People often think of economists as people of ideas who have no connection with the real world in indeed we live in times when intellectuals are looked down upon and we want our leaders to be men of action. A prime minister famously once said, quote, Hard work is much more powerful than Hollywood stockwood. He said this while defending demonetization, by the way. And we all know how that went down. His statement also assumes that people from Hollywood don't work hard, which is silly.
My guest today, that is VIN Economics from Harvard. And I can guarantee you that he has spent more time in the towns and villages of India than many of our politicians would literally once invoke the headline from the Financial Times to sum up a key value of his quote, The best economist is one with dirty shoes. Stocco Karthick teaches and lives in the US, but has spent thousands of hours in Imperial India trying to get to the heart of one of our biggest problems, the state of our education.
Welcome to the Scene and The Unseen, our weekly podcast on economics, politics and behavioral science. Please welcome your host of. Welcome to the scene in The Unseen. I keep saying on the show, ideas have consequences. We only need to look at Indian education to see how true this is. Our education system is broken because for decades, our politicians and policymakers have held the wrong ideas about education. All the conventional wisdom was wrong, and the consequences of that are a humanitarian disaster.
Hundreds of millions of Indians through the years haven't reached anywhere close to their true potential. And it's hard to dispute that this has led to all our other problems, such as those of poverty and gender being much worse than they otherwise would be. This is a moral crisis and it began as a crisis of knowledge. My guest today is particularly the brilliant economist who has had his boots on the ground for a couple of decades now is the global culture of education at the Jameel Poverty Action Lab, or JPL.
And he has written more papers on Indian education than anyone else I know. He has spent thousands of hours all across India conducting experiments and gathering evidence for all kinds of theories and interventions. And he advises various state governments in India. It could be argued that these are exciting times for economists because we are now much better at testing our ideas against evidence, a subject for which Gothics colleagues and mentors Abhijit Banerjee, Acetophenone and Michael Cramer won the Nobel Prize for Economics last year.
I had a long conversation of this. The first hour, by the way, is a to and fro on PPE philosophy, politics and economics, all of which are a part of our education system. So we get into the weeds of Indian education only after an hour or so. But I loved every little bit of this conversation, which felt too short to me. Before we get to this conversation, though, let's take a quick commercial break.
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This is not a subscription. The scene in The Unseen will continue to be free on all broadcast apps and at seen scene unseen, don't I? And this is just a gesture of appreciation. Help keep the thing going. Scene unseen, vote and support. Welcome to the scene in the scene. My pleasure. I really look forward to this. You know, before we get down to the subject at hand, which is not a subject of education, let's get to the subject of your education, by which I don't mean your formal education policy, but what's your intellectual journey been like?
What makes what later on who he is? Tell me a little bit about sort of your background and your formative influences.
Yeah, thanks. I, I think, you know, like you said, so, you know, mechanically, I grew up in Ahmedabad, so I'm already kind of a pretty bad Indian by temperament because I'm family and I grew up and I'm the bad. So I speak in the traditional. So in that sense, my influences are pretty bad Indian.
I'm also, you know, my schooling was very idyllic, actually. I'm the one who was a great city to grow up in. And so I was on a standard engineering track. My dad was an I.T. graduate. And so that was the default of what you did.
But I think I started getting interested in economics pretty early because my dad would just bring home The Economist and just kind of leave it around casually. And I probably started reading it or skimming articles from the age of 12 almost.
But by the time I was 16 is when economic liberalization happens and born in seventy five. And so that was kind of, you know, a moment of just getting hooked onto the economics economic policy. And there was an interesting tangent as to how I got in economics, which is I was appearing for this national talent search exam which is done by the CBC. And the thing is, you had the before the natural sciences, physics, chemistry and biology and for social sciences, history, civics, geography and economics.
I was studying skateboarded. And so basically my physics, chemistry, maths was up to national standards because of studying for my biology was nowhere like, you know, the things I looked at this in bus. So and, you know, I think my dad was OK. Listen, why don't you just pick up one of the social sciences and economics is something you read so much about anyway, so you could do it. So they did a crash course in kind of preparing myself with example.
So there was a formal part of getting up to economics, and that was kind of the informal part that was happening with liberalisation. But I think the really big inflection point in my life was when I won the scholarship at 16 to go to Singapore. And so I did my last two years of high school in Singapore. And the main academic reason I went was this was 91, the opportunity to mix and match across subjects, which is possible now, but which wasn't possible, that excited British levels of math, physics, chemistry, so kept all the engineering options open, but did economics as a subject.
And I think those two years in Singapore were really the most life changing experience in terms of not just the academic study of economics, but I had a fantastic teacher, but also just studying the Singapore economy and recognising that there was a place that was poorer than India. Twenty five years ago, I got there in ninety one. Ninety one and sixty five is when Singapore became independent.
And then, you know, you just kind of get obsessed with the importance of good economic policy and the centrality of effective policy in lifting millions of people out of poverty and giving them a good quality of life.
So, in fact, Bob Lucas, who won the Nobel Prize in five, he has this famous paper in nineteen eighty eight, called on the mechanics of economic development. But he starts by saying that once you think about the disparities in living standards across countries and think about what policies and India and Indonesia might adopt that might allow them to grow faster. And when you think about the staggering consequences of that for human welfare, it becomes impossible to think about anything else.
So in a way, I was living Bob Lucas's quote in my head well before I ever read the paper. And, you know, so that's how I got hooked on economics. And then I think the Singaporeans were pretty crucial because I left home, I was at the hostel. So one of those things where, you know, when you get home sick and your family and friends, one way to go is, you know, you kind of just mope the other way was to just dive into your work.
Or so the marginal kind of intellectual leap I had in those two years was probably the highest. And then I was just, you know, super lucky at various stages that the options that were open after that one options I wouldn't even have considered coming out of India. So, you know, then my advisers and high school teachers were all kind of saying, listen, you should be applying to the top colleges in the world. And I'm like, really mean.
And they're like, yes, you know, we've seen students over the years and that's where you should be applying. And then, you know, I've just been incredibly fortunate at various stages. You know, undergrad. I had a choice between Oxford, Harvard and went to Harvard mainly because of the financial aid. And then, you know, the undergrad influences in economics were partly my cousin, but partly just to hold the reins, like being a kid in a candy store right out of the range of courses.
And everything you go to is quite clear early on that I would care about academic economics, but with a view to improving policy. And then, you know, after Harvard, after four years, I had this particular regret of having turned down Oxford for my undergrad. And so I did a one year master's in Cambridge on a fellowship. And so that was that was a fun. And in fact, I followed him at the centre Trinity and he won the Nobel within six weeks of getting there.
But that was a fun year. In fact, you know, you will appreciate this given your cooking for capacity. In fact, that that was it. Ninety eight. Ninety nine in England. So that was the year I, you know, I bought my cricket tickets in advance. So I followed the Indian cricket team around that for the updates and Bhupathi won Wimbledon. So it was a good year to be in England. But anyway, I think England was fun, but I think the other thing I got from Singapore was a very, very healthy respect for the private sector, which is something that your typical academic economist or typical kind of government bureaucrat doesn't always have.
And so before I went to my Ph.D., I really wanted to have a private sector experience. And one of the things I did in college was I learn Chinese. And so I went back to Singapore, worked in management consulting for a couple of years. And this is '99 to 2001 at a time when China has not yet entered the WTO. So most Fortune 500 companies, Asian headquarters in Singapore, Hong Kong and some shifting to Singapore because of Hong Kong getting the 97 kind of implications for China.
