PPS603 Microeconomics of International Development Policy

1. PPS603Microeconomics of International Development Policy 6.3. Education

2. Introduction Recall that we have been studying the development process systematically by looking at the aggregate production function of the economy. In this section, we continue studying the labor input of the aggregate production function of the economy by studying education. In the spirit of endogenous growth models, you may also think of this as human capital instead of labor.

3. Education: Enroll or Instruct? (The remainder of this chapter is adapted from Duflo, Esther (2010), Luttercontre la pauvreté I – Le développement humain, Paris: Seuil.) From 1999 to 2006, the rate of primary school enrollment has increased from 56 to 60 percent in sub-Saharan Africa. Likewise, it has increased from 75 to 86 percent in Southeast Asia.

4. Education: Enroll or Instruct? What explains this progression? Perhaps more importantly, is this really progress? That is, are kids enrolled in school regularly present, are their teachers present, and do the kids really get to learn something when they are?

5. Generalizing Education: Traditional Approach Traditional education policy rests on two principles: Parents are the main obstacle to universal primary education; The direct (enrollment fees, transportation, uniforms, books, etc.) and indirect (opportunity) costs of education are too high, which is why parents are such an obstacle.

6. Generalizing Education: Traditional Approach Recall that the MDGs include two education-related goals: (i) universal primary and middle school enrollment; and (ii) gender equality in education by 2015. This says nothing about educational content, however. It’s purely driven by enrollment. Content was ranked sixth among the goals of the 2000 World Education Forum in Dakar, Senegal!

7. Subsidizing School Thus since 2000, some countries (Ghana, Kenya, Uganda) have favored reducing direct and indirect costs: free primary education, no enrollment fees, etc. Conditional cash transfers – which give parents something in exchange for their children attending school – are also increasingly common (e.g., Progresa or Oportunidades in Mexico), as are subsidized (school) lunches.

8. Subsidizing School What explains increased school attendance? Is it the decreased costs, or some other confounding factor, like parents who are more mobilized? Duflo et al. (2009) randomly subsidized school uniforms in Kenya, i.e., the sole monetary cost ($6) parents need to bear for their children’s education.

9. Subsidizing School So 327 schools where JPAL was already conducting HIV prevention work were split in 163 treated schools and 164 control schools. Drop out rates fell from 18 to 15 percent for girls and from 13 to 10 percent for boys. In terms of policy, this suggests getting rid of the uniform requirement, or at least subsidizing school uniforms throughout the country.

10. Paying Parents The Progresa program (now called Oportunidades) allows measuring the impact of opportunity costs (Schultz, 2004). The program consisted in a conditional cash transfer to women in exchange for (i) their children attending school; and (ii) themselves receiving preventive health care.

11. Paying Parents The interesting feature of Progresa is that the policy makers behind it wanted to make it apolitical, because they suspected the ruling PRI was about to lose its elections. So they conducted a randomized control trial. In half of 495 randomly selected villages, Progresa was implemented.

12. Paying Parents The program actually had little impact on primary education, whose enrollment rate was already fairly high in Mexico. Girls’ enrollment in secondary school, however, rose from 67 to 76 percent (73 to 79 percent for boys). This led to about 30 other countries reproducing the experience (with a similar program in NYC).

13. Paying Parents Kremer et al. (2008) studied whether performance-based scholarships that provided enough money to pay for a girl’s enrollment, her uniform, and a little bet of money for her parents led to improvements. As it turns out, both attendance and performance improved, with positive spillover on boys’ performance.

14. Paying Parents There is an interesting dichotomy. In developing countries, parents are seen as the obstacle to education. In rich countries, however, rewards are given to children themselves. It is not obvious, however, that giving the rewards to parents instead of children is more efficient. It may have to do with whether the parents can actually help their child succeed.

15. Paying Parents Berry (2009) ran an experiment in a poor suburb of Delhi. The program consisted in a small reward to children who improved their level of reading within a few weeks. The reward was given to children (toys) or their parents (an equivalent amount of cash). In poor (non-poor) households, incentives for kids (parents) work better.

16. Limits to Traditional Approach The classical approach considers school enrollment to be the primary objective, that parents are the main agent to target, and that financial constraints are the real obstacle. The studies discussed above, however, underline other important problems: children’s incentives (especially in situations where they are the first to receive an education in their family) and teachers’ incentives.

17. Limits to Traditional Approach Absenteeism of children ranges from 14 percent in Madagascar to 54 percent in India. So enrollment does not mean children are in school. Another limit is the focus on costs instead of providing information on the benefits of education. Yet another limit is knowledge. Sitting in class does not guarantee that a student learns anything.

18. Encouraging School Participation Why do kids go to school? Education is an investment in human capital. So one way to increase literacy rates is to improve the actual or perceived benefits of educations. In Indian regions where primary education turned out to be useful because of the Green Revolution, literacy has increased faster than in other regions (Foster and Rosenzweig, 1996).

