## Saturday, June 09, 2012

### What should government do?

In the question "What should government do?", economists have one big answer "do the public goods". A public good is something that is non-rival (the consumption by one does not come at the cost of consumption by another) and non-excludable (it is not possible to exclude someone from benefiting from the public good).

The regulation of air pollution is the favourite example which illustrates a public good. Clean air is non-rival (if you breathe clean air, it does not diminish my supply of clean air) and non-excludable (if the air is cleaned up, nobody can prevent me from breathing it in). Indeed, nothing that one person can do can make a difference to air pollution. Only the government can regulate pollution and this deliver clean air.

Similar issues arise with defence, police, judiciary, monetary policy, financial regulation, public health (though not the health of the public), biodiversity, etc., all of which add up to the economists' vision of what government should be doing.

### What should government do in the field of education?

Education is substantially a private good. I study, I benefit. There are spillovers ("externalities") to others, and so there is a case for a government subsidy. But barring that, this is a field where the incentives are well aligned for each person to be the main one in charge of his own education.

Public funding solves the problem of externalities. At the level of elementary education, vouchers are a nice way to deliver public funding that is large enough to pay for the externalities. At the level of higher education, public policy can focus on economies of agglomeration alongside some public funding, nudging the outcome in India so that there are 100 high quality broad-based universities.

As I read The delicate technology of creating excellence by Pradip Ghosh in the Telegraph, I was reminded of the public goods character of testing and curriculum development. As he says:
in this very large country with a multitude of school boards and their non-uniform curricula and examination standards, it would be inappropriate to go by board grades because that would yield unreliable, undesirable results — we would not get the best students. And, such a course, therefore, would be unfair both to the aspiring students and to the institutions they would be entering. A single post-high school examination with a well-defined syllabus and a centrally administered paper-setting and grading system was thought to be the best alternative
The production of education services is a private good problem, to be sorted out between one student and one education provider. However, the problems of curriculum and testing have a public goods character. Let's run the tests of a public good, for a nationwide system for standardisation of curriculum and testing.

Is it non-rival? Does the consumption of the services of this system by one person diminish the amount of this system available for another? With computerised testing, there should be full scalability (though Pradip Ghosh argues, in the article above, that there are problems with this).

Is it non-excludable? High quality curriculum is non-excludable in that once curriculum documents are on a website, everyone can download them. Testing is excludable if you want to be cussed about it, but for the rest it should not be possible to exclude anyone from taking a nationwide test.

This argument guides us in thinking about what government should be doing in the field of education:

1. Funding (calibrated to overcome the externalities)
2. Curriculum development
3. Testing
4. Information infrastructure about education service providers (i.e. schools but also all sorts of new ways of organising education service delivery) so as to assist choice by parents and students.
The entire focus of management time, and the entire resources available for the task, should be devoted to these 4 problems.

### Central government or local government?

Once we know that testing and curriculum are public goods, we have to ask who should do it.

If an important outcome (getting into the IITs) was linked to regional board examinations, that is a recipe for grade inflation. This is a reason for doing this at the central government.

There are economies of scale. A curriculum only needs to be developed once. This is a reason for doing this at the central government.

In conclusion, the IIT JEE has many problems, but the building and running of high quality examinations is an important task of the central government and should not be diluted or abandoned. The fraction of management time, and resources, that are devoted to curriculum and testing need to go up.

1. To add to this, the production of education services is going to be solved globally by online efforts like Udacity, Coursera, edX, Khan Academy, etc.

In this scenario, I'm not sure why curriculum development should be the job of the govt. I'm not even sure if govt testing will be required if these sites come up with their credentialing mechanism. Why shouldn't testing be left to the corporates? A Coursera profile might carry equivalent weight to a BTech from IIT in future.

The only thing the govt needs to do is provide funding: we need a national research funding organization like NSF in the US which will have stable funding of say 3-5% of GDP for research. All good students will stay back and do PhDs in India if this was done. And, a fraction of this research will flow into high quality companies, provide jobs, expand the economy, etc, etc.

