Q. Why should there be government intervention in education? Why can education not be like a commodity/​service that is bought and sold in markets? 

A: Government interventions are needed when the market ​‘fails’ to provide goods and services that are needed by society. ​‘Public goods’, like streetlights, are one example of market failure. If a private company provides streetlights, it has to collect a charge from users. It is not possible for it to prevent the use of streetlights by those who do not pay for it. Hence, streetlights are provided by (local) governments. However, education is not such a public good – any child who does not pay the school fee can be kept out of the school.

Education is a public good in the sense that there are multiple benefits to society as a whole when most of its people receive education. It may help to increase the pool of skilled workers, reduce family size and infant mortality rate, and improve health indicators for all. It is difficult to exclude somebody from enjoying the benefits of an educated society. This could be the reason for calling education a quasi-public good. 

There is also the issue of ​‘negative externality’ warranting government intervention because the lack of schooling of some people may impose a certain cost on society. (They may have more children, there could be more poverty and a higher level of certain kinds of crimes, unhealthy practices may be followed, etc.) If the decision of whether to educate the child or not is left to parents, some may not use education, and that can be harmful to them and others. People may not know whether the other person who is interacting with them is educated or not (that is a reflection of information asymmetry). This is the reason why students’ exams are conducted by examination boards. Even educated parents may not be able to judge/​evaluate everything that happens in schools due to the lack of information and information asymmetry. Then, one can imagine the case of less educated parents, who constitute the majority in India. This may also warrant government intervention in education. Moreover, governments can decide the broad outline of the content and nature of education provided in all schools.

Q: Most people would agree that there is a need for some form of government intervention in education. Does that mean that governments must run all schools and colleges? Can private schools and colleges not provide education within the regulatory framework of governments? 

A: Everybody would agree that some children (or their parents) do not have the money for their education. Hence, there is a need for financial support from the government to ensure that all children get a school education. However, some may argue that ​‘education for all’ is possible when governments provide money to poorer parents who can then, choose a school (government or private) for their children. They may consider private schools as they are considered more efficient or effective. However, there are different challenges when the government uses one or other kind of private schools to meet its goal of ​‘school education for all’. 

Q. Governments can give money to private schools to provide education to all students (including poorer ones). What are the challenges in this regard? 

A: This is the idea behind government-aided schools in India. Such schools comprise the majority (55 percent) of all schools in the state of Kerala. How to ensure that the private schools that get grants from the government meet the needs of the state and what should be the nature of funding are complex issues which may have an impact on the effectiveness and efficiency of the service (of providing education). 

If the money is provided per student, a school may admit all students but may not provide quality education. This happens when schools appoint teachers who are willing to work for lower salaries. If teachers’ salaries are directly given by the state, profit-oriented private managers may appoint teachers who pay higher bribes to them. This practice is widely prevalent in Kerala, where the government directly pays the salary to teachers in aided private schools. It is difficult for public authorities to monitor and control such private transactions between people who both have an interest in such transactions, even if these are illegal. 

If the financial support is given on the basis of the number of students a school admits, there can be an over-reporting of enrolment in schools. This may also happen if the state provides the salary of teachers based on the number of students. This will require continuous monitoring of the attendance in all schools so that children from other schools are not ​‘hired’ to demonstrate an exaggerated attendance in a given school. If the government provides a lump-sum grant to a school, it may cut costs by reducing enrolments because there is no incentive to enrol all eligible children from the locality. 

If extra money is given to parents based on the attendance of their children in school, it may require supervision to avoid manipulation of attendance records in the schools through collusion between parents and school authorities. This is especially so when parents do not have a great interest in sending their kids to school regularly. If the funding is based on the performance of students, the school may have an incentive to deny admission to those students who do not do well in examinations.