19. Encouraging School Participation Moreover, in remote villages where few have studied and where the rare persons to study have long moved out because of bigger and better opportunities, it is difficult for parents and children to have a constant reminder of the actual benefits of education. “Man, what the f*** you wanna go to school for? What you wanna be? An astronaut?” – Preston “Bodie” Broadus to Michael Lee, “The Wire,” Season 4.

20. Encouraging School Participation An experiment conducted in the Dominican Republic indicates that in high schools were the drop out rate is high, students systematically underestimate the benefits of education (Jensen, 2007). Most of them believe that the salary difference between someone with a high school diploma and someone without is negligible.

21. Encouraging School Participation A simple intervention in that case has been to provide students with reliable information about salaries conditional on educational achievement. This was set up as a randomized control trial in 150 schools (75 schools for the treatment group). The drop out rate fell from 44 to 41 percent (but only among students from relatively wealthier families).

22. Encouraging School Participation A similar intervention in Madagascar showed that some parents overestimate the benefits of primary education while others underestimate them. An intervention similar to the previous one involved parent-teacher-student meetings in 640 schools. In 25 percent, the teacher showed a simple chart of educational benefits to parents. In 25 percent, a role model was invited to tell about their lives.

23. Encouraging School Participation A third 25 percent of schools was exposed to both the chart and the role model. In the last 25 percent, the discussion remained very general, with no specifics information given to the parents. A few months later, a survey was conducted about parents’ perceptions of the effects of education.

24. Encouraging School Participation Variance in responses had decreased (increased) in “chart” (“role model”) schools. The change in perceptions, however, brought an overall change in absenteeism, although children of parents who overestimated (underestimated) the benefits of education tended to be more (less) absent after the intervention.

25. Student Health Another impediment to school attendance is the health of students. Repeated absences are often the result of diseases. Intestinal worms affect about 25 percent of children worldwide, mostly in sub-Saharan Africa, but they are neglected by public health officials because they don’t kill people, they only make them tired and anemic.

26. Student Health Intestinal worms, however, are easy to treat, with one pill every six months. The WHO thus recommends preventive treatments. But even though these pills are cheap, prevention programs are rare. Kremer and Miguel (2004) ran a randomized controlled trial and estimate that there are not only positive effects on the treated, there are also positive spillovers on untreated children.

27. Student Health Infection rates decreased, hemoglobin rates increased, and the height and weight of students also increased. Absenteeism also fell by 14 percent to provide students with an average of 0.15 additional years of schooling. What’s more, the spillover effects are as important as the direct effects, which shows the importance of contagion. The “public good” nature of the intervention alone justifies a subsidization of it.

28. Costs and Benefits We have just seen that a host of policy interventions “work,” in the sense that they improve school enrollment or attendance. To choose between policies that “work,” however, it is important to know their costs. Another advantage of randomized controlled trials is that they allow to know the exact costs of an intervention.

29. Costs and Benefits So what are the best options? If we consider the cost of an additional year of school attendance, giving information on the benefits of education costs $2.50 per student and deworming costs $3.50 per student. By the same metric, Progresa costs $1,000 per student for secondary education and $6,000 per student for primary education.

30. Transmission of Knowledge We go back to the question asked earlier: When kids are in school, are they learning anything? Unfortunately, that is far from certain. Half the “educated” children in India cannot read a simple paragraph. The interventions just discussed only make sure students enroll in and show up for school. They offer no guarantee that they actually learn.

31. Transmission of Knowledge Duflo notes how parents overestimate what their children learn in school. In Uttar Pradesh (the most densely populated Indian state, and one of the poorest), among parents whose child did not know how to tell letters apart, one in six thought their child could read. Knowledge of mathematics is even more overestimated.

32. Transmission of Knowledge How to improve quality? Duflo notes three potential solutions: Allocate more funds to education; Improve pedagogical practices and adapt them to a new population of students; Improve teacher motivations.

33. Failure of “More of the Same” Policies Can the quality of education be improved by recruiting more teachers, handing out textbooks, etc. and without changing pedagogical content or incentives? Most of the randomized controlled trials in this area (several of which were conducted by Michael Kremer) turned out to be disappointing.

34. Failure of “More of the Same” Policies Glewwe et al. (2009) study the relationship between textbooks and test scores. The initial study was conducted in 1995 by Kremer, who found no impact. In complete disbelief, he then increased his sample size, and even designed a new test aimed at gauging student knowledge more accurately, to no avail: textbooks do not help at all. Neither do flipcharts (Glewwe et al., 2004) or reduction in classroom sizes (Banerjee et al., 2002) if they are not accompanied with other changes.

35. Failure of “More of the Same” Policies One reason for the uselessness of textbooks is that in several developing countries, these textbooks are inherited from the colonial period. In Kenya, textbooks are in English, often the third language of children, who learn their local dialect and Swahili before they learn English. In francophone Africa, history texts all too often still begin with “Nos ancêtres les Gaulois …” (“Our ancestors the Gauls …”)

36. Failure of “More of the Same” Policies Another reason behind the failure of “more of the same” policies is the lack of teacher incentives, which is obvious from their absenteeism. The World Bank conducted random spot checks in 2002-2003 in several countries. In Bangladesh, 16 percent of teachers were absent. In India, 25 percent. In Uganda, 27 percent. The weakest absenteeism rate was in Peru, at a still staggering 11 percent.