2. Government is not good at any of this. At best one can ask for the government to establish an organization and fill it with professionals and leave the job to them. I want to make this point clear because otherwise people think that parliament can debate on such issues as happened in the NCERT textbook cartoon case. Even if the govt gives money for such things, it cannot dictate the working of such organizations. Even though govt funds IITs it does not mean that ministers can dictate to the IITs, which is sadly what is happening now.

It is already happening that schools all over the country are adopting CBSE syllabus because parents think it is better. It does not mean that outcomes will be better. That requires better teachers which is a totally different order of problem. So at school level, the curriculum issue is not worth breaking your head.

At the undergrad and higher education level, I think you should not impose uniformity. Let different systems emerge and compete one another. The better ones will win and hopefully others will follow. A single gigantic system will be too rigid and changes will be difficult.

If the private sector does not participate in any sector then the govt may have to step in even if it leads to some private benefit. It is not possible to say that the benefit is purely private in the case of higher education. We need well educated people to run the economy. Of course policies should be such that they help private sector to participate in education, but that has not happened in India. Note that even in the west Universities can function because they can get lot of money through privately funded research projects. And a lot of that money comes from govt funding for research, so the govt does invest in higher education though indirectly.

Running good educational institutes is not possible without other segments of economy also being healthy. Why will students study basic research or do phd if there are no job opportunities ? If you produce 1000s of phds how will you productively employ them ? There are a few academic positions in the better colleges for which Indians with foreign phds will give a stiff competition to indian phds. In fact Indian universities will prefer foreign phds than Indian phds. And govt research labs are full of mediocrity and run like any other govt office, not like research institutes, that no bright person can stay motivated in such places.

praveen

3. Isn't this debate moot when the IITs themselves refuse to listen to the people who funded and developed into what they are today? They are challenging the legitimacy of the government in their affairs. This after the people of this country made do with blackboardless schools while funding these White Elephants.

The JEE system has or had several problems. I have met quite a few extremely intelligent IITians (and IIMians) who have a very poor work ethic. I think it went back to the way the JEE was biased by the vast majority of successful test-takers in the past. Many wouldn't attend regular classes and instead spend their time in coaching centres. From a young age, they were learning that it's ok to break rules and bias the system. Fake attendance, not bothering with doing well in regular classes etc were teaching moments for many of these people (not all but many).

So, it's important that ethical actions and continuous performance in regular classes (a necessity even in case of grade inflation) are rewarded. The American system does take into account class performance along with a simplified test that has to be taken irrespective of the institution one is applying to. Remember, that America has different system that even differ from county to county and not just state to state.

IITians (and IIMians too) have been acting like they are a separate caste and do not want to "pollute" themselves by associating themselves with the riff-raff even through a common entrance exam. This is a reflection of our hierarchical / caste mentality. These people are acting like latter-day Mandarins or Young Turks.

It might be time to stop funding these White Elephants while the country is going bust with civic life worsening and the vast majority stuck in poverty forever. Evidence from Japan, Taiwan, Korea and China (sort of in case of China)has shown the fundamental social reforms including universal education and land reforms are necessary for development. If we start now we can get there in two generations maybe.

Instead we are busy trying to satisfy the needs of the middle class.

PS: Apologies for the long response.

1. 1) "They are challenging the legitimacy of the government in their affairs."

Why is this a problem? You think the IIT directors should blindly follow the govt? You think educators in IIT don't care for the country? Most of them are extremely passionate about education in the country and have left lucrative jobs on foreign shores or in the private sector, to work on education in India. The least the govt can do is listen to them.

2) "Many wouldn't attend regular classes and instead spend their time in coaching centres. From a young age, they were learning that it's ok to break rules and bias the system. Fake attendance, not bothering with doing well in regular classes"

The coaching centers were far better (in math+science) than the school teachers and the curriculum was far better too. Some of the coaching teachers are the best teachers in the country. Regular classes relied on rote learning. Why is this a problem? Or, do you just have a huge chip on your shoulder against IITians? In any case, the future is moving away from rote learning, regular classes to online free lectures with coaching across the globe.