Though private schools may be efficient in terms of expenditure, they may give lower salaries to the teachers. The higher salaries in government schools may encourage many teachers to join private schools while aspiring for permanent appointments in government schools or other better-paying jobs. Consequently, a major part of their time may be taken up by preparations to this end, and it will reduce the time available to them to enhance their capacities for a long-run, effective teaching career. For all these reasons, the strategy of using for-profit, private schools to improve the access to school education may not be suitable.

Q. One can argue that not-for-profit private schools can be used to achieve the government’s goal of education for all. These may not behave as opportunistically as for-profit private schools. What is your view? 

A: In fact, the majority, if not all, private schools claim a ​‘not-for-profit’ status, but one can identify practices which are aimed at increasing ​‘profit’ for the owners. In order to ensure that an educational institute is really not-for-profit, there may be a need for somewhat intrusive regulations or monitoring on the part of the government. For example, there may be a need to know the actual costs and to regulate fees and other payments collected from students. Such intrusive regulations may not be liked by the NPO/​sNGOs that run these schools. However, the absence of regulation can be costly, especially if the government funds schools with certain social objectives (for example, to ensure that children from poorer backgrounds get an education in such schools). Therefore, the incentive problems that governments encounter while contracting with the for-profit private schools (discussed earlier) may be encountered in an even worse form in schools claiming to be not-for-profit. 

Yes, there are a set of schools which devote a lot of effort to education without any goal of making money. These may take care of certain public concerns in the domain of education. There have been religious organisations in the provision of education historically. In general, the social priorities in terms of education need not be fully taken into account by these NPOs. The content of education may reflect the ​‘ideals’ of the organisation. For example, there can be more ​‘religious content’ in the education provided by a religious NGO than what may be desired by the larger society.

Even those NPOs which focus exclusively on education and do not function along religious lines may have their own ideas on ​‘desirable education’. For example, a number of schools opened in independent India that followed the ideals of Mahatma Gandhi. A few well-known alternative schools are functioning in India, which follow J Krishnamurti’s ideas on education. Even if there may be nothing explicitly wrong with these ideas from a social point of view, there could be sections of the society which may object to such ideals. For example, the basic schooling experiment promoted by the Gandhian schools was not attractive to many parents. Parental ideas or norms about what constitutes desirable education are likely to be influenced by their socio-economic status. For example, those who send their children to alternative schools, like the ones run by the Krishnamurti Foundation of India (KFI), come from specific socio-economic, intellectual or cultural backgrounds. The ideals of secular NPOs can also limit the reach of the educational institutes run by them, even if they have no intention to exclude any section of the society.

There could be other reasons which limit the reach of schooling provided by the NPO/​NGOs. There may be geographical areas where such organisations are not willing to work. This may be driven by the debilitating environment in a specific social context. There may also be areas where these organisations cannot work even if they wanted to. For example, the social situation could be adversarial to the functioning of a church-run school in many parts of India. These are the reasons that there are lakhs of villages in India where there are no schools run by NPO/​NGOs.

Coming to their financial capacity, schools run by NPO/​NGOs have three generic sources of funding: (a) cost recovery from parents, (b) other sources of charitable funding, and © the government. If the funding is provided by the parents, the school can cater to the needs of only those who can afford to pay. That itself may limit the scope of these organisations in terms of education for all. A few of these organisations may run schools by following a policy of cross-subsidy whereby wealthier parents pay a higher fee so that the cost of education of the children from poorer backgrounds is subsidised. However, such cross-subsidisation policy among the children who use a single school may not generate substantial resources to support all the children who need such financial support in a locality.

The NPOs may start schools with certain broader social objectives, but there can be a gradual decline in their mission in the long run, and the schools may begin to function like other enterprises that run for their own sake. It may also bring into play perverse incentives which may work against the realisation of social objectives. For example, a number of aided schools in Kerala managed by religious and caste associations have started appointing teachers by taking bribes from them since teachers get salaries from the government. The management may also be inclined to appoint teachers belonging to a specific caste or religion, flouting regulations to base the selection on merit or the reservation policy.

