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Monday, September 19, 2005

how to judge efficiency in education

Judging efficiency can be a hard task. Judging efficiency in education can be even harder. I was on line reading about efficiency and education and found the best way to calculate it. Economist always want to know if they are getting the return on their investment. This is a critical idea when it comes to public education. On average, in Indiana, they spend$8550 a year for every student's education. Is this worth our tax dollars? The only way we have to judge is through testing.

In Indiana they wanted to identify the efficient allocation of tax dollars that went to education. In some districts they spend fifty percent of their tax dollars on education. This is huge. This information shows us that the American population spends a large amount of our tax dollars on education. Is it worth it? To judge the spending the economist used different identifiers, cost per student, teacher to student ratio, FTE's or percent ofemployees that work in the classrooms, they also used the score on state ISTEP. This is a test that judges the performance of each individual on math and english skills.

The cost per student in Indiana was an average of $8550. This money covers the materials neccessary to complete that school year. The next is student to teacher ratio. In Indiana the average students per teacher is 18.9 to 1. This calculation alone proves nothing due to the fact that there is a neccessity to have more teachers in urban schools. The next is the FTE. On average in Indiana 87 percent of the employees work in the classroom. The last identifier was the performanc on the ISTEP test. This score should be used lightly because there are more variables that play a part in its result, ie. parents contribution and environment. In the 2002-2003 school year 63.4 percent of sophmores were above the states math and english standards. This identifies that the education is providing some increase in human capital. With all this information how can we determine efficiency?

We can use the cost per student as well as the "overhead cost" to determine if the result, ISTEP, is worth the funding. The numbers identify some of the schools in indiana can be more efficient with their money. These identifiers could be used throughout the country.

If the federal government used its resources to judge the performance of school districts in a meaningful way, it is possible to make schools more efficient. I believe that public education is a neccessary public good. It has been show that the more human capital you have the higher production possibilities. It is also easy to see that the nations that have a higher per capita education spending provide a higher GNP. With all this information it is still neccessary to critic the services you are receiving. The American society provides a lot of money to education. We need to ensure that everyone has the ability to achieve a higher social status/budget line if they desire. This will allow society to grow as an aggregate.

I think it is interesting that economists spend so much time crunching numbers to determine whether or not pubic education dollars are being spent effeciently. Of course they aren't, government is never efficient. Efficiency results from voluntary market exchange. Inefficiency occurs when the market fails by producing monopolistic enterprise or externalities, or fails to provide some public good. Within this framework government should intervene when the market fails, if government action is going to better the situation.

You write I believe that public education is a neccessary public good. I disagree. Education is both rival and excludable. That sounds like a private good to me.

Perhaps this would simply change what you say to something like you believe the provision of education should be government's responsibility. Such a view would not be justified from the framework of efficiency, I'm not sure of a framework besides that of social welfare/justice, aka socialism, that would. What do you think?

Also, when considering public education I like to look at the work of John Stuart Mill, "Of Individualilty" in On Liberty.

A general State education is a mere contrivance for moulding people to be exactly like one another: and as the mould in which it castes them is that which pleases the predominant power in the government, whether this be a monarch, a priesthood, an aristocracy, or the majority of the existing generation in proportion as it is efficient and successful, it establishes despotism over the mind, leading by natural tendency to one over the the body. An education established and controlled by the State should only exist, if it exist at all, as one among many competing experiments, carried on for the purpose of example and stimulus, to keep the others up to a certain standard of excellence.

It would be a difficult argument to make that government controlled schools set the bar for excellence. Although some public schools may provide quality eduaction, the fact is many do not. If parents were free to choose among competing schools which would most effectively nurture and develop their child's unique abilities and strengths, perhaps greater human capital would result.

There may be a role for government in that government might be allowed to compete in the education market, but participation should not be madatory and vouchers should be issued to tax paying parents wishing to send their children to non-public schools. What do you think?
The statement I said, "education is a neccessary public good," needs to be restated, I agree. The fact that the market does allow for "private" schools, means that education is a marketable good or service. This does not unequivically mean that we should only have private schools, however. There is a role for the government in our education. I state this from the fact that if we have a perfectly competitive market, the level of education will drop. People from around the area will be educating your children from the back of their vans. This because you, or some parent, wants to save money. If we have a monopolistic market, the control of what our children learn will be in the hands of one corperation. This is a scary idea.

The market for education is alive. There are opportunuties for a company to start a "charter academy," if they want. The public sector must remain in the process of education. If it is federaly mandated that everyone between six and sixteen is in school, it would be unfeasable for them to ensure that all kids are participating in the free market. The public education system is not perfect, however, with more work on how to make it more efficient, we can ensure that a large populous of America has some higher form of human capital.
"I state this from the fact that if we have a perfectly competitive market, the level of education will drop. People from around the area will be educating your children from the back of their vans. This because you, or some parent, wants to save money. If we have a monopolistic market, the control of what our children learn will be in the hands of one corperation. This is a scary idea."

I think this analysis changes or adds some new value judgment to the normative framework of economic efficiency. It seems to me that from only the efficiency perspective there is no concern about the specific nature of education. The efficiency perspective is based upon the individualistic ethic. I that that suggesting that a competitive market in education would not produce the right kind of education is suggesting that we aren't taking the preferences of individuals as given.

Efficiency takes preferences as given. The problem, from the efficiency perspective, with respect to education has to be whether the market fails or not.

Whick market failures would be appropriate to consider for education?

Monopoly might be one, and curiously, it seems that government has created public education with a large degree of monopoly power. In a market, monopoly power leads to prices that are too high and quantity that is too low from the efficiency perspective. This is not the economic problem that results from government's monopoly power in education. Instead, I suggest we get 3 results that are "bad" on the efficiency perspective: (1) too much education, (2) the "price" of public education is too low, and (3) many parents find that the education provided publicly does not satisfy their preferences (which we economists take as given).

A second market failure to consider is a public good. I agree that education is not a public good because it is excludable.

The last market failure to consider is positive externality. We have discussed in class that I think education does not generate a positive externality. The issue is often misanalyzed as though the question is just whether the good generates "social benefits." This is not the efficiency question. Any good that enters any person's utility function will have "social benefits." The question for those of us interested in economic efficiency is whether there is a divergence between MSB and MPB if education is providely privately and voluntarily?

Finally, note, that if we decide there are positive externalities generated by education, there is a specific policy approach suggested by economics, in general, to correct a positive externality. That approach would be to provide a "corrective" subsidy to consumers of education. I think it is interesting to note that education vouchers, which Tateum makes reference to, would be a policy that fit rather well the economic suggestion of corrective subsidy.
Those who choose private schooling or home schooling end up paying extra (since they are already taxed). What would possess people to spend (or give up) such income? This suggests that some consumers of educational services are not happy with the government product.

Private and home schoolers routinely manage to provide superior education (as measured several different ways including standardized testing and long term success). They often do it for way less money than the public schools.

A hot topic in many states now, is that industries are concerned that they can not find enough competent people with technical education in this country. They are seeking talent overseas and bringing them here.

Is public education any more necessary or efficient than public health care, public feeding, or public housing?

How did this country survive prior to the advent of all these public services?
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