3) "IITians (and IIMians too) have been acting like they are a separate caste and do not want to "pollute" themselves"

When elitism is based on merit, it should be acceptable and even encouraged. IITs are the only meritocratic thing in our country and while they need to be improved greatly, one has to watch out against dumbing them down by politicians. By the way, every country (US has its Ivy league), region (China has its own JEE), education stream (Delhi has its Stephens college) has its elites and there is not much one can do about that if it is merit-based. The answer is not to bring them down if they feel they are superior, but to create more alternative superior colleges so that the superiority is narrowed enough to become irrelevant.

4) "It might be time to stop funding these White Elephants while the country is going bust with civic life worsening"

Funding these institutions isn't the cause of civic life worsening. Why not focus on the rest of the education sector, other institutes first before going after something that is atleast better than the rest. Sure, the IITs need reform, but why not improve the other colleges, new IITs, etc before making changes to the existing ones? I support removing subsidies for those who can afford, and requiring students to pay back, etc, so sure funding especially at the undergraduate level in IITs can and should be cut, but with alternative avenues of self-financing.

5) "Instead we are busy trying to satisfy the needs of the middle class."

Historically, IITs have been one of the few meritocratic avenues for students from the underprivileged sector. In fact, the privileged usually don't bother to have their kids go through the grind. They will send them abroad for good quality undergrad education. And, then there is nothing wrong if a small fraction of institutes cater to the lower middle class.

The bottomline is the absence of supply and quality in the rest of the colleges, universities in India. Lets fix that, lets unify the admission process for them first, and then talk about improving the IITs.

4. 1. Govt. has no business telling colleges what criteria to use for admissions (currently, central govt. interferes in central colleges and state govts interfere in state colleges)
2. Once govt is out, competition will create 1 or more good quality tests (conducted either by an independent party or by a group of colleges) that different colleges will use in various ways
3. To attract students, individual colleges will simplify the admission critera as much as possible.

How does this become a public goods problem?

5. Those coaching centres were and still are not affordable for most lower middle class and poor people.

People in the Indian middle class have a very weird definition of the "underprivileged sector". By "underprivileged", they mean themselves who cannot afford the toys of the rich. This lack of sense is the biggest problem that our country has faced. We do not even notice the extreme poverty around us because we are too busy crying about our own so-called underprivileged status.

I would have appreciated if our State had spent a little more money in developing other skills in economics, commerce, law etc. The poor quality of some of the people in these professions is evident in some of the national dialogues especially in case of law.

The Government shouldn't ideally interfere if it wasn't funding the institutions. But the fact of the matter is that it built up these institutions with scarce resources. I know of instances where the government has spent lakhs of rupees on "science" while the country was taking on loans and not delivering basic civic amenities and this was in the 80s.

The people have the right to control these institutions and a democratically-elected government, however flawed it is, is the best institution the people have. They needn't bow to the demands of elitists and Neo-Darwinists.

Finally, there is something to be said about people who follow the law in letter and spirit. There is something to be appreciated about not putting in fake attendance, not defying general behaviour for selfish gains etc. These are the kind of cultural traits that have helped Japan and Germany but is slightly lacking even in China.

1. It is not a zero sum game. If the govt suddenly starts forcing itself upon the IITs, it doesn't mean that automatically other institutions will become good. It will only mean 5 more mediocre institutes like the rest of them. If there is a common admission test, it doesn't mean that suddenly education will improve. In fact, it will deteriorate further because of flawed scoring mechanics. Do you think IITians are unique in being opportunistic?

The govt itself set up the IIT Act and gave the IIT senates the authority to run the IITs. So, why is it not listening to them? Why does your democracy exclude the IIT senates and so-called "elitists" who aren't really being elitist anyway. And, sure if the govt has a good reason, it should be able to take the IIT senates into confidence. Its not a dictatorship.

Much of your complaint should be about the failings of the govt in running the other universities properly. It is amazing that when the fault is in the govt policy, you have the most faith in the existing policies instead of asking for the govt policy to improve. You seem to have the mindset of handouts and socialism, isn't it?

"Finally, there is something to be said about people who follow the law in letter and spirit. There is something to be appreciated about not putting in fake attendance"

Ofcourse, that is obvious, but please ask the govt to set the right policies and incentives to alleviate scarcity in good quality education. If the schools were any good, no body would put in fake attendance. The problem isn't fake attendance, its bad schools and bad curriculum. Fixing that is the solution.

