9. Education: Setting the Stage


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MIT OpenCourseWare at ocw.mit.edu. ESTHER DUFLO: So actually
a lot of themes are criss-crossing in this
documentary. It’s pretty well done for
managing to bring many of those teams up. So before we sort of I summarize
them, I’d like to have your impression of what are
the themes that seem to be important in like how the
students get educated, the government’s decisions, the
parent’s decision, et cetera? Yeah, Ben? AUDIENCE: Cultural
preservation. I forget the other one. It was the Kurds, and who’s– ESTHER DUFLO: Just the rest of
Turkey, mainstream Turkey. AUDIENCE: –mainstream Turkey
and how they’re willing to preserve their culture, and how
that spill-over effects [INAUDIBLE] how they operate
[INAUDIBLE]. ESTHER DUFLO: Right, so one
issue that is kind of there is whether the whole education is a
way to mainstream the Kurds, which they are suspicious
about. That’s a good point. AUDIENCE: Yeah, I was going
to say infrastructure, so actually physically getting the
schools becomes a problem. The guy mentioned like when it
snows, it becomes hard for the children to get to school,
so they fall behind. And they have the desire to
become a boarding school, like religious schools actually
in their village. But because they don’t have
that, it becomes difficult. ESTHER DUFLO: Right. So there is a supply
constraint. There are no schools in the
villages and getting to them– they go by bus, but even that
is difficult, because infrastructure is difficult. AUDIENCE: It can also to be hard
to find justification for this education, because although
some people argue that there is still value to it,
even if girls or boys who get educated just come back to
the village and live with their family, but a
lot of people say, well, what is the point? ESTHER DUFLO: So there
is a question of the benefits of education. Yaprak’s parents, what do they
think the benefit of education is for her? What do they expect from
the education? AUDIENCE: For her to come back
and contribute to the family. ESTHER DUFLO: Is it what they
say, or is it someone else who says that? What do the parents say,
the mom, and then Yaprak say it also. AUDIENCE: Her mom said
that she wanted her to become a doctor. ESTHER DUFLO: Her mom says she
wants her to become a doctor. She also wants to
become a doctor. And in fact there is this
debate where people are saying, well, what’s the point
of education if we don’t have a job that will take into
account this education? And there’s this other guy who
says, well, even if she doesn’t become a doctor, there
are these other things. But it seems to have
a little bit of a minority view in this. You don’t see any anyone asking
her the question, but she answers, saying,
yeah, yeah, there would be some value. But there’s somewhat
of a debate there. AUDIENCE: When you’re talking
about supply, there’s a lack of supply of teachers
over there. So in particular regions, like
the eastern region for example, teachers have
to go out into those cultural sort of things. They’re coming from
different regions where culture’s different. And then at the same
time, they may not particularly be there. They’re passing through. You mentioned that do we go to
train or to get experience in this way and them move on. So there’s not sustainability. When you think about teaching,
it’s important that teachers build relationships
with students and really pour into them. But when they’re in this like
transit sort of mindset, it becomes a little hard
to do that. ESTHER DUFLO: Right, so that’s
another supply issue from the supply side is whether there
are enough teachers. And then that kind of interacts
like it was a cultural issue. Who were the teachers? I think you’re making
two points that are both important. One is the point that the
teachers who are coming to them may not be as motivated. They might not be accountable
to the community. They might be difficult
to discipline. They might not care. In addition, they might be the
ones who are trying to teach in Turk and not and not in
Kurd, and all of that. So that brings the cultural
dimension. Yup? AUDIENCE: Another thing I didn’t
realize whether or not they mentioned in that movie. But there’s a problem if all
these girls are actually living in those boarding schools
for most of the week. And they’re just going
back for the weekend. You know, they don’t have that
sort of family [INAUDIBLE] that’s going to actually
give them more balance. So even though they’ll be
getting an education, there’s a huge drawback for the fact
that they don’t have their parents right there and
telling them what they have to do. And nobody really knows
what that could cause in the long run. ESTHER DUFLO: Like you guys,
far from your families– yeah, I think this sort of
comes a little bit in [INAUDIBLE] when they have this debate about
I think they would like to have the schools
in their villages. That don’t like to send the
kids to boarding school. I think one issue is are the
kids mature enough to manage in boarding school? And the other which
is in [INAUDIBLE] of that, are they going
to become different? Are they going to absolve these
values that these guys are not necessarily
looking for? There might also be a slight
conflict underlying this, where actually from the point
of view of the Turkish government, who is trying
to make the Kurds into regular Turks. It’s actually a good
thing to get them away from the families. But from the point of the view
of the Kurd, that’s kind of a way of following
the exhibition. So that’s one thing that goes
with education, which you find in a lot of places. For example, there was a big
education drive in Indonesia that I’m going to talk