So it was a great time to basically just think about how private capital think straight to the kind of work we were doing was really putting Asian strategies, looking at where you saussure production, where you at the markets. So it was an incredibly valuable two years, but it was also very clear that I was not interested in climbing a corporate hierarchy passé as much as thinking that understanding of how private capital markets and applying that in the public interest. And then I came back to my party and it's a personal thing that's not in the I've had some interesting detours about thinking about different pathways to policy, thinking about active politics, thinking about things.
And then I think multiple mentors and advisors at various points said, listen, your competitive advantage is always going to be intellectual. So go ahead and get the beauty and, you know, be an academic, but stay engaged with policy. And that's kind of roughly what I've done. And again, I've been super lucky in the sense that I came to be at a time when development economics was becoming much more empirical. So if this was in the 80s and 90s when you were really just writing a lot of applied theory models and trying to argue which type of poverty trap was kind of creating poverty, I might have lost interest.
But it was at a time when you really had to get your shoes dirty, go to the field, understand what was happening. And I kind of you know, the Occupy movement was happening around that time.
And I was kind of the first wave of the students of this year's Nobel Prize winners write to Michael Kramer was my direct advisor and abjectness they taught us the development sequence together in my second year in grad school.
So and then, you know, I think how I got education.
So I thought I believe I'm still a public finance economist. Right. So the focus has always been on effectiveness of policy. And for public finance is like the core policy field that is both on the revenue side and the expenditure side.
And then the interest in education specifically, I think came from you know, partly there was the setting and influence about belief in human development and human capital. But, you know, I've always kind of believed in Sydney ends, but disagreed with me. That's right. They can come back to that when we talk about vouchers and how the semion influence itself sometimes would suggest the case for more market based provision of basic services. But I think the key to our city movement is very technocratic, is kind of very in some ways it's humble.
Right. So there's an aspect of methodological hubris where it gets pushed back up the double standard. But it's also, in a sense, it's about humility, which is to say that we have way more theories than we have data. And at some point you just need to subject your theories to real evidence. And so how I got into education was really there was this conference in Havana in 2001 at the end, but I was the first APHC student and this is this really high level policy conference of top US economists and an economist, the who's who of the policy establishment were there.
And I was this eager Beaver Beach student sitting there taking notes. And there were two entire sessions on education. And, you know, the four speakers were literally like the who's who those IBG Bennetto. There was Michael Kramer. That was Caroline Hoxby. And by providing a field based perspective and, you know, it just got me hooked in the sense of how important the topic was and how abysmal our performance was and the ability and the potential of good research to try and influence and inform the allocation of public resources to better the common good.
The education then just became the topic into which a lot of these principles that I ended up working on.
So, you know, and then there's the specific research projects I started doing. My first major study was this all India study on teacher and doctor absenteeism in the public sector and very simple descriptive work. Not fancy at all. We did was make surprise visits to over fifteen hundred schools across the country. And that was when I got my fieldwork experience, you know. So it was a wonderful, wonderful experience to see in rural India, seeing the schools, seeing the reality and then just crafting survey instruments to just learn what was going on.
And I think, you know, having them documented facts on the teacher absence and just how much, given the salaries of the biggest component of the budget, there's how much fiscal leakage you get just from that one line item. And then, you know, part of, I think where I have been, the policy motivation. But what I do always shows in the sense that I care about the academic paper. But the motivation is always that. How does this research help us understand, improve understanding for policy?
And then over the years, we've had some fantastic collaborations, particularly on the PREDACIOUS is the undivided on the issue. And we set up a. CDs of long term studies are both randomized trials as well as longitudinal follow up of kids, and we've learned an enormous amount from that research. So we shall talk more about the part. And then I think in terms of the policy engagement, you know, I've always been fortunate in the sense of having exposure to conferences and access to the Democratic leadership in the country.
So, you know, whether it's the chief economic advisers, whether it's the planning commission, senior folks, people that have been long term mentors and influences. And so in that sense, they were windows to them, provide input based on policy.
And then around 2002, when I was frankly very frustrated with the RTC, which I, you know, which I really think set us back in multiple ways. Right. It's kind of a classic example of good intentions that are counterproductive. And we can talk more about that. I remember being very, very frustrated at how policy was not reflecting any of the evidence. I think Bauby said, listen, you write these great papers that get published in the top journals and might at best a seminar and clap our hands and say good job.
But in the end, the policy is still written by people who are essentially bureaucrats and who don't understand research. So if you want to start having impact, you need to roll up your sleeves. And if you don't get involved a bit more. And so then he invited me to write a background paper to the 12th five year plan. And then a lot of the language in that paper ended up making it to the five year plan. And then after that, I think he again said, listen, you know, it's one thing to put things in a planning document, but now you need to start engaging much more in terms of making this happen.
And so then, you know, both with Mitchard will be done some workshops. And then over time, you know, where I spend most of my policy time, frankly, with the states, because 90 percent of service delivery functions are with state governments. And so I continue to work across a range of states, testing a bunch of, you know, continuing to do research, but continuing to also synthesize. So I think one of the things I ended up think said to me, which you maybe not the exact words, but the spirit, which I say is, you know, is like you need to learn to segment your brain into the researcher who says that I know nothing because you realize how little you know.
And so the academic this thing is always about fine tuning our understanding on relatively narrow areas of uncertainty. But in the policy space, it's like whether you have research evidence or not, we are still making decisions. And so you need to then be comfortable with saying we don't have all the answers. But here is the best I would recommend based on what we know. And so, you know, that's kind of been the spirit of my policy writing.
So I wrote that on paper. And then for the new education policy, which will talk about, you know, I provided extensive set of comments in writing. And and the good news is many of those things have been incorporated in the NDP. But the note of caution is that many of the language was also in the five year plan. And so then we'll come back and talk about implementation and what it's going to take to take some of these ideas to action.
But hopefully that gives you some sense of the personal aspect behind this, which is another kind of way I think about this is in the nonprofit sector, you have tons of very motivated nonprofits trying to improve education, trying to improve development outcomes.
Right. But the 800 pound gorilla in the room is the government. And so the government spends over three hundred thousand dollars a year on education. And if you can improve the effectiveness of that by one percent, that's basically bigger than the CSR budget and education of almost any entity that's running. Schools are providing scholarships.
And so it's a very, very hard beast to move. But the returns to improving effectiveness of government expenditure is massive. And that's that's what I spend my time on. That's extremely fascinating. Now, before we get down to the nitty gritty of talking about your experience and of Indian education and your insights from a few tips to unpack, number one, I thought of someone from Oxford. Listen to this. They're going to get really pissed off because you basically said, hey, I missed out on Oxford, so I went to Cambridge, Massachusetts.
I'm leaving that aside. I also found this particularly fascinating, what occurred earlier today about policy that worries you. You may as an academic, you approach something with extreme humility and you're trying to work on one small margin of something. But as a policy person, you have to have a clear direction. But you're showing and that seems to me to be a lot like, you know, what Harry Truman once said when he was president, about give me a one handed economist, because all his economists kept saying, on the one hand, this on the other hand and I was also sort of fascinating and this is something that this is a trait I come across in the personal journeys of many of my guests, which is the role of serendipity and chance.
Like you've spoken about how you would have the economists still lying around at home. And in those days, The Economist was far better than it is today, though it's still a model of clear writing on complex subjects. So I can imagine the influence that I would have had going for Singapore. I'm sure you've thought about where you might have been, if not for sort of all of these. The trade that I want to examine a little bit further before we actually start talking about education is what you said about your disagreement with SEN on means and ends.