6. Even to me at first, Ajay's idea about the government developing and regulating curriculum sounded ludicrous but there is a sense to it. Common standards allow for more efficiencies and the government is best placed to provide that. It's a bit like how public health care systems turn out to be more efficient than private delivery prevalent in the US.

My only problem is that centralization has been a disaster in India. Everything is getting centralized in a country of a billion and more. China has a more decentralized structure. We desperately need a million experiments in politics, society and economics to figure out solutions for ourselves not one-size-fits-all prescriptions.

Since I brought it up earlier, the biggest pain felt by entrance test takers is the multiplicity, which forces them to spend more and more money on multiple applications, travel to multiple exam centres and the required specialized coaching for each of these tests. This has been a major grouse with parents for a long time. These are again the pains of the middle class. Now consider the difficulties faced by the poor from moffusil towns.

I have lost faith in the IT revolution bringing major change here after seeing how it is on the ground.

7. The debate over the government's role in education provides us with yet another instance of the narrowness of thinking with neoclassical tools. Public goods are those which the market will fail to provide or under-provide, hence the need for supplementary government action. It is rather dangerous thinking in these "utopian" (in the sense of unrealistic) terms as it blinds us from the lessons of History by narrowing the debate over the role of the state to matters of testing and/or curricula. On this model, it is doubtful that the US university system would ever have been envisioned let alone built.

Perhaps we might learn from what is now historical common sense: the US university system was in large measure a creature of the state. Here is renowned scientist Richard Lewontin (New York Review of Books, 14/02/08):

"The Manhattan Project and the development of radar during World War II provided the impetus for a major reorientation of the relationship between the state and the academic world. It became obvious to policymakers like Vannevar Bush, head of the wartime Office of Scientific Research and Development, that a regular major investment in scientific research would be necessary for the future security and financial prosperity of the country and that, given the competitive demands for profit, private capital could not be adequate for the purpose. The result has been that the annual federal expenditure for research and development (in constant dollars) has been multiplied by a factor of ten since 1947. The relevance of this immense increase in the funding of science to our understanding of changes in culture is twofold.

First, universities and colleges have been a major beneficiary of the investment in science, their total share having risen from $1.5 billion to$15 billion annually.

[...]"

We have little option to make our pathetic state infrastructure work. Trying to work around it by invoking the magic of the market might have a basis in utopian theory, but it has little ground in history.

8. “It’s pretty obvious that degrees will go away,” Thrun says. “The idea of a degree is that you spend a fixed time right after high school to educate yourself for the rest of your career. But ­careers change so much over a lifetime now that this model isn’t valid anymore.”

How would you like a graduate degree for $100 (Forbes) 9. While this is not entirely related, an interesting problem arose in the case of admission of a particular student in Gujarat National Law University, upon securing the required CLAT scores, over the interpretation of a rule in a brochure (which stated candidates who did not pass their 12th exams in their first attempt) were not eligible for admission, whereas the regulations of the University had no such restrictions. This was challenged by the student (he had the sympathy of the media and many other well wishers while he himself hails from a lower middle class family) and he was admitted into the university. In this scenario if this were a private service provider and not set up under the aegis of the government, maybe his challenge would not have been successful. You may want to read more on this at this http://barandbench.com/brief/3/2519/lucifers-counsel-or-why-i-think-the-donnie-ashok-case-is-not-a-positive-development 10. I am not in favor of this new pattern of IITjee or ISEET.This pattern supports CBSE candidates in comparison to the other regional boards students.CBSE students scores higher than the other regional board candidates. 11. I am a class 12th ISEET / IIT-JEE 2013 aspirant and was looking for a Mathematics preparation course for 2013 Exams and found one at wiziq : http://www.wiziq.com/course/2572-mathematics-preparation-for-iit-jee-and-aieee ,,,, help me by reviewing the ISEET / IIT-JEE 2013 preparation course, so that I may join this course Please note: Comments are moderated. Only civilised conversation is permitted on this blog. Criticism is perfectly okay; uncivilised language is not. We delete any comment which is spam, has personal attacks against anyone, or uses foul language. We delete any comment which does not contribute to the intellectual discussion about the blog article in question. LaTeX mathematics works. This means that if you want to say$10 you have to say \\$10.