in a bit, which had exactly the same idea. Education is about
imparting skills. It’s also about imparting
a world view. And therefore that creates
conflict between the different people who have different
ideas about what these worldviews should be. AUDIENCE: Maybe also that those
parents talked about the lack of [INAUDIBLE] practical things maybe teach
about agriculture [INAUDIBLE]? ESTHER DUFLO: Yes, so that goes
back to what is the value of education? What’s the benefit
of education? So it comes back to well, fine,
if she graduates and becomes a doctor,
that’s great. But if not, what has
education brought? Maybe nothing. People might not necessarily see
the value of the education that’s imparted as being that
great, unless you can make it to being a doctor, which would
be great, but is a bit more of a leap. AUDIENCE: I just have
a question. So I figured how many children
were in the household. My understanding is that they
only send one to school, like the impact that has on the
children who aren’t in school. I know the mom at least said
that she wasn’t happy as she would like to be [INAUDIBLE]
education [INAUDIBLE]. But is that mindset perpetuated
because you have a child who’s going to school kind
of puts you in further [INAUDIBLE] your current
circumstances, which could pose another problem. ESTHER DUFLO: That’s an
interesting question. For example, the sister
of this girl, Yaprak. what’s her name? Was [? Meemet. ?] She wasn’t in school, because
she was too old to benefit from the compulsory education. So on the one hand, she gets
some indirect benefits, [INAUDIBLE] benefits from the fact that
Yaprak is educated. On the other hand, she also
gets like these education envy, and feels that, oh, it
would have been great if I could have been educated
myself. So that’s an interesting
point. AUDIENCE: We kind of spoke about
this before, but just the idea of the value of
education and what are the returns to it? So when you’re most poor, you’re
just kind of raising everything higher. When you think about education,
the returns are going to be much farther off. This was sort of mentioned, but
you get to a certain point and you need some education,
then after a while, it’s kind of like, well, you’ll probably
be more valuable if you just stayed home and helped
out around the house. There’s a dichotomy, I guess,
between the social pressure for education and the
home pressure to help your family out. We need to eat tomorrow,
so this is a little bit more important. You’ll be able to go to school
when you feel like it, or when you get a little bit older. Or maybe you won’t need to go
to school because we need a survivor now. ESTHER DUFLO: Right, so there’s
another cost of that in the cost of getting yourself
to school, and that now the government is paying for
the bus, and is paying for the school, et cetera. But there is another cost, which
is in economic jargon we call the opportunity cost,
which is while you’re in school, you’re not helping
out on the house. And that is something that is
mentioned in the movie at some point, where they’re saying,
well, that’s kind of one reason why people are not
complying to the objectives. People are feeling that they
are getting on their house. And you said it exactly right. There is a trade off. Even if you don’t bear the
direct cost of schooling like is the case here, there is
a trade off between the opportunity cost, when you’re
losing the value of the child work now, and the benefits
that are far out in the future, potentially very far out
in the future if you think that it’s worth getting an
education, only if you can become a doctor. AUDIENCE: I was going to say, if
the child goes back to the village, then they just wasted
their time, essentially, if they weren’t helping out. ESTHER DUFLO: So that is the
debate that they have at some point, which is at least some
people feel that if you go back to the village, you
just wasted your time. So the only value is
to being a doctor. And at the same time they
realize that it’s not super likely that it happens. And then in general, if someone
says that it’s easier for men than for women to get
jobs outside the village, there might be the other point
I made earlier, that they might not want the girls
to really leave to be outside the village. They might accept for them to
leave to be a doctor, but they might be less likely to let them
leave to man a register in a supermarket, which maybe is
a job you could get with a good education without
continuing. And so if you’re not going to
leave the village to take that job, and they feel that there
is no value in between, then you would have no reason to
pay the opportunity cost. So that’s where kind of this
debate or tension comes up. Is any of it valuable? Or is it only valuable if I
achieve a sufficient amount to really get like the lottery
ticket of having a chance to become a doctor. So what does this bring, this
idea that the benefits of education may or may not be
obtained from the first years of education? We might be able to obtain
them only if we get enough education. What does that remind you
of that we have seen? It’s that idea of the S shape. So the question, and here,
again, at this level, as usual it’s a question. Is there S shape in education? So are the first few years of
education valuable, because you learn how to socialize. That’s what they said
in the movie. You learn how to socialize. You learn family planning. You learn maybe to read the
instruction in the packet of fertilizer for when you
come back to the farm. So there might be reason to
think that even the first years of educations
would be valuable. Or is it the case that the first
year of education are not really valuable, that the
only thing that’s worth it is a college education. And the first year of education,
