The topic of my development economics class last week was education. The following my insights from the readings and our discussion.
Enrollment vs. quality education
Although the United Nations used net enrolment ratio as the main measure of “universal education” goal in the Millennium Development Goals, it fails to account for the quality of education. The high teacher absence rate in many developing countries makes people wonder if schools serve their purpose of promoting knowledge and enhance skills. Survey results (Chaudhury et al, 2006) suggest that on average 19% of teachers were absent in Bangladesh, Ecuador, India, Indonesia, Peru and Uganda. Teachers with higher qualifications and more power tend to be absent more.
Education as Investment vs. Education as Gift
It’s tempting to take education for granted. One can certainly argue that parents recognize the intrinsic value of education in enabling us to fully realize one’s potential and simply give education to their children as a gift. But in financially constrained households, educational choices are made after carefully weighing risks and returns. Education is an investment, and parents, as investors, have to evaluate the project before putting money into it. In poor households, parents tend to invest less in education than the richer families. Apart from the reason that they have limited financial resources, they also seem to underestimate the role of education. Several papers have shown that the perceived returns on education (in terms of wage differential) are far less than the truth.
Risk as a central concern
Overbearing parents in poor households often “pick the winner”, i.e. choose the most promising child and invest heavily in him or her. This also means that the other children have less chance to advance in personal development. Looking at these makes one wonder: why do the poor have so many children in the first place? Why don’t they have fewer children with higher quality (just like the one-child policy slogan in China — “giving birth to fewer and healthier children”)? The rationale may be that by raising more children, the parents are lowering their risk of not being taken care of when they are old. For the poor, diversifying risk is a major concern.
I am now reading Banerjee and Duflo’s book chapter on microfinance, so I will revisit the issue of how risk affects the behaviors of the poor next week.
Abhijit V. Banerjee and Esther Duflo. 2011. Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty. PublicAffairs. New York.
Nazmul Chaudhury, Jeffrey Hammer, Michael Kremer, Karthik Muralidharan and F. Halsey Rogers. 2006. Missing in Action: Teacher and Health Worker Absence in Developing Countries. Journal of Economic Perspectives 20(1): 91-116.