In terms of national and smaller-scale programmes, the evidence is mixed. Studies either note positive or neutral impacts. The results showing negative effects of choice are few and far between, while some studies display large gains in various countries.
A key lesson is that most attempts by governments around the work to introduce choice have been flawed. Many regulate in such a way as to prevent strong supply-side dynamics from arising (often partly because the profit motive is absent), don’t allow schools enough autonomy, and prop up failing schools by giving them additional funds. Such constraints work against true competition.
The English school choice model suffers from these same shortcomings. With proximity as the main tie-break device, rich parents move closer to good schools, thus increasing residential segregation, leaving poor parents with few options. In England, therefore, choice has to a large extent been a chimera.
There is a role for the government in education. The benefits of education for society as a whole, and parents’ need for information that might not be in the interests of suppliers to provide, mean there is a case for government involvement in funding and information provision. But this is far from the prescriptive and dominating role the state currently plays.
Transforming the education system into an education market requires more than just the right to choose schools: it requires careful system-wide reform to a change the incentive structure fundamentally. Only then can we expect a revolution that increases productivity significantly.
Gabriel H. Sahlgren is the Director of Research at The Centre for Market Reform of Education. Incentivising excellence: school choice and education quality was published last week. The author’s policy recommendations for the English education system are given in a discussion paper, available to download from www.cmre.org.uk/publications