And I think this is where, for example, someone like Monkman Gandhi diverged from a lot of the other leaders of our independence movement, where Gandhi was always all about making ends or the means to. And, you know, we sort of came into this republic with the mindset of that these are our noble goals, these are our ends, and the means are inevitably straight. And I can see this playing out at two levels. With the first part of my question is that when you start examining this and some of your early training was to be an engineer, but at the same time you've seen the power of free markets in Singapore and you've got the economists.
But how do you sort of handle this dichotomy between means and ends? And keep telling yourself that, listen, you know, whatever beautiful policy I may recommend, it is, after all, the heavy hand of the state, which often has to carry it out. And that means, of course, is changing. And the second part, which will explode immediately afterwards with the second part also, is there been this tacit acceptance that, listen, there is going to be a certain amount of state coercion involved here, so let's at least make sure that it is effective and justified by bringing experimental methods in our cities and all of that, which I'll explore shortly.
But on this whole broader question, how has your thinking on means and ends? Because you, after all, deal in a field where there is a significant amount of state presence and state business is equal distribution, know all of this money that is being spent on education is, after all, coming from somewhere. So how has your thinking sort of evolved on this? And, you know, and can you elaborate a bit on your differences with those Indian view, as you put it?
Yes, and I think this is you know, I'm just starting to see why the conversations are so much fun, the lectures, because you can follow tangent, follow nooks and crannies. So remind me, because of your cricketing forecast, tell you one very important cricket joke, not just to a cricket true story in my life, but that has to do with my year in Cambridge because you mentioned Oxford and Cambridge. But yes, I think you're the Oxford Cambridge notwithstanding.
So I think you coming back.
I think the semion moral point of view, that development at the end of the day is not just about GDP, but it is about enhancing human capabilities and that health and education are a core component of that.
I think that's a really simple and important and deep point. And I think if you'll allow me a tangent, see a little bit of the sense in Worldview is, I think, being borne out right now as we speak. OK, so then I teach my undergraduate class on developing economics. One of the things I talk about is, you know, you can measure countries welfare and prosperity by GDP per capita, which is a standard thing, or you can measure it by the same in human development index, which the UN.
And the basic difference is that the Human Development Index has only a one third rate of income. It has a one third rate on health, one third way down education.
Now, what's interesting is if you rank countries around the world by GDP per capita, if you rank them by HDI, the rankings are remarkably similar. So there is very little difference. And so the only exceptions you get, there'll be some countries like Saudi Arabia that are much worse off than income because you simply accidentally finding oil under you doesn't make you develop if your population can't go to school now. And conversely, I think the examples of Vietnam and Kerala and others would be that here are places that outperform human development compared to income.
And I think where I would say there's a slight vindication of the Indian view in the current global crisis is that if you look at the other societies that have outperformed dramatically relative to GDP per capita, it is the societies that are in fact higher HDI. It's all relative, obviously, but the income tax with everything anyway. So I think there is a deeper point that that education and health are somewhat kind of broader enablers of society. And one of the philosophical tensions in education, which, again, I'll come back to the end, there's too many because you see but I'm bringing it now because I know you're kind of a classical liberal.
I mean, and I have many of those same those same instincts. But here's the fundamental tension.
Tension is I think many of us probably have an ethical worldview that says that people should be allowed to keep the majority of what they work for. And so the cohesion of the state in that sense, measured by state taxation rate, should be kept low.
OK, but I think a lot of us would also share a world view that says that the role of the genetic lottery in life outcomes should be minimized to the extent possible. So to kind of come up with an analogy, which again, I use in my undergrad class, is to say, you know, when you look at the field of life as a soccer field and you say this is an uneven playing field, the problem is that socialism, communism, as you say, it's uneven and therefore the game should be a draw.
But if the game is a draw, there's no incentive to play and there's no spectators, there's no economy, there's nothing. And so then it's kind of you shrink all activity. So what we would like to do is we would like to level. But if the game is so uneven, right. Then there's no game. Right? I mean, so what you would like to do is level the playing field as much as possible and then say now go play right now, go play and let the natural kind of balance and effort and everything emerge so that you then get to keep the fruits of your labor.
Right. And the reason I'm making the standard is because deeply then has to go with what is the role of the state, what is cohesion, what is the thing.
And so but I think the fundamental tension here is that at one level we say that we want. Want people to be able to keep the fruits of their labor at another level. You say that we would like to keep a level playing field and prevent the generation or not prevent or at least mitigate the amount of intergenerational transmission inequality.
The problem is that the thing that people seem to want to do the most with their money is propagate that advantage for their children. OK. And so if you look at what people do in terms of schooling, etc., so I think the role of the state in the basic services of health and education, I think is therefore much more warranted in terms of providing that kind of level. So then I think there's the practical question of how do you achieve this?
And I think that's where there's this slight divergence within can over the original SENIN view is that the countries that have the world that have outperformed their human development relative to incomes have been the catalyst. The Vietnamese, the Cubans that have all had like heavy state involvement don't even try not even the medical in some ways that you did was a very heavy state investment in education.
OK, so you know and I know and we'll come back and talk about vouchers and markets and stuff like that. But I think the one very compelling argument that the anti voucher crowd has is to say that, listen, no country has ever managed to achieve universal education at scale without public provision. And this is true even if you is OK. Now, that being said, I think in many ways India needs to chart its own path based on our lived reality.
And this is a topic in many ways. Like I said, I'm working on my first book, which will be out next year. So many, many things that will come back to later. But to keep the focus on what you said about the means and in some sense, when I say there's a little bit of a cognitive disconnect and sends all results versus his views on, say, vouchers comes from the fact that if you look at one of his most powerful ideas and famines, that people historically thought that famines were because of collapse of food production.
And what he showed was that it's not the collapse of food production, but see, it is the collapse of purchasing power. So typically, when you have a famine that is food nearby and you can buy the food. So sitting in Bombay, you don't stop just because Bombay doesn't grow its food to buy the food from places that grow the food. Right. And so, like the problem with the famine is not that the food production collapses, it's because the daily wage labor collapses because there's no harvest, there's no work that incomes collapse and it's because incomes collapse that you have starvation and famine.
So the entire idea of Andraka, the idea of an employment guarantee scheme as a better means of social protection rather than publicly provided inputs comes in away from Sen's insight that it's the purchasing power that's the problem, as opposed to the lack of supply that the market will take care of supply if you provide the purchasing power. So if you take that logic to education, then the case for voucher based financing and saying let the market provide and let the state come in by kind of providing the purchasing power, I think is quite compelling.
But as I will get to in more detail when we talk about private schooling, it's much more complicated than that. And where the market analogy kind of breaks down in schooling is what we forget is that schooling is a club where schools define themselves as much by who they exclude as who the schools are not trying to maximize market share. Right. So, I mean, if you look at Harvard over the years and I'm a product of Harvard, Harvard undergrad, Harvard, Britannia's, but I've now spent 11 years as a faculty member of the University of California.
And at a moral level, I feel so much happier here right now. And that's because the Harvard objective function, the endowment has grown 10 times, but the enrollment does not increase at all in 70 years. Right. It's because it's fundamentally a club. It's like, how do I identify a bunch of smart, privileged kids and give them even more resources? That is the University of California model, because at the public university is saying that how do I maximize the number of people educated and how to maximize the integral of human capital times the people, as opposed to just maximize prestige.