all that gives you is the option value of going to
high school and college if you want to. The latter case is a case where
there is an S shape. So unless you get enough
education, it’s not worth it. At the former case is a case
where there is no S shape. And so one empirical question is
whether it’s actually an S shape or it’s actually
not an S shape. Another empirical question,
of course, is the value of education, whatever the
shape the overall level of the benefits. And the third question is what
people are thinking? Because even if it’s in fact
linear, if people think that it’s actually S shape,
then it’s going to influence their behavior. And it’s going to influence
the choice that they are making. So for example here, they have
all these discussions about is it even worth it to send the
kids to school or not. And they never question the fact
that it would be great if she could become a doctor. But they might question the
fact that there might be a value of anything below
being a doctor. Is there anything else that
comes out of this? Yeah? AUDIENCE: I think Ben
might have talked. I heard him say something
about cultural– but just the idea of the head
scarves, the preventing of the girls from going to school,
and then the idea of Kurds being assimilated as opposed to
being integrated in a way that helps them maintain
their culture. Again, that’s something
that would deter me from going to school. ESTHER DUFLO: Right, so that’s
kind of the convex combination of the two points, Ben’s point
and the point about once you send them to boarding school,
they’re not under your thumb. You can’t check what they are
doing anymore, which is reinforcing in Turkey that’s
it’s not allowed to wear a head scarf in school. So from the beginning, there
is a conflict there. Is school aware of
indoctrinating the kids away from what you would like, under
the guise of providing them with valuable skills
in the labor market? And there is certainly some
amount of that, to be honest, that’s actually said by them. The only thing we missed
from the movie– well, we might have missed a bit
more– but the only piece we missed that I remember and
is worth pointing out is the woman with the hair like that
who speaks with this very posh English accent, the columnist
from The Economist. She has the last word. And she mentions one thing that
might be worth pointing out, which is this is compulsory
education. This drive to compulsory
education was very much of a top down intervention, was done
without any consultation, or anybody, which is done. And the way the schools are run
is run in this completely centralized way, with a
centralized curriculum, with the teachers appointed from the
center, the kids driven to boarding school, et cetera. And she says that that’s not
going to work, that people are not going to accept or not going
to really be in the mood or thought to be really groovy
about the whole education thing, unless they’re
given some autonomy in running the schools. So that’s an important point,
because that’s the point that many people make, that any
effort at top down education will meet some resistance
from the people. They might still go because
they have to go, but the parents won’t be very engaged. The children won’t
be very engaged. The teachers might not
be very engaged. And nothing will happen. So we keep that in mind. I’m channeling her, because I
want to keep that in mind as we have the discussion. Because this tension between
education, board-funded top down, and education, emerging
from the bottom up, is one of the central debates
in education. So I think you guys said a
lot of the things that I wanted to touch on. Let me kind of make sure that
we have everything together. So the stories of a Kurdish
girl who goes to boarding school after education was made compulsory until grade eight. So many important themes
appear in the movie. I think we mentioned them. One are all the questions about
the supply of education, so that seems to have been a
constraint before this big education push from the Turkish
government and still is a constraint. There is no schools in
the remote villages. The roads are bad. Transportation is difficult. There is a shortage of
well-trained teachers. Therefore there is a large class
size, and the teachers are moving, what you were saying
about the teachers coming from far away not being
necessarily the best teacher, most motivated teacher. For part of the international
community, these types of constraint are the only thing
you have to worry about. I think you guys have all seen
a picture of a little African girl in a village saying, that
if only she had a school, she would study until she would
become a doctor. So there is a whole branch of
the international community, governments, et cetera, for whom
the only problems with education are supply problems,
and if only we could get rid of the supply problem and make
sure there are enough well-trained teachers, then the
kids would go to school. They would learn something
in school. And they would all
be very educated. So the problem is a problem of
fixing the supply constraint. But what we see in the movie is
that these are not the only constraints. So the reason why it’s relevant
is that a lot of the international community, a lot
of the policy was in aid. And the policies implemented
by the government have that flavor in mind, which is let’s
fix the supply problem. So for example, a lot of African
countries have gotten rid of school fees completely to
make sure school was free. You go to a country like Kenya,
and there is a school every 25 meters, because every
community who wants a school can gets one. So there is plenty of schools. In some sense, one could say too
