Is public education worth it ?


Everyone believes that all children should go to school. Even in the remotest villages and even for the most disinterested student, parents and teachers argue that S.S.C. is the bare minimum that someone should aspire for. We are told that education is the key to future.

Education is not a good thing in itself. It is not essential for human welfare by default. For example my great great grandfather did not go to school or college, he was fairly well off and well respected in society. So was everyone else’s great great grandfather.

In last 100 years human productivity has improved by a huge factor. This gain in productivity has come from human creativity and intellect. Just the way our ancestors had to learn basic skills like hunting to stay alive, in a modern world a human being is required to achieve certain level of productivity to survive. This productivity is what is essential and education happens to be the only way to achieve this. The mistake people make however is to equate this sort of productivity enhancing education with “school education” which is totally controlled by government. Indian students for example have absolutely no choice but to go to a government controlled school.

What makes education a good choice is the fact that in the absence of Education a person can be productive only by doing physical work. Physical work means a person burns his calories to produce some output (say a porter on train station). The amount of energy generated by burning a liter of Petrol is several times higher than the kind of energy human body can produce as a result there is not much demand for physical labor in our society and people for whom physical labor is the only option to be productive do not earn enough than those who use their mind to be productive.

Like all things human, education is not a predictable process. Different people have a different rate of learning and hence the kind of productivity they would acquire post formal education is different. It will depend on the kind of education they get, the kind of environment they would learn, quality of teachers and the intellect of the student himself.

Can it be the case in certain cases a student is better off not going to school altogether ? Can we apply some economic analysis to answer this question ?

Actually it is not very hard to do that. Please note that when I say “schoo” I am referring to government controlled formal schools teaching government prescribed material.

Assume that the cost of putting a student through school from 1st to 10th std is Rs 5 Lakh inclusive of all direct and indirect costs (salaries of teachers to money spent on books).

Assuming that the student pursues no further education, his going to school was worth it IF AND ONLY IF that education has made him productive enough to earn and save Rs 5 Lakh in next 10 years. ( For simplicity I have ignored inflation and RoI. With RoI of 10% this could very well go up to say Rs 10 Lakh.)

If the answer to this question is NO then it was a wiser choice not to send that child to school at all and instead saving Rs 5 Lakh in the beginning. Which basically means by the time he is of the age of S.S.C. he would already have Rs 5 Lakh in bank + saved 10 years.

The argument might look absurd to many people. It looks absurd because we see a lot of people around us who got just S.S.C. and improved their quality of life while those who did not go to school continue to languish in poverty.

There are two parts to this observation. Part 1 is that; for most of the students Rs 5 Lakh have been spent by someone else. That is the government; which is in turn you and me (taxpayers). So when a SSC pass student earns Rs 4 Lakh over 10 years, it is a net + 4 Lakh for him where as for a society it is a net loss of Rs 1 Lakh. Ordinary people are not trained to see the opportunity cost.

Imagine if that same student was given Rs 5 Lakh in cash before entering the school and he/she had just put it in the bank, he/she would have got richer by Rs 20 Lakh or so after 20 years. So when you factor in this opportunity cost, the student appears far worse despite saving Rs 4 Lakh over a period of 10 years after getting an economically inefficient education than have say Rs 20 Lakh without going to school (10%.  RoI).

Part 2 here is that a good number of students manage to go beyond S.S.C. or are intelligent enough or responsible enough to ensure that they get productive enough “despite the obstacles placed by the school”. This productivity might come from other investments that parents might make such as tutions, other books, training programs etc.

Because of the government control

I suspect that our entire education system remains mostly economically inefficient. I say entire and mostly because all our schools are controlled by government to lowest possible levels which means if one of the school is proven economically inefficient it makes sense to say all of them are inefficient.

Not just high schools but even same might be true for Engineering colleges such as IIT. Too few IITs means the competition of admission is very high and hence more money gets spent on IIT Coaching every year than the money government spends on running these IITs.

Our students will be far better off in life is government simply shuts down each and every school, fires each and every teacher and all educational officers, sells of real estate where schools exist and instead gives a monthly cheque to all children of school going age we might be far far better off than what we are now.

Does that mean our population would remain illiterate ?

If government simply gets out of education, either gives cash vouchers to kids of school going age, it would mean that our kids will not waste their time in a meaningless unproductive activity called government sponsored education.

It will then be up-to parents, kids and rest of the society to figure out how to use this money and the extra time. Very likely parents will come up with better ways to make productive use of their child’s time. Entrepreneurs will come up with far better educational institutions which will give better, more personalized education in a profitable way.

The current educational system controlled by government is just not dysfunctional but also evil because it wastes 10 years of a child’s most important life.

Does it still make sense ?

Parents have actually figured this out. Entrepreneurs have figured this out. That is why good teachers prefer to run tuition centers instead of teaching in a worthless school system and make far more money than school teachers.

Parents overwhelmingly send their kids to coaching classes by paying hefty amounts. The coaching classes are not greedy, in fact they are doing a great social service to the society. The reason why parents pay huge amount for coaching classes because they know that the possible returns on that investment are very high.

What about the poor ?

If government gets out school system how will poor educate themselves ? That is a a valid question but we see that poor people can afford mobile phones, shampoos, cold drinks and DTH sets. Almost every sector of our economy where government has not put its dirty nose has made things remarkably cheaper for our poor people.

If a poor student is intelligent and can achieve productivity level of X+ if expenditure on his/her education is X, it makes sense for any financial institution to lend him/her that money and make a reasonable profit after his/her education is complete.

This incentive for profit will also drive institutions to be as productive as possible, give monetizable skills starting from a very early age.

But it wont happen !

 

 

 

 

 

 

 

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