So it gives you one sense of why the simple market analogy breaks down. But that being said, there are creative ways of leveraging the kind of the dynamism and incentive compatibility of the market in the public interest, which we will talk more about. But I think the main caveat I'm making is that it needs to be much more nuanced, I think. And all of us in education go through this phase, including myself about 12 years ago, of kind of you hear the idea of school vouchers and it seems magical.
And I think there's a lot of potential in that. But I think it's a much more complex subject than other market analogies, which will come too late.
I am not, by the way, a voter of either school vouchers, and I'm not against public schooling either. Let me clarify a couple of points that No. One, when I mentioned coercion, one aspect of coercion, of course, is that whatever the government does is funded by violence because it is taking money from people. But the other aspect, important aspect is that it interferes in people solving their own problems, not monkeys, monkeys. So the mechanism to which society solves its own problems.
You need something. I give it to you. It's a positive sum game. Both the first benefit. That's how we all grew, you know, and that's the kind of coercion that I actually object to. Far more that when people can help solve each other's problems, the state gets in the way. And we've seen that, especially in the. Context of education, where, for example, is good to have a goal. These are our goals.
Everyone should have this level of education. We should have a level playing field. We should do something about the genetic lottery. I agree with every little bit of that. I have no caveats with that. My issue is, what are the processes through which we achieve that goal, not just what is or ends, but what are the means and what are the means? Not in a moral sense of coercion is morally bad, but also the means in an instrumental sense of what will help take us towards that goal.
The best. And, you know, one of the most fundamental things that seems to have gone wrong here is that I think India has and allows you to elaborate on the settlement of this. But I think India has adopted with good intentions the sort of wrong means where we prevent society from solving its own problems. For example, I'll quote from something that you have written where you wrote, quote, It is worth recollecting that shortages, waiting lists and side payments were common in many sectors, including telephones, computers and cars.
In the mid 1980s, the most important lesson for India from the successful economic liberalisation of the early 1990s is that the key to expanding access, increasing quality and reducing costs in sectors ranging from electronics to transport was a reduction of barriers to the entry of private providers and the resulting increases in choices for consumers and the competition among producers. It is perhaps no accident that the greatest challenges for the Indian economy are in sectors like agriculture and education that have not seen similar reforms demonstrated these words, which are rare today.
When I read that paper that you sent me, I was like, come to my arms because for years and I'm like a year older than you. And four years I've been telling people about how when I grew up in the 1980s, you had to wait five years to get a telephone unless we were a little kid like me. But you had to otherwise wait five years to get a telephone. Airline tickets were so expensive, blah, blah, blah.
You open those out, you allowed society to solve its own problems. You allowed markets to carry that element of coercion and boom magic. You know, today no one considers those ideas a problem and the government provision is not an issue. But what has happened with education is that we didn't allow the private sector, the full range of it, coming from that early mindset, which we can get into about how for profit schools are still not allowed. And because of that, these areas which are so important, which you could argue like education and agriculture, as you pointed out, also crucial to the well-being of our people.
Forget our development as a nation, which is a broad concept, but just through the material and physical well-being of our nation have been kind of ignored because of this mindset. So I would actually say that, you know, choosing the wrong means can take you further away from your ends, even though it seems intuitive that if you have a problem, they bring the state in and the state will kind of solve it.
No, I couldn't agree more. And again, you know, I'm starting to see these are different teams, which I'm talking about in this book, which I mentioned. But I think one simple source of confusion, I think, and I agree completely, since you quoted me back to my source, I can't disagree. But but I think the key to solving most of India's problems really is expanding supply that we are. So where we had a shortage based economy because of regulation is where we have a bulk of problems.
Right. So I think so that we are completely in agreement. I think what makes this whole issue so complicated is a government plays three very different roles in the ecosystem. The government is a policy maker. The government is a regulator. The government is also a provider. Now, the problem, most of the schizophrenia with regard to how the government approaches the private sector comes from the fact that the role of the private sector is actually dramatically different in these three functions of the government.
So for the government as a policymaker, the private sector is an ally because as a policymaker you care about how do I get the best outcomes right for this society? Because as a policymaker, your role is to maximize aggregate kind of welfare now as a result. So if the private sector can deliver it better, then on the margin, you want the private sector to do it right. So as a policymaker, the private sector is an ally because it gives you more supply, it gives you more diversity of options.
It gives you just more options to play with.
Right now, as a regulator, the private sector is an equal right. You need to treat the public and private equally and not privilege one versus the other so that it's a level playing field.
And again, we don't quite do it.
But then as the provider, the private sector is your competitor because then you're competing for the same market share. So I think part of the problem here is that if you look at the structure of a government education department, the majority of kind of the budget as well as the personnel are dedicated to government as provided. And so therefore government is provided. It automatically is the lens through which we look at the policymaking, the regulatory function as well, and in that as a result, we end up doing untold damage that cannot by restricting private and because government as provider doesn't want the competition the government has.
Up, right, you should absolutely want that, and it's the same issue in aviation, right? So I think, you know, again, speaking of Singapore, I just talk about examples in my Indian economy class about the distortions that come from government as provider getting in the way of what's in the public interest of government to regulate. And I think India is that even more direct example of that, where, you know, a country as small as Singapore gets more tourists in a year than all of India.
I mean, this is a manmade island that has to create these theme parks for tourism. And here we are, this kind of, you know, millennia old civilization that doesn't get the same number of tourists. And the big one big reason for that is Singapore's open skies policy. So anybody can fly and anybody can fly out, pick up passengers, drop passengers and people come there and but is here for decades. Aviation policy is essentially being still focused on bilateral and kind of reciprocity for India.
And so trying to therefore protect that, India has over the years dramatically cut short India's global integration in terms of transport. So anyway, so I think that part of the confusion here comes as I couldn't agree more. The government is this incredibly heavy handed beast and we can come back to what the policy framework should be. And I think the challenge, again, is when the issue is so complex that maybe what we should do is we should first kind of segment and discuss on the evidence and what we know, because understanding itself is difficult enough and then kind of thing.
Now, based on what we understand, how would we craft a set of policy responses that are both consistent with the evidence, consistent with the principles, but also that there is a political way to make this happen. And then we'll come back to the various political constraints right. Know between rent seeking and that sometimes it's not just venting, it's just good. It's a bad idea.
I mean, the take over and that are very, very hard to get rid of.
So but hopefully that clarifies a bit in terms of the private sector. But, yeah, I haven't given you answers yet. I've just tried to clarify what the issues are.
No, I think you're showing academic humility that rather than the certainty of a policy scholar to use the as a binary to be fed, it's not even the policies.
Right. Like, you know, it's the consultants would like ballpoints that I most cared about. So one thing I say is, you know, consultants have confidence, academics have confidence intervals. Right.
So that's so beautifully put. No, I know what I also want to clarify to the listeners, I think the last part that I didn't get over is that for all my sense, that the government should not in any way a strong society from solving its own problems for something like education. I'm not against public schools or public education at all. I'm saying let a thousand flowers flourish. Whatever works works. We'll find out what works and which is a different matter.
So let's kind of actually turn to the subject at hand after these delightful digressions and talk about education itself. Give me a sort of broad overview, not just in terms of where things stand today or where things stood before the NDP, but just over the decades. What has been wrong with public schooling policy number one, which you've seen and examined at a very granular level? And before that, what do you think are the mindset issues which were the problem like one mindset issue, which I think you would agree with, but that's a separate issue is, of course, the for profit issue that Nehru once famously said to Jodi, go, do not talk to me of profit.
