School choice with impoverished information
James Tooley’s book “The Beautiful Tree: A Personal Journey Into How the World’s Poorest People Are Educating Themselves” documents stories of effective, low-cost schools emerging independently to provide an education that the poor actually want and can financially support. While I share Tooley’s enthusiasm, there is one salient obstacle to a well-functioning educational market that I think needs addressing: the lack of adequate tools for parents to assess school quality.
While the quality of independent schools (some for-profit, others non-profit) is often much higher than government schools, there is considerable variance between schools. In theory, parents should be lining up for relatively cheap schools that prepare students to be accepted into top schools and eventually earn high wages (along with more general human development). Indeed best practice dictates that you best serve the poor with “no-frills” products, according to a Monitor Group report on innovative business models for emerging markets.
But while impressive buildings and high tuition payments should negatively affect demand, it’s just the opposite. Pankaj Jain, head of the innovative Gyan Shala schools, finds that parents, without an objective indication of education quality, mainly look to buildings, high prices, and an “exotic” environment (e.g., number of English words spoken by students) when deciding where to send their child.
A large number of parents pay a large part of their income to schools that may be no better than the public option, and certainly worse than an organization like Gyan Shala:
A pioneer paraskilling enterprise, Ahmedabad-based Gyan Shala (Hindi for “a school for knowledge/wisdom”) is an NGO provider of primary education to the poor. Gyan Shala’s 330 one-room schools, located primarily in slum districts, serve 8,000 children whose households earn between Rs. 2,000 and Rs. 6,000 ($40-120) per month. Gyan Shala schools teach children in grades 1-3 at a monthly cost of $3, roughly a quarter of the cost of a government school and about a sixth the cost of a recognized private school. School budgets are often subsidized by third-party funds to ensure affordability. Most parents pay Rs. 30 ($0.60) per month per student. Gyan Shala schools provide remarkable performance at uncommonly low cost. Comparative studies report test results showing Gyan Shala students outperforming students in the best government schools in Gujarat in every category (except “copying”), even when government-school children tested were a grade above. [Monitor]
Gyan Shala has the leadership and drive to assess its own performance, but such assessment is not common enough for the many parents outside of Gyan Shala’s reach.
For the education market to function, there needs to be some signal of quality beyond the superficial. “Test results are a simple, relatively unbiased and of known limitations, a mechanism to [assess performance],” says Pankaj, “but school rating, of the type done/ commissioned by OFSTEAD for UK public school, to my mind, is a better alternative.”
Whether test results or school ratings are optimal is up for debate, but either would be an improvement to the current consumer information.