many schools in that the class size is actually quite
small at the top. And in India, it’s
the same thing. India is debating a right to
education, where if you don’t have a school right near your
village, you can get one. But what we see in the movie
is that it’s not the supply constraint, not having a school
near you, et cetera, is not the new problem. In fact, Turkey is not only
building schools, and building these boarding schools, and
having kids travel in minibuses to go to the school,
they also made education compulsory. And if the only problem was
supply, then making education compulsory would not
be necessary. You would put the schools there
and people would be delighted to go. And you wouldn’t need
any compulsion. In fact, Turkey decided that the
only way that they could get a fast increasing education
was to make education compulsory. So implicitly, there is the
argument that, well, maybe people would not want to
go to all the schools. So there must be a demand
constraint as well. There must be a lower demand
for education. So what constrained them? We mentioned that. One is no economic resources. So they don’t have money. So this in principle, the direct
cost of education can be compensated by making
education free by paying for books, by paying for
transportation. But there is also the need
for child labor. It was mentioned in the movie. The kids who are in school are
not helping on the farm. Then there is the need to get
married, which was mentioned by Yaprak’s sister. She says, now I need
to get married. And you can be married and
in boarding school. In principle you could, but it’s
not very frequent that you would be both married
and in boarding school. So this is not a cost effect. This is something which
is more about culture. Maybe the husband wants
a young wife. Or there is something different
than just a strict opportunity cost effect. Like, why do they think that
it’s important to get married early instead of continuing
schooling? So these are only important
because they’re mentioned. And there are the benefits. Is it useful? Or is it useful only if you
get enough education? If it’s useful, do parents
know that it is useful? What do they expect
of education? Do they expect that education
is making their child generally better at
living their life? I’ll do they see
education as– the woman employs a term that
is interesting– it’s almost like a foreign currency. So people see your education
diploma. Do you see that as something
that if you get enough of it, you can actually sell
to the market? What is enough? Is it a foreign currency that
you could get a few cents of and that would be good enough? Or is it a foreign currency that
you need a big packet of to be worthwhile? And in the movie, what was
interesting was is that we saw different people having
different views about whether it is a foreign currency, that
is, you have to take it elsewhere to benefit from it? Whereas you could also benefit
from it just in your general my life, with having fewer,
healthier children, being more socialized? I think it’s again Yaprak
sister who sees another advantage of education for girls
in that it is going to increase her bargaining power
within the family. Since traditionally girls are
quiet and don’t say anything and men have all the power, and
if girls get education, that is going to improve
their bargaining power within the family. And that is something that girls
may find very attractive and their future husbands might
find less attractive. And here the question
is what are the fathers going to think? Yaprak’s father, on the one
hand, probably he has in mind the value of keeping the
girls in their place. On the other hand, he
likes his daughter. So there is probably a conflict
within him between the fact that as a man, he
doesn’t want to conflict with his wife, so we would rather
the woman being lower down, but as a father probably likes
his daughter more than his son in law, who doesn’t
even exist yet. So there might be a conflict
here in his preferences which might easily lead him to say,
fine, she should get an education or no, we want
to move forward. And what is interesting in the
movie is that he clearly sees himself as a bit of a
[INAUDIBLE] leader and a modern character. So he seemed to have concluded
this debate from his point of view to say that OK,
I’ll send her. AUDIENCE: I have a question. I’m wondering with that attitude
if it’s sort of like we’ll just indulge the girls for
a while and let them go to school, but we know secretly
that we’re still going to take the power we have and not
actually concede anything and respect the fact that
they [INAUDIBLE]. ESTHER DUFLO: Right, so there
might be a little bit of that. So just to repeat the question,
the question was, are they just indulging them
for a little while and then going to bring them
back in line? And then education is more
like it’s not seen as an investment anymore, but more
consumption value for the girl, since the government is
providing it for free and she’s kind of a bit too
young to be really helpful in the farm. Let’s get her get an education,
but we kind of know that at the end of the
day, it’s not going to change her life. And we certainly maybe hope that
it’s not going to change her attitude. What’s interesting is that if
this is what people had in mind is that that’s clearly
not her view. So that might be a little bit
of disconnect here, which would be in her advantage
in terms of when she gets the education. So here if we’re thinking of
these bargaining power issues and this potential conflict
withing the father between his goal as a husband where he wants
to keep the power, and his goal as a father, where he
would like probably her to have some power, is that that