It is a dirty word. Good little realizing that they can meet profit is a driver of benevolence because the only way you can make a profit is by providing value to someone else's life and relieving that mindset or decide just that broader sort of conceptual level. Where do you think we went wrong then after independence, where we put our whole education system in public schooling in this study?
I mean, I guess this is the challenge. So even before I get there, I want to follow up on what he said about profit being a dirty word. And I think so. Again, it's useful to kind of connect the models in the markets for a second.
And I think and I share your I share your deep kind of belief that the libertarian reason for why you believe in markets so much, the moral case for markets is that no transaction can take place unless both sides want it right. So if there's no pressure on you to buy it, there's no pressure on me to sell it. So I will only sell if I make a profit. You will only buy if your consumer surplus is positive. And that's an incredibly valuable disciplining device for resource allocation across the economy right now.
The only problem with that and why that problem becomes, especially First-order in India, is that I think the economic approach to policy analysis has improvement because are both sides better off?
Right. I think is a very powerful framing, but it completely ignores the justice or lack thereof of the original position. Right. So it makes the initial position as given and doesn't question what is the moral basis of that initiative.
So in a world where you have the level of abject poverty that you have, the market solution for the most part, essentially is to leave those people out completely. So one way to say. Is that democracy is one person, one vote, right? But if the market is one group, one vote, a one dollar, one vote, right.
So how much purchasing power you have in the market to market is an amazing thing, except that it doesn't care for you if you don't have purchasing power. So to take the example of, say, pharmaceutical research, we spend more money kind of on a. wrinkle cream research in the US than you would on tropical diseases put together, not because it doesn't affect more people, but because there's no money to be made. So in that sense, so the power of the market is the incentive compatibility of the transaction.
The blind spot is the fact that, you know, effectively it's one dollar, one vote. And so, you know, I think a lot of what I would call the left libertarian is broadly how I think of myself, which is to say, I believe in individual liberty. I believe in minimizing the heavy handedness of the state, but I also believe in, to the extent possible, reducing the effects of the genetic lottery, so to speak, by providing more purchasing power and dignity to the poor.
That then gives them a chance to compete in this marketplace, I think.
But the point I'm making is that so and this is again, it's a theme I discussed in my interview with I've been in five years ago and something that if I'm a big part of my book, is that what makes India an outlier in human history is that we are the only kind of country that had universal adult franchise and democracy is such a low level per capita. And so what democracy before development has meant for India is if you look at income distributions in general, income distributions.
Right. Skewed, right. Which means the median income is typically below the mean. So in kind of a simple democracy, the median voter is always going to want more redistribution. So most of today's rich countries build their welfare states after becoming rich. But India. So the core question and public finances, how do you allocate taxpayer money between public goods that create productivity versus redistribution and democracy before development in India has basically meant that that skill has always skewed much more towards redistribution rather than public right now.
So all of that, I think still it's a preface to say that given our kind of unique history as a country, it is impossible to get away from the massive bite. When I say political demand, I mean popular demand. I off kind of public involvement and which is what kind of shapes my thinking is to say that the public involvement is kind of a given. So then how do you optimally allocate or optimally direct that public? Now, the other place where I massively agree with you in terms of letting people solve their own problems, is that one way to, I think, let democracy deliver better services is to decentralize a lot more, because I think where democracy is kind of failed, India is not in the idea of democracy, but in that the level of aggregation is so high that you're expressing your preferences over so many dimensions of what you care about as a citizen in one book, that decentralizing is a way to kind of unbundle the vote and then allow your local vote to focus much more on issues of service delivery and build democratic accountability.
So sorry, but I think this is the few things that I have to get to those digits.
So that but that's fun.
And then these are very much the kind of conversations I enjoy in many ways for about centralization. That was another moment of come to my arms, you know, sort of get back to the you know, sort of what I do is I kind of agree with everything you said. But let me tell you sort of the margins at which I would add my little two points. I think when Nehru said what he said about profit being a dirty word, I think he meant it in the sense of not in the nuanced sense that you're speaking of it, but more than because he had a zero sum vision of the world, that he assumed that if someone is making a profit, someone is getting exploited.
And that's, of course, fundamentally not true. That's the way the world works. And yet that is a mindset which a lot of Indians have even today, which is why a lot of populism will focus on redistribution and in the popular narrative, which is rational, and there's a reason why that is so. But that isn't necessarily to. The other thing that I would like to sort of go into is and again, that's another point that I keep making that, you know, a lot of the countries in those states did so after, you know, they became prosperous.
And there is something to be noted that and if you attempt to become a welfare state before you become prosperous, what happens? And I had written a piece a while back which I learned from the show. And in fact, I think a lot of your stuff from the show to my listeners should kindly check that out for, you know, videos of context with the event, as you mentioned, and various other links. But anyway, so to speak, I wrote a few months ago, was about how Indians should be obsessed about poverty, getting rid of poverty and not with inequality.
And to me, the two were very different things. And people don't get it and feel the same when you look at the world in a zero sum way that if someone is getting richer, someone else must be getting poorer. So if inequality increases, that inequality is increasing. But actually that's not the case at all. And actually, as we've seen since India's liberalization or even since the eighties, that as poverty has reduced, inequality has gone up.
Often in a developing country like India, I think they often go in opposite directions because everybody is getting better off at the same time. But the rich are getting better, faster. Because able to achieve scale and put the money to use and all of that, but what I would focus on instead is what the philosopher Harry Frankfurt calls the doctrine of sufficiency, which is Frankfurt's view, is that when we look at humanity, what we should focus on is not the differences between the rich and the poor, but how poor the poor are in absolute terms and how he defines a doctrine of sufficiency.
And obviously I'm saying this from memory, so I won't give the exact words. But how he essentially defines it is that you'll figure out a measure of what a person needs to live with basic human dignity. And you define that as efficiency on your feet. And that is what you aim for. And for Indians, especially, I think many of us English speaking elites have, you know, picked up this obsession from abroad that we can talk about inequality and all of that.
But I don't think is relevant to us because you can solve inequality with redistribution. You can make everybody equally poor. But if you want to solve poverty, then you have to acknowledge the positive sameness of human interactions and the centrality of profit to that and work with that in mind. So I agree with what you said about the original position that, you know, it is not enough to say that if I interact with someone who is much less privileged than me, that doesn't solve the problem of privilege, really doesn't solve the problem that is relatively poor.
And I am much better off. But I am saying that I'm wondering if that's a problem to solve. The problem to solve is that he is not well-off in absolute terms and by transacting with me, he gets a little better off with that transaction. And what we then think about as the benevolence of the state in practice never really works out that way as we have seen.
So I think, you know, let me let me agree with that, but then add two additional important points of nuance.
So I think so I agree with that completely, is that, you know, and this is in fact consistent even with the view of right and wrong is generally considered much more of a social Democrat philosopher by focusing on the welfare of the poorest.
And even Rawls would say that inequality is good to the extent that it actually makes the West off better off. So if it's the inequality that gets the innovation and gets kind of the the new enterprises that are delivering outcomes at scale that help the poorest. Absolutely. I think that's wonderful. And I couldn't agree more with you that if a country like India, you should focus much more on absolute poverty rather than equality. I think the two caveats are the following.
The first is that where the inequality like intrinsically matters is the consequences of the erosion of the democratic process. I mean, and that's because essentially, what is the state? The state is also kind of allocating policies and budgets. So if inequality gets to the point where essentially elites capture the government, then you kind of get and there's tons of work just showing how you kind of decay institutions. The kind of ramrodding has this wonderful his first famous book, Saving Capitalism from the Capitalists.