If the government funds a major part of the expenditure of schools run by NPOs, there is no reason why they should remain non-governmental schools. It may lead to a situation where the government cannot reduce funding on the one hand and cannot regulate (the appointment of teachers, salaries, and so on) on the other. Hence, the provision of education by the NPOs/​NGOs has to be seen as complementary to what is to be done by the state and not as a substitute for the governmental provision.

Q. Many studies indicate that private schools perform better than public schools in terms of the quality of education. Why are learning achievements better in private schools in India?

A: Yes, there are studies which note that the learning achievements of students (as evident from test scores) in private schools are better than those of students in government schools. The annual surveys on learning achievements collected and compiled as Annual Status of Education Reports (ASER) note that achievements in private schools are significantly higher than those in government schools. However, another study (Muralidharan and Sundararaman, 2013; Karopady, 2014), a randomised control trial conducted in Andhra Pradesh, could not see a significant improvement in the scores of children who were randomly shifted to private schools (as part of the intervention). On the other hand, students who were in private schools originally (at the start of the experiment) scored significantly higher than the students in government schools. How do we interpret these contradictory results?

We have seen (in other Q&A notes) that educational achievements are influenced not only by what is happening inside the school but also in the households, besides other social factors. The studies conducted in India point to the influence of ​‘tangible’ social and economic factors. Cycle 3 of the National Achievement Survey (NAS) has shown that students from minority groups, comprising Scheduled Castes, Scheduled Tribes, and Other Backward Categories, scored significantly lower than students in the General category. (The family size was found to be a factor that had a significant impact – the scores of children coming from larger families were very poor when compared to the average.) Parental education was found to be important in the mid-term assessment (MAS) of the NAS. The children of college-educated parents did significantly better than those who had illiterate parents. Our analysis of data showed that these social and economic factors influence student achievement: gender, being a scheduled caste or a scheduled tribe (SC/ST), the economic status of the household, parental education and paid tuition. The economic status of the family was measured by aspects and assets such as having access to water, a toilet in the house, type of house, number of rooms, and possessions like a TV and vehicle. These were then converted to an index. A higher ​‘affluence’ index had a significantly positive effect on achievement. 

The role of socio-economic factors evident from these studies explains the higher learning achievements noted in private schools in India. Private schools are used by parents who are not only better off in terms of their socio-economic status but also more concerned about the educational achievement of their children. A similar socio-economic background could be the reason that the children who were moved to the private school from the government school and the children who remained in government school showed no significant difference in their learning levels. However, children who were already enrolled in private schools did significantly better. Presumably, this set of children had parents who displayed a greater demand for education than those who went to the government school. The difference in the learning levels between the children who originally went to the private school and those who were randomly moved there through a lottery system can be taken as the effect of the parents’ demand for education.

Q. Government schools may be important to achieve ​‘education for all’. But there are allegations of ineffectiveness on teachers in these schools. What can be done to address this issue? Can there be financial incentives (and disincentives) to enhance their effectiveness? 

A: People are motivated by incentives – financial (or material) and non-financial (such as awards or social recognition). There is also intrinsic motivation, like doing the right thing, in some people. It is believed that teachers need to have high levels of intrinsic motivation to be effective.

There is a common perception that financial and non-financial incentives work in the same manner, that is, the motivation they provide is the same. It is also believed that a person interested in doing a better job due to intrinsic motivation can be further motivated by financial incentives. However, incentives and intrinsic motivation may not work towards the desired result in the same way in every situation. An interesting case came from a systematic study in Israel. A small section of parents of children in a playschool had been coming late to pick up their wards after school. This created a problem for the caretakers since they had to stay back even if one child was left behind. The playschool instituted a fine to address this problem. Parents who came late were required to pay a fine. Surprisingly, many more parents started to come late. Even those who were coming on time earlier because they felt it was not the right thing to do to hold the caretakers back beyond their normal working hours began to come late. This was because when the fine was introduced, they thought that the extra time of the caretakers could be bought without any ill will. This is a case where the introduction of a financial/​market incentive led to the disappearance of intrinsic motivation.