may change with economic goals in the society and what are the
opportunities he sees for her to do something with
the education. If the society’s completely
paralyzed, then in a way the benefits of education are very
high for her, so he has less of a reason to want
to go to it. AUDIENCE: Just from watching the
video, it seems like it is possible for them to combine
both the cultural values and the value of education. Like for instance, clearly it
is a male-dominated society, but here we watch the scenes
where there’s a bunch of men, sitting around, and
they’re talking the value of education. It’s still the women who
are serving them tea or whatever it was. And they still see the women,
the girl who is getting the education, she’s still
helping with the children and all that. So it seems like– ESTHER DUFLO: Yeah, it is
possible that even with the education they are still going
to maintain the differences. What is interesting is that
there is a level question and a slope question, which is it
is possible that the girls have so far to go that getting
an education wouldn’t be sufficient to make them
become equal. But that would still go
in that direction. And at least some of them seem
to have the hope that it would bring it in that direction. But you’re right. So those are the expected
benefits of education. And then there is what worries
them about the schools. We’ve mentioned the culturalized
assimilation, the fact that it might be like a
covert way to assimilate them to a culture that’s not theirs,
and the fact that maybe there are no benefits, the
fact that just if sending the kids away is not
a very good thing. Potentially they are
worried about them. So these are the
demand issues. So the demand issues are a
little bit tricky, because depending on how this thing
balances out, what are the benefits they see versus the
feel they have versus the immediate cost of not having
the kids on the farm. Or the decision of sending the
kids or not sending the kids is not obvious, even if
education is free. And making education compulsory,
of course, pushes them in that direction. So is benefits of education that
are touched upon in the movie are of different kinds. There is this foreign currency
idea– you get a job. You get a higher wage. They hope that the girl is
going to be a doctor. So the issue is can everybody
become a doctor? And probably not. So even though they don’t say
it in the movie, they must have in the corner of their mind
that they’re not quite sure that she’s going
to make it. They sort of say it, but they’re
not quite sure it’s going to make it. And that uncertainty and the
fact that the objective is so hard certainly has some impact
in how serious it is to take the whole thing. And then there is the
possibility that just getting an education would help in
your job, doing your job better, even if your job
is to be a farmer, coming back to the farm. And nobody seems to
really say that. It’s only mentioned in a
negative way, which is if only they taught something useful
like home economics then maybe we would be able to have some
benefits of this education. But that’s not what
they are doing. And so maybe education is
useless or is seen as being useless at the lower level. Then there are the non-monetary
dimensions of getting an education. Girls will become
more socialized. The family planning, they’ll
have more friends and know how to interact with people in
the city, et cetera. And then there is the idea of
learning things that you can teach others. So the one guy who has an
college education in these men’s discussion, he goes and
say, well, let them get an education, come back, and
teach us some stuff. And so this is the external
spill-over value of education, which is the opposite than the
one that Ben had mentioned, which was the education envy. But it’s the idea that if I get
an education, if there is some benefits, for example,
I learn how to read the instructions on the fertilizer
package, maybe I learn to use new technology in agriculture,
not only it can be useful for me, but potentially it can
be useful for others. So if that is the case, a
village might decide to focus on the smartest kids on the
block and make sure that they at least get an education so
that everybody benefits. So those are kind of the
benefits of education. So one empirical question
is what are the real benefits of education? The other empirical question is
what are people perceive to be the benefits of education? Another thing that he touched
upon in the movie is this top down versus bottom up. So here the government is
trying a big top down approach, trying to
do it very fast– putting all the money from the
top, making it compulsory, which is the ultimate top
down, and instead of supply-drive policy, has been,
as I was saying, popular in many countries. Many African countries– Kenya, Uganda, Ghana– have recently, relatively
recently, in the last 10 years or so, have adopted free primary
education and moving to free secondary
education now. India, as I was saying, has a
right to education, which actually allowed people, in
principle, to sue the government if they don’t
get a school. So the supply drives have been
the main education policy say in the last three decades. The Millennium Development
Goal specified that every child should get at least a
basic education, basic goes to nine years of education. What is interesting is that
there is no mention anywhere that they should actually learn anything in those schools. It’s sort of assumed that if
they get nine years of education they’ll get
something out of it. But as we’ll see, it’s a
pretty big assumption. And there are certainly some
clear signs success of these big supply drives. Between 1999 and 2006, the