Right. So and this is true even in economics. Right.
What we idealize about the market. This is something I learned very early. Right. Which is what as economists we idealize about the market is the ideal of free competition, that the competition is what forces people to be accountable. But then when I became a consultant, the first thing I trying to do as a consultant is minimize your competition. So is how do you define and how do you get either legislative barriers to entry, patent barriers to entry, different kinds of ideas.
So we just see again and again and again that that inequality can capture the political process. That's, I think, one important caveat.
The second caveat, which is I think more going back to what Nehru said, is that he is absolutely true in a place like India, that if you look at a few, realized that the feudal history is built of exploitation in the sense that and this is something that modern economics hasn't dealt with enough. But we're now starting to see a bunch of very careful microfilmed at work that how much of the attention of the capitalist class was spent in reducing the outside options.
So going back is reducing the outside options of work. And so what appeals like free market? Yes, it is free market, but I am essentially constricting your outside option so much that you have no option but to accept the very low. And I think the best example of this is really seen in my own changing thinking on Anrig. So when Reagan was first announced, I was a skeptic, I was a skeptic, and I'm on the record, as with many neoclassical economists saying that, listen, this is going to boost wages without boosting productivity and this is just a bad overall bad idea.
And in fact, the rhetoric around it was bad and continues to be bad.
Now, in the context of the migrant crisis, when people say, well, we want to prevent migration, which is again getting it completely upside down because it's urbanization, that's kind of the engine of development.
But leaving that aside, right, when we did this massive, large, randomized controlled trial in Andhra Pradesh on the effect of improving and real implementation, the result is blue on my right.
And what we found was that not only did it improve wages, it actually improved employment and incomes across the board.
And because what was happening was we also find very robust evidence of monopsony of essentially, you know, when you have a few large landowners who can end oppression, employment and suppress the wage, that improving the outside option and in. The bargaining power of the workers, which is what is right, is not only kind of improving the welfare, but improving it's not only equity, but also efficiency. So I think my goal right now is to focus on the holy grail of policies that improve both equity and efficiency and that are, in fact, a classic anti-poverty programs that, you know, that while we might call it as just a tad, this is another welfare program, if they're well designed, can in fact be efficiency enhancing as well.
OK, so we're already like an hour away and we can see that we can talk about so many things that but these trends are all connected. They're all connected because how we approach anti-poverty affects how we approach education, affects how we approach health. And this is the fundamental tension between the state and the market. Right. Which is the democratic ideal is one person, one vote. The way the market allocate resources is one dollar, one vote. OK, now, to the extent that that dollar that the person commands in the market reflects essentially effort and returns to that effort, that is expanding the common good, we don't begrudge that right.
But to the extent that that reflects accidents. But I mean, that is something that we do want to come in on. So anyway, I think, you know, philosophical things aside, in the end, I think this is why, you know, there's a reason why the original public policy in the way going back to Oxford was being an Oxford philosophy, politics and economics, because, you know, it's the philosophy that taught you what kind of society you wanted.
It's the politics that said, how do you kind of come up with a positive sum game like, you know, given the competing interests in society? And then it's the economics that says you always have less resources than what you have demands for it. And so how do we optimize the limited resources we have?
And I think where I've spent more of my time on this than the last one, I think because you can argue the first two kind of till the cows come home. But the point where I want to focus more attention on is given any set of ethical objectives, given any set of policy objectives. There is so much inefficiency in how we do it that if we can try to squeeze out some of that inefficiency out of the system, you will actually deliver substantial improvement over the status quo, which is kind of where I focus most of my time.
And so maybe that's a good segue to then start talking about education itself and where we are in terms of our journey as a country and the evidence of the cost effectiveness of how we are spending our scarce public money on education.
That's so insightful. And I'm glad you mentioned the PPE because it is one of my failures that I cannot talk about without talking about BNP and. Oh, yeah, before we go in for a commercial break and after that, we promised our listeners we'd talk about education. But before we go in for that, a couple of asides where, you know, I wouldn't disagree with anything except a couple of asides with having spoken about it, in fact, is education and economics.
I'll also drop some philosopher names, which is give some perspective on what the Karthick mean when he spoke about roles to join roles in the early 70s through this very influential book called The Theory of Justice. And the principle idea behind the theory of justice is what he calls a veil of ignorance. So imagine that all of us are behind this veil of ignorance before we are born, where we don't know what our position in the world will be, what would we want society to be like?
And people often use this experiment to imagine a sort of socialistic world. But a lot of libertarians actually like Rawls and see this as a justification for libertarian thinking, because the way I would come at it from my classical liberal position is that if I knew the way the world works, if I understood the rules of economics, the power of incentives, of scarcity, what human nature is like, then from behind the wheel of ignorance, I would want a world with minimal coercion where individual autonomy is respected, not in the sense that there is no state and no coalition.
It also I'm not one of those. But and what I often recommend that, you know, there are two books people should be together. One is Theory of Justice, which is a masterpiece, and also Anarchy Street and Utopia by Robert Nozick, which was in a sense a his own struggles and talks about why we don't need the state at all, which is just at an intellectual level. Whether you agree or not, I think just reading it is a fascinating experience and you should definitely do it.
The other point I wanted to get at is that I also do this weekly economics podcast with my friend called Goldkorn Central, and we recorded an episode of that yesterday. We are recording this episode on Wednesday, August five. That episode is actually going to release tomorrow and this is going to release on Sunday where I spoke about how about Milton Friedman, the famous warning about how pro markets and pro-business are two opposite things, almost, you know, the exact point you were making, citing gudgeons book saving capitalism, the capitalists.
And I would argue then that I have a mild objection to your phrase about inequality capturing the state. I think the rich get to the state. And the problem there with the rich capturing the state is that why are they capturing the state? They're capturing the state because the state has much more power than it should, and therefore they can generate more money for themselves. And this is a very perverse process. And I agree with you that it harms the poor the most and allows the rich to generate more wealth for themselves through state coercion.
And the solution there is not to outlaw the rich, but the solution that. I would say is to reduce the power of the state so the rich don't want to go to the state because there's nothing in it for them, the only way they can make more money is through the pursuit of profit and adding value to the lives of other people.
On that note, you know, let's let's take a quick commercial break and then we'll come back and talk about education on the scene in The Unseen.
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Welcome back to the scene in The Unseen. I'm chatting with Karthick later on about the PPE of Indian education and of course, the new education policy, or the NDP, as it were. Before I get to him, the one final little regulation which comes on from before the break, which is very simply that I had spoken about how you can get arguments for liberty or for classical liberalism from John Rawls. And if you're intrigued by that, what is he talking about?
What does he mean? I recommend this excellent book called Arguments for Liberty, edited by Alan Rosebowl and Grandpap book, which is a collection of essays about how you can arrive at liberty from a different set of principles. We, of course, know that you can arrive at it from utilitarianism, you can arrive at it from the natural rights of John Locke and so on. But this book also shows you how you can take Aristotle's ideas and the ideas of John Rawls and, of course, the ideas of God and also get to an appreciation of human liberty and individual autonomy.
And I think our listeners have had enough of that. Let's get to education. Tell me so you know, I'll go back to the earlier question. And I've really enjoyed, you know, reading through a few of your papers, which you so kindly sent me, returning from the show, of course, give me a sort of overall general bird's eye view, not just at this moment in time, but through the last few decades, that what has been wrong with our public schooling not just started down lower level.
