Friday, January 8, 2016

Is private for-profit education always a disaster?

John Quiggin lists a litany of cases where the answer to the question is yes. It particularly makes for depressing reading given the blind push for privatisation by the Australian government.

I think for-profit private education is particularly likely to be problematic when two criteria are met:

1. Consumers are not paying up front. For example, if they are paying tuition from government loans that they will only have to pay back a decade later.

2. Consumers (students and parents) don't have the ability and/or information necessary to assess the quality of what they are getting for their money. For example, a poor parent who never finished high school may struggle to know what a good ollege education should look like.

These criteria means the "free" market is not very responsive.

Until a month ago I thought that the answer to this question was universally, Yes!
However, one should never say never.

For my birthday my son gave me a copy of The Beautiful Tree: A Personal Journey Into how the World's Poorest People are Educating Themselves by James Tooley.
It is a fascinating story of how Tooley discovered how in many slums in the Majority World there were private for-profit schools, typically charging of the order of $1 per week (roughly 10% of parents income, seriously!) for tuition. Many development "experts" from the West and local government education administrators denied the existence of these schools. When finally presented with evidence  of their existence they debated their effectiveness and moral value. However, Tooley showed the quality of the education they present is higher than local "free" government schools. This is because the latter are remarkably ineffective due to government corruption, unconditional tenure of teachers, teacher absenteeism, .... Uneducated poor parents then make well informed decisions to sent their children to the private schools which are very accountable to parents because they are dependent on fee income. Remarkably most of these schools waive or reduce tuition for about 20 per cent of their students who are deemed to be particularly economically needy!

My son became aware of the book through this podcast on Econtalk.
Some of the issues were dealt with in a cover story on The Economist.

1 comment:

  1. Of course, everything is comparative. There certainly are poor countries (not all of them) where the public education system is so bad, or inaccessible, that the for-profit alternative, unappealing as it may be, is better.