enrollment rates have increased, in Sub-Saharan Africa
from 54% to 70%, in East and Southeast Asia
from 75% to 88%. These are primary
schools only. Secondary school enrollments
have also increased, even though secondary school is much
more expensive, much more difficult to do for
governments. So worldwide, there are still
a bunch of millions of kids who are not in school, but much
less in 2006 than they were in 1999. So is it all worthwhile? That’s the question that
Easterly is asking in the reading for today. And what is his answer? His answer is not that graph. AUDIENCE: I thought education
in itself, an increase in education, is not going to cause
and increase in growth. ESTHER DUFLO: Right. He is saying it’s useless. And how does he explain that
despite the fact that it’s used less people have
still done it? Yeah, go ahead. AUDIENCE: [INAUDIBLE]. ESTHER DUFLO: Go ahead,
go ahead. AUDIENCE: I was going to say
because the increments in the [INAUDIBLE]. ESTHER DUFLO: Exactly. So what Easterly is saying is
that you guys have been fooled by this graph. These are countries– USA, Romania, Paraguay,
Venezuela. And these are the average years
of schooling of the population. And this is the log output per
worker, relative to the US. So everybody is negative because
the US is a richer country in the world. And what you can see here is
that there is a pretty strong correlation between the log
output per worker and the years of schooling. Countries which have
more years of schooling are also richer. So one could conclude from there
that year of education increases income. And people have certainly
drawn this conclusion. What is his point about
this graph? AUDIENCE: I’m not sure this is
the point but, it’s the idea of mobility bias. We have more education, perhaps
that’s because we have some sort of mobility. I mean, I don’t know
if this is– ESTHER DUFLO: This
is countries. AUDIENCE: –in the
national sense. ESTHER DUFLO: Think of it’s like
he made this argument, not for a person, but
for a country. What’s different about these
countries as well? AUDIENCE: They also
have more greed. Their GDPs are higher, so
they have some more opportunity for school. ESTHER DUFLO: Yes,
they are more flourishing for younger people. We run this graph with
the number of football team you have. You would have a
lot of zeroes. It wouldn’t be such
a good graph. But you would have the same
relationship that places that play American football
are also richer. And we don’t think it’s because
of American football. Or I mean I don’t think so. You may have a different view. So that correlation is
not very informative. So what he’s suggesting
is to say, so let’s not look in levels. Let’s look in differences. And I couldn’t find such a
nice looking graph for differences, but here is one. Now we have the difference in
human capital from it’s 1990 minus 1965. It’s a difference in the log
other ideas of education. And now we put the log
difference in income. You could do it in level log,
except that doesn’t matter. What’s relevant in this graph
is you get a big cloud of points and a completely
horizontal line. So if I can say this graph in
words, what this is saying is that the countries which have
increased the most the average years of education of their
labor force, are the countries which have put more and
more kids to school have not become richer. So you compare in the Easterly
reading, he had a comparison between different African
countries which had made different levels of progress– so I think, so for example,
Ghana versus Madagascar, and saying that Ghana has increased
education more, Madagascar increased education
more, and Ghana is not going faster than Madagascar. Actually, I don’t think
that’s true anymore. I think subsequent to that,
Ghana has increased quite good and quite a bit faster
than Madagascar. But that’s, let’s say,
was the point, were the keys at the time. So now we interpret him saying,
well, when we take the difference out, now we are at
least seeing what has been the effort terms of increasing the
years of education, versus the gain in terms of increasing
the GDP. And we see no effect. So the level relationship was
all coming from this bias In fact, there’s no effect of
the years of education. And the bias in the level of
regression are some form of the ability by us as USA which
countries have more education, because it takes money
to have teachers. They can afford it. Or maybe they choose to be
educated because when it’s more worthwhile to get an
education if you can do something with that education. So that comes back to this
argument of what’s the point of getting an education if
you’re going to come back to the village anyway? So if education allows you
to take advantage of the opportunities that are afforded
by economic growth, then you’re going to be more
willing to get an education if you think that the country
is going to grow a lot. So for all these reasons, and
you would expect more education in rich countries, not
because education causes growth, but because growths
cause education. So his conclusion is that
internationally driven investment to education were
a waste, that education is actually useless. Now there’s a bunch of problems
with his argument, because in a sense what he is
saying is that I don’t see any evidence across country that
there is a lot of increase in GDP coming from increasing
education. But the issue is we don’t
know why these countries increase education. We don’t know what would have
happened if they had not increased education. So for example, many of the
African countries that increased education the most
also had severe civil war subsequently. It is possible that education
caused the civil war, but it’s not very likely. It is more likely that the