And you've, of course, examined various different aspects of it, but even to begin with, perhaps at a broader level of the mind set towards it.
Yeah, so this is this is great. And look forward to, you know, just getting diving into the into the core topic of the day.
So if you look at education policy for 70 years after independence, I think the first couple of decades can be characterised by, you know, essentially neglect of primary education.
OK, so there was definitely investment in tertiary education with the view that this is important for building a technically trained labour force that would help India make the, you know, do the technological adoption needed for adopting technology. And Nehru in that sense was kind of, you know, as a state led, modernised, and therefore that certainly wanted the ability to absorb the technology.
But that original orientation of the Indian education system still casts a very long shadow on the modern Indian economy today. So if you come back to why is it that our economy is not able to compete with, say, China or East Asia in labour intensive manufacturing? It's because the lack of primary education and the lack of foundational skills kind of hurts us in the mass market, whereas the Mitchard, where India does really well, is actually in much more technically sophisticated manufacturing, which is consistent with our investment, tertiary education.
But I think, you know, we certainly did start making a course correction in the early 90s right now.
So you had these waves of programs that was first Operation Blackboard and Shihabi, and then you had the right to education. Now you have the new education policy. And over the past 25 years, I think certainly or 30 years, there's been a substantial debate in terms of focusing on school education. So I'm focusing first on the good news.
OK, so at an enrolment level and if you just look at net enrolment rate and completion, is that between 1991 and 2011 censuses, you know, there's a sharp increase in enrolment. If you look at the fraction of children aged 10 to 14 who are in school or enrolled in school, that number is now over ninety five percent. And one consequence of that increase in enrolment is also.
A sharp reduction in different dimensions of socio economic inequality with regard to access to education, because you don't get the ninety five percent without basically getting almost everybody there. So the glass half full story is the success in terms of enrollment. You've seen massive increases in spending, increases in school construction increases and recruiting teachers, increases in, you know, building toilet building, compound walls, building school facilities, providing mid-day meals. So there has been an enormous increase in expenditure on education relative to what it was before.
And, you know, you do have positive results in terms of enrollment. And it's not even to say that that doesn't give you any learning because the counterfactual of no schooling is clearly going to produce lower learning.
But the glass half empty part of the story is that despite these massive investments of not just money, but also time, the opportunity cost of time is not zero, including for children. Is that the translation of all of the spending into outcomes has been remarkably poor. And so this year I'm talking mainly about the public education system. And then there's the parallel piece that's going on. And so and we'll talk more about the research and evidence from specific reasons for why the quality of expenditure in education has been so poor.
But, you know, basically it comes down to weak governance and and suboptimal pedagogy.
And I'll talk about both of those points in a moment.
But one manifestation of the weakness of the public education system is kind of the widespread exit to fee charging private options. And basically alongside this increase in public education, public investment, you're also seeing a steady increase in the market share of private schools where, you know, even in rural India, it's about 30 percent.
In urban India, it's probably 70 percent. I think recent estimates suggest that an all India level, you're talking close to 50 percent of children are enrolled in private schools. And this is at one level, it's an enormous indictment of our public expenditure on education because the exit to private schooling is not happening as a response to shrinking government spending. It's happening despite increasing government spending.
So, you know, one way to think about kind of the value destruction in terms of the low return on investment than otherwise, but low quality of expenditure, those are two different terms, because the other way I can still be positive, but you can do much, much better.
The key is the fact that because if people are voting with their feet in one of the private schools, one way to ask this question is what does it say about the quality of your product that you can't even give it away for free, which is and you can't even give it away at a negative price? Right. Because the price of public education is negative, because you're providing MedImmune to providing a bunch of other inputs. So the business as usual is not working.
Right. So that's the big picture. Fact level expenditure has going up, enrollment has gone up, school completion has gone up and dropouts have gone down.
And input based measures we're doing really on every input based measure. It looks like the school system has improved till you get to this vexing question of learning outcomes. And that's when the emperor really has no clothes. And so I can now talk a little bit more about the detailed research on each of the factors in each of the reasons. But, you know, if you want to comment a little bit on this big picture, that's fine.
Or I can go into the research itself to the big picture thing is very worrying, because as you pointed out, even though enrollments have gone up in the last couple of decades, outcomes have actually gone down. And like you said, it still not improve, at least not in the face improve. And what is also sort of depressing is that despite the fact that there are bad government schools and not just feeding, actually giving you stuff in terms of vitamins and all of that, so they're better than free.
But poor parents, not just the rich who can afford elite private schools, but poor parents still tend to spend significant chunks of their income sending their kids to private schools instead. And there is this misconception that private schools necessarily means the bishop or the little St. John's and elite private schools. But most private schools are budget private schools operating out of holes in the walls. But I want to turn to private schools, the sort of start talking about public schools.
One broad thing that I'd like you to elaborate on, which I found incredibly insightful in your writings, was when you pointed out that one fundamental way in which the Indian education system falls behind others is that the education system can basically fulfill two functions, which are human development, where you actually increase the skills of the kids or something. And we have focused on something. We are focused on filtration rather than education. Can you elaborate a bit on this?
Yes, I think and maybe maybe it kind of makes sense to come to this after I quickly discussed the results, the research that becomes an interpretive lens of making sense of why we are where we are. Right. They can also let me.
So the first part is so obviously let me just give you the details, a little bit of insight into why all of the spending is not translating into outcomes. OK, and then so if you look at where the budget goes, the majority of the budget goes in for line item. OK, so by far the biggest is teacher salaries. And then there's also money that gets spent on school infrastructure and building toilets and compound walls and providing books and computers and resources and stuff like that.
Then there's money. On student inputs of, say, mid-day meals and school grounds and stuff like that, and then you also spend a fair bit of money on teacher training and other kind of quality upgradation kind of investment. Right now, the bad news is that none of these four things, for the most part, seem to have much impact on learning outcomes. And let me just explain why.
OK, so first of all, I don't know if your listeners want a little bit of a detour into kind of research methodology, but maybe I will not do that. And, you know, you can point people to other sources that have written about our cities and methodology, but maybe it's worth taking just two or three minutes. Right, because it's also something about the nature of research more generally is that the problem with research is that actually bad research is worse than no research and that because it kind of crowds out people's attention by creating more confusion.
OK, so you can get very, very misleading results. Right. If you don't account for the fact that correlation is not causation and often you have to you need well identified research strategies that give you credible control groups against which you can be sure that you are, in fact, evaluating the effect of the policy that you say you are. OK, so to take a two minute detour on your research methodology, let's just take the midday meal program.
So this is something we spend thousands of crores on on a year.
And if a finance minister were to ask the education minister saying we spend all of this money on this program, can you tell me what the impact has been? The Education Department actually has no way of answering that question because they haven't necessarily thought about the outcomes are measure the outcomes. Now, even if you measure the outcomes and saying in 2003, I have some baseline indicators of the attendance of nutrition and of learning outcomes, and you say, OK, let me measured this five years later, 10 years later after the mid-day meal and see how much it is.
OK, now the problem with that comparison is that there are hundreds of other things changing at the same time. OK, so you've got general economic growth, parental incomes increasing attitudes are changing. So maybe you got those improvements without your program at all, which is kind of why you need a credible control. And part of the reason, the main reason for this year's Nobel Prize in economics was kind of the bringing of experimental methods from clinical trials into the evaluation of social policies.