37. Failure of “More of the Same” Policies Even when they are physically present, teachers are not necessarily teaching. In India, a survey has shown that when teachers are present, many of them are drinking tea, chatting with other teachers, making political signs, playing cards, etc. Combined with high rates of student absenteeism, this makes for depressing results.

38. Using Additional Resources to Improve Pedagogy and Motivation If additional resources are not used to improve pedagogical practices and improve motivation, they won’t be used for the welfare of students. Interventions which use additional resources to improve pedagogical practices and improve motivation have positive impacts. For example, the work of Pratham, an important Indian NGO that specializes in education.

39. Using Additional Resources to Improve Pedagogy and Motivation Banerjee et al. (2008) evaluated Pratham’sBalsakhi (“Friend of the children”) program, in which a teacher’s aide spends two hours per day with ninth graders who do not yet know how to read or write, or who have difficulties with arithmetic. Balsakhi improved performance on average by 0.3 standard deviations. For the worst students, it was equal to 0.6 standard deviations.

40. Using Additional Resources to Improve Pedagogy and Motivation Pratham then launched another program called Read India, which dispatches volunteers who, after a two-week training, go in villages and hold reading workshops. Evaluated in Uttar Pradesh, the program increased the proportion of children who can decipher letters from 40 percent to 100 percent. Those who already knew letters (words) learned how to read words (sentences).

41. Using Additional Resources to Improve Pedagogy and Motivation But this begs the question: Was the initial problem a lack of the right pedagogical tools, or a lack of motivation on the part of teachers? An experiment was run in Kenya to disentangle the two effects by Duflo and her coauthors, who used World Bank funds to allow 140 schools to hire an additional teacher with a one-year contract on top of the tenured teacher already there.

42. Using Additional Resources to Improve Pedagogy and Motivation The idea behind one-year contracts is that they provide better incentives than long-term contracts. (Why?) Students in schools that hired a one-year contract teacher performed better than in the schools that did not. But this only tells us that adding an additional teacher helps – it doesn’t tell us whether it’s the short-term contract that did it.

43. Using Additional Resources to Improve Pedagogy and Motivation In Kenya, 210 schools were split in three groups: Control group: 70 schools Treatment group 1: 70 schools in which students are matched in classes of the same level (i.e., good and bad student classes). Treatment group 2: 70 schools in which students are randomly assigned to one class or the other (i.e., completely heterogeneous).

44. Using Additional Resources to Improve Pedagogy and Motivation This design allows determining whether (in)adequate student preparation makes teaching too difficult to be effective. This design also allowed studying teacher incentives (one-year contract vs. tenured) by randomly assigning teachers to classes.

45. Using Additional Resources to Improve Pedagogy and Motivation The results are informative. Splitting students into two relatively homogeneous groups increases performance in both groups (0.14 of a standard deviation) relative to completely random assignment. The students of one-year contract teachers was also 0.18 standard deviation above those of tenured teachers. But this does not mean we should abolish tenure – it could very well be the case that “young” teachers teach well in view of getting tenure!

46. Motivating Teachers: The Role of Financial Incentives The Kenyan experiment tells us nothing about financial incentives, and there are many programs throughout the world which provide financial incentives to teachers. For example, No Child Left Behind punishes schools that underperform. The result is that teachers cheat on standardized tests by selecting the students who take them, by teaching to the test, and by changing student answers (Jacob and Levitt, 2003).

47. Motivating Teachers: The Role of Financial Incentives In Kenya and in India, an experiment was set in place in which all the teachers of the best-performing district received a reward. In Kenya, there is a short-term improvement in performance, but no long-term improvement. A closer look reveals teacher cheating there as well. In India, there is a short-term improvement, but it’s too early to tell about the long run.

48. Motivating Teachers: The Role of Financial Incentives On the whole, teacher incentive programs have had mitigated success because teachers can cheat too easily. Can performance be improved by punishing teacher absenteeism?

49. Motivating Teachers: The Role of Financial Incentives Working with SevaMandir, a Rajasthan-based trusted NGO, Duflo and Hanna (2005) set up an experiment in which some teachers are given a digital camera with a time-and-date stamp and asked to take pictures of their class twice a day. Teachers would receive a base monthly salary. After 10 days of showing up for work, they would receive a bonus.

50. Motivating Teachers: The Role of Financial Incentives The program led to a drastic decrease in absenteeism. In the 60 treatment schools, absenteeism dropped from 44 to 22 percent, and SevaMandir made the program permanent. Teachers are happy with the program, since it gives them a sense of priorities. Even though they are often the only literate person around, they no longer have to help villagers with their literacy-related needs.