social tension that preexisted in the country caused
the civil war. One possible answer to the
social tension may have been, well, let’s try and get
people an education. Yep? AUDIENCE: This is interesting
because I guess in our standard macro classes, you
look at a factor of A as a multiplicative factor that
increase in GDP. And typically, maybe I’m
thinking about it wrong, you look at that as if you have
increased education, it could be worth more innovation. If you have the technology, you
still go for the forms or operating a computer. And education helps facilitate
that group. So I’m a little confused as to
how you make this conjecture. ESTHER DUFLO: So that’s
an interesting fact. I think in a sense, in your
macro class you may have been interpreting this graph. And there is certainly a lot of
theories for why education would be good for growth. So one of them is the
one you point out. This is the externality argument
that we were making about the movie. One person who is educated can
figure out some technology, and then everybody can
use the technology. So they are all these
spill-overs, which is why we would get this pretty strong
relationship between education and income. So there a lot of theoretical
reasons to think that there could be a macroeconomic
relationship between education and income. And in fact, we see one, which
is why everybody is happy thinking education
is a good thing. What Easterly is saying is just
commenting on this graph, which is he doesn’t see
a relationship. Because when he does, the
relationship in differences now between growth and education
and growth and income, he doesn’t see the
relationship anymore. AUDIENCE: How long is that? ESTHER DUFLO: That’s 1990, 1965,
just about 30 years. Yup? AUDIENCE: I have a question. In Easterly’s paper,
he mentions the productivity factor. And he says that only a small
percentage of this is accounted for by [INAUDIBLE]
capital and by machinery and other forms of capital. What is the rest of it? Like, what is productivity
in that case? ESTHER DUFLO: So that’s
an excellent question. The answer to this question is
that’s what I do what I do and not macroeconomics. If you’re looking at growth
across country, and you’re trying to account for the growth
in an pure accounting sense, which is to say, so
imagine that you each country is a big machine. Think of a country
as a machine. So there is a machine. There are some people to operate
the machine, labor. And there is some human capital
to think about how to operate the machine. And then there is some spunk. So think of a macroeconomy
as that. In letters, we write it as an A
multiplied by K, that’s the capital, to some power, multiply
by L to some power, multiply by human capital
to some power. That’s your macroeconomic
model of an income. We can observe K
to some extent. What’s the capital
in the economy? We can observe L to a pretty
good extent, how many workers there are in the economy. We can observe H to some extent,
what is the the human capital, usually measured
with education. And the rest spunk is what
we don’t observe. Now we can say, well, let’s
look at what share of the level of income of the country,
differences in income across country, are what share
of differences in growth across country are explained
by those factors. And the answer is
not very much. So the answer is that we use
factors such as capital, labor, and human capital,
measured in this way. We don’t explain much
of the gross differences across country. This is one of the reasons why,
which when you look at growth and you look at the
differences in human capital, there’s just no relationship. There’s a bit more with
physical capital. And the rest is like,
we don’t know. So technological progress is
just a fancy term for we have no clue what the hell is going
on, which is to me saying that well, if we have no clue what
the hell is going on, then it means that we need to go beyond
thinking of the economy as one big machine. And we need to start to
understand what is happening. Look at micro level. That might start giving us a
sense of what might actually be going on. Because technological progress
is not just how good is the chip in your computer. You think of this as, as I was
saying, the spunk, how people interact, all of that. So in your macro class, you
either saw this graph and commented on it, or you may also
seen a graph where you have growth on the left hand
side and level of education. You do see a strong
relationship between growth and level. These countries which had more
education in 1965 have grown faster between ’65 and 1990. But what Easterly objects to
that is that yes, of course. Because if you anticipate
growth, that’s how you’re going to decide to
get education. Because education becomes
more worthwhile. So that does not tell me that
education is worth anything. So that’s where we are
with the macro data. And my bottom line is not that
your macro class is wrong or that your macro class
is right. My bottom line is we just don’t
know by just looking at these data. We don’t have enough
data points. And anything could
have happened. In the countries which were
about to have wars may have invested more in education
perhaps as an attempt to not have those wars. Who knows. So in order to answer the
question of what’s the benefits of education, we need
to look at specific examples. So ideally, I would have liked
to look, for you, at the example of Turkey, because we
just saw it in the movie. But I don’t have it. So we’ll be looking at the
example of Indonesia. So if we are looking at the
effect of supply-driven expansion, there are some
arguments where one could see that it’s not going to work. And these are arguments that
Easterly is making. And we kind of all saw