In the case of schooling, too, financial incentives working against the expected work is not an uncommon phenomenon in India. Let us consider this hypothetical case: A government allows teachers in schools to charge a fee to provide extra attention to those children who need such assistance. One would not be surprised to see some teachers compelling even those children who may not need extra assistance to pay the extra fee. Hence, we need to be careful in instituting financial incentives as a way to improve the performance of school teachers.

Q. What could be the reasons that government schools are less effective (requiring people to use private schools) in countries in India? 

A: The percentage of children studying in private schools in India is significantly higher than that in many developed countries, including those in the US and Europe. Schooling in India is already highly privatised, with around 30 percent of schools in the country in the private sector. This trend is likely to continue in the future. There will be no surprise in this regard if we look at the other services in India for which governments in different parts of the developed world play a major role. The use of private health care in India is much higher compared to the European countries. Even the poor in India, who are expected to be the beneficiaries of the government-provided health care system, depend on various kinds of private health and medical-care providers. In that sense, privatisation in health care is also more ​‘advanced’ in India. In summary, for goods and services which ideally require different kinds of state intervention, people may even depend on poor-quality (and higher cost), unregulated private providers when they are at lower levels of development. Hence, the higher dependence on ​‘private’ providers for education and healthcare in India is a reflection of its underdevelopment. 

We don’t see enough societal action to create an effective public provision in services, such as schooling in India. There could be different reasons: the protracted underdevelopment of some sections of the society is one. The lack of demand from some people, as reflected in their unwillingness to make efforts to create and sustain public systems that provide quality service, could be another. A collective effort is important even for exercising the voice option, which is needed to make public provision more accountable and more responsive to the needs of people. The social fragmentation that makes an across-the-board collective action in society difficult and adds a cost could be yet another reason. We need to understand the relevance of these different factors in the context of schooling in India, and that may require more research and reflection.

Author

Santhakumar V is a former Professor, Azim Premji University, Bengaluru

Photo

Featured photo credit: Purusottam Singh Thakur, Azim Premji Foundation

Primary reading material 

Santhakumar, V. The Need to Strengthen Government Schools. University Practice-Connect. 
https://​prac​tice​con​nect​.azim​premji​u​ni​ver​si​ty​.edu​.in/​t​h​e​-​n​e​e​d​-​t​o​-​s​t​r​e​n​g​t​h​e​n​-​g​o​v​e​r​n​m​e​n​t​-​s​c​h​o​o​l​s​-​i​n​-​i​ndia/

Gneezy, U., Meier, S. and Rey-Biel, P. 2011. When and Why Incentives (Don’t) Work to Modify Behaviour. Journal of Economic Perspectives, 25 (4). pp. 191 – 210.

Hanushek, E. A. and Luque, J. A. 2003. Efficiency and Equity in Schools Around the World. Economics of Education Review. Elsevier, 22(5). pp. 481 – 502.

Karopady, D D 2014. Does School Choice Help Children from Disadvantaged Sections. Economic and Political Weekly, 49 (51). pp. 46 – 53.

Lee, J and Shute, V. J. 2010. Personal and Social-Contextual Factors in K‑12 Academic Performance: An Integrative Perspective on Student Learning. Educational Psychologist, 45(3). pp.185 – 202.

Muralidharan, K. and Sundararaman, V. 2013. The Aggregate Effect of School Choice: Evidence from a Two-stage Experiment in India. NBER Working Paper No. 19441.

Reeves, E. 2008. The Practice of Contracting in Public-Private Partnerships: Transaction Costs and Relational Contracting in the Irish Schools Sector. Public Administration, 86 (4). pp. 969 – 986.

Sandel, M. J. 1998. What Money Can’t Buy: The Moral Limits of Markets, The Tanner Lectures on Human Values.
http://tannerlectures.utah.edu/_documents/a‑to‑z/s/sandel00.pdf