them in the movie. There was the point about
the teacher quality. If the teachers don’t care
because they’ve just been spar shooted by a central government
to the community exactly as you were saying, then
the level of education is not going to be very good. If the parents don’t care and
just do it because they have to do it, then they are not
going to put pressure on the teachers to actually deliver. And they’re not going to put
pressure on the children to actually learn. So the | case is the point that
you were making earlier, where the children are all alone
in boarding school, and nobody’s looking after
what they do. And potentially, they learn
nothing, or they might learn to do all sorts of bad stuff. So if parents do not think that
schools are delivering anything useful, then they
won’t pay attention. And finally, children,
if they also don’t care, won’t pay attention. So these are all theoretical
arguments. I’m not saying they
are correct. But these are the types
of argument that Easterly is making. So how would we know whether
or not there is a benefit of education? So as I was saying, I don’t
you want to interpret the cross-country evidence. I think it’s very difficult
to interpret. So I want to focus on one
country, and this one company that did almost the same
thing that Turkey did. And fortunately for us, they did
not a few years ago, but many years ago. So now we can look at those
kids as they are in the labor market. And we can see whether it was
beneficial for them to be sent to these schools. So that country is Indonesia. Indonesia is an oil-producing
country. So when there was a big oil
shock in 1970, starting in 1973, for Indonesia, it was
actually good news. Because there were producing
oil, so they became richer. And they decided that they were
going to use this oil money to build a
lot of schools. Basically, all the oil money the
first few years went into building tons of schools. Tons means they build almost
62,000 schools all over the country. But particularly in places
which had a low education enrollment. So it’s your ultimate
top down. Furthermore, what is interesting
in relationship with Turkey is that they had
exactly the same objective, which is they wanted the kids
to learn Bahasa Indonesia. That’s the language for the
country, even people in the outlying island and
stuff like that. And they wanted everyone to
learn the state ideology, which was the Pancasila. It’s kind of halfway between
an ideology and a religion that [INAUDIBLE] was keen on. So it was entirely pushed
by public effort. If it was going to fail, then
this was going to fail. And what do we see? So these graphs are the number
of schools that were built in the region. And this is the difference
between the education of the young cohort who benefited from
the school, and education of the old guys who
didn’t benefit. So you see that in general, it’s
always positive, because education went up over
time between the younger and the old. That makes sense. But it is also increasing in
slope, that is, places which got more schools got more
years of education. Maybe that’s not surprising,
because that’s almost a mechanical result of
putting schools. But this graph is an
interesting one. I’m now looking at the wages of
people in 1995, difference between the wages of the
young, minus the wages of the old. Now it’s all negative, because
old people have more experience and tend to
make more money. But what is interesting is
not the negative thing. It’s the slope again. The slope is again positive. So it is saying that compared
to the old guys, the young people benefit more in places
which build more schools. And it’s very difficult to think
of a story why would this be the case,
except that the benefit is from the education. So it seems to be the case that
parachuting more schools to communities increase
the years of education, increase wages. And that seems to imply that
education increases wages. And in fact, if you put two
and two together, you find that the effect of education
on wages is about 8%. You can use similar experiments
to look at the non-monetary effect
of education. So Taiwan around the same time,
little bit before, also did a top down drive to
increase education. What they did is compulsory
education. And what you find in 1968, and
what you’ll find is compulsory education in Taiwan led to
an increase of education. That’s not surprising but also
a reduction in infant mortality in places
where education increased more as a result. So again, these are the
non-monetary benefits. Nigeria did the same thing
as Indonesia for the same type of reasons. They used their oil money
to build schools. Again, they built more
schools in some regions than some others. And again you can compare the
changes in infant mortality, and infertility, and in wages
in places where they built more schools and
in places where they built fewer schools. And the more schools they
built, the higher the education, the higher the
wages, the lower the infertilities, the lower
the infant mortalities. So the bottom line, when we do
look at specific top down policies is that they actually
are useful, that it seems to be that there is a returns to
education, corresponding to about 8% increase in wages for
every extra year that you spend in school. So when we look at this thing in
detail and we answer these questions, we see yes, there
is a benefit of education. What we are going to do next
is to say, well, is the benefit as high as
it could be? And that’s where we are going
to see the limits of these kinds of things, having to do
with the quality of education, the motivation of the teachers,
the motivation of the parents, et cetera, which
we’ll do next time.

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