And a lot of the work I do, as you said, an introduction. I am the global chair of education for Japan and so oversee the entire or not oversee, but at least provide help, channel the insights from all of the research happening around the world into kind of updating our syntheses about knowledge and education. So the results some of these I'm going to give you are based on high quality work and so coming to school infrastructure. So having a school relative to not having a school definitely matters.
Matters when it matters for learning outcomes. If the counterfactual is no schooling, there's no question that schooling matters. But if you then look at the budgets that we're spending on upgrading classrooms and building toilets and compound walls and all of that kind of stuff for the most part, or libraries, computer labs, you know, none of these things seem to matter. And I think we can get into the reasons for this. And the broad and simple answer is that I think there's three possible things.
OK, so one is that all of these infrastructure can help make education a better consumption experience, but it may not actually be what matters for teaching and learning, which is for learning, because what happens inside the classroom. So one slight tangent, but which is very related to this, this is wonderful paper looking at German higher education after World War Two and tries to study the relative importance of physical capital versus human capital in education. So it's a paper that looks at allied bombings during World War Two, created quite a random variation in physical capital destruction because some universities lost their buildings completely.
But as the universities that had a higher fraction of Jewish faculty had a much bigger loss of their intellectual capital, because these people, you know, they were either shunted attempts or they migrated to the U.S. and to what the study shows is that years after World War Two, that the universities that had lost their physical capital had completely recovered.
That is 50 years after the universities that lost their scientists and faculty had still not recovered. And so what that tells you is like and this is relevant to India's expansion of higher education today that we keep talking about, but we don't have the faculty who have kind of top class faculty. This is not going to translate into higher quality education.
So you could say the same thing about schools where the buildings may be nice to have necessary, but by no means sufficient for getting learning outcomes. And then there's other things that could be going on. But at a big picture, I'm not going to say don't build schools. I'm just going to say that the evidence suggests that it may be an enabling condition, but it's certainly not sufficient to get the learning outcomes.
Now, the harder part then is teachers. If you look at where we spend most of our money, OK, maybe it's not buildings, maybe it's teacher quality. Right. And again, the news is very depressing. It's depressing because if you look at the picture, pretty much everybody says you need to train teachers and teacher training will improve outcomes. Is there's not a single study in India that finds any meaningful correlation between possessing a teacher training credential and your effectiveness in the classroom as measured by improvement in student learning.
So, again, as an aside, some of the best insights we have gotten on the public sector labor markets in terms of research has come from the education sector and. That's because measuring public sector worker productivity is very, very difficult, because it's multidimensional and you're working in teams, but as teachers are a classic public sector employee. But if I measure the learning levels of students before the school year and measure it at the end of the year and I know which teachers assigned to its student, you can actually measure productivity as effectiveness at improving learning outcomes.
OK, so there's a lot we learn about public sector labor markets in general, but specifically using methods like that. This Value-Added analysis, we find there is really no evidence, not in my studies, not in any other studies. And so, again, what's going on here?
So why and this is very depressing to me as an educator, because I believe in training. I believe in education. That's what I do. And to then see the results that none of this seems to matter. OK, so again, this broad explanations. The first is remember that what we are pushing is a teaching credential as opposed to any effectiveness. A teacher to a bunch of these credentials are probably just fake, given that we have an entire industry, a cottage industry of kind of diploma mills, and that it's not surprising.
It has no effect. But I think a deeper problem is even if you look at a legitimate teacher training programs, if you were to go look at the content analysis of their curriculum. Right. Most of the curriculum of teacher education programs focuses on history, theory, sociology, psychology, philosophy of education, and very little of actual pedagogical practice of how do you teach, OK?
And one of the reasons for this is that education schools themselves tend to be occupied by those who have these in their disciplines. And so they want to propagate their disciplines in the context of education as opposed to get their hands dirty with the actual job of learning how to teach, which is a practical. OK, so the practical orientation is kind of nonexistent. And if you look at the better teacher training programs around the world, there are things that are more practical based.
And I'll come back to that in one of my policy recommendations. And then the third problem is that even if the teacher training credential were to give you some meaningful knowledge in a de facto setting in a government classroom with a zero motivation and accountability for outcomes, you don't use that knowledge. Right. So that knowledge may not translate into practice. And the way we know this, what you see is that the same teacher training program that is found to be highly effective in private schools, when you do that training program in a government school ends up having no effect.
And I can give you links to the research on this. And conversely, when you do performance based bonuses for teachers in the public schools, what you'll find is that in the business as usual, setting teacher training has no effect. But in the incentive schools, the better trained teachers do much better. OK, and so what that tells you is that the training gives you the capacity to be better if you were to choose to exercise that capacity. So the quality is kind of knowledge times effort.
Right. And if effort is low, then the knowledge doesn't matter. And this is something that shows up even in my research on health. Right. Then we can have maybe a separate show, an even greater crisis. That's our health care system.
But the fundamental point is the same. And this is show up and we go to the private schools. Private school teachers are less qualified, but they make up for the lower knowledge with much higher levels of effort. And so in the public system, the teachers are much more qualified, but the effort levels are low, therefore, limit the transmission of that knowledge to better outcomes. So that's the training for you. So think about it, because the entire building block of our right to education of kind of these legislations and going back to the heavy hand of the state and regulating in terms of credentials and all the research shows that those credentials have zero impact on learning outcomes.
OK, so we had the whole system was pushing in some ways sort of meaningless credential. So we can come back to that later.
OK, and then the third party business as usual is kind of reducing pupil teacher ratio, reducing class size. And this is by far the most expensive thing that we spend our money on. So if you look at the Right to Education Act, we won't be from 40 to one to 30 to one, which roughly costs an extra twenty five thousand dollars a year in terms of additional teacher hiring. OK, now the effects here are not zero. The effects you do have some positive effect on learning outcomes, but the magnitudes are very, very small and they're so small that the investment policy does not appear to be very cost effective.
OK, and now what are the reasons for why the reduced BTR may not be having an impact? It's again, if you look at the data more carefully, what you'll see is that when class size matters the most is when children are very, very young. OK, so when you're really young and you need small group attention because children kind of sit in one place. So one way to think about this is think about university education. As a professor, I can lecture students a lecture to two hundred.
OK, now how much better is the quality of education going to. Maybe slightly better. Maybe there's a little bit more discussion relative to it. But the question is, is it twice as much? Because that's what it's going to cost you to get the class size at half or at least some period. So the class size reductions matter the most when children are very, very young.
That is our norms and are as done at the elementary school level.
And if you go look at the schools often, what will happen, the senior class five in the small class and I think the junior teacher to the large younger class. OK, so to the reduction of the school level is not optimized in terms of how to use then. Other issues of the order which kind of have to do and I'll come back to this in the policy recommendations, which is one of the problems in India, is because we have expanded school construction across the board.
You now have so many subscale schools that you have literally tens of thousands of schools that have enrolment of under 20 or 30 students with one or two teachers. So in that setting, then you have multigrain teaching across five grades. Even the production doesn't translate as much. So, again, the point I'm making and why all of this is important is that if I were to put 20 experts in education and come back with a new education policy and I think overall the new education policy is a great document.
It's a wonderful document. And I'm happy about many things about it. But the big kind of blind spot is that there is no discussion of kind of a word that is considered dirty among educationists, which is cost effectiveness, because when you have a bunch of things to do and you have limited resources, you need a way to prioritize this. And typically what ends up happening is you spend your money on what looks like all the components of an education system, but many of them are actually not the most important things.
And you're spending tons of money on things that don't matter. And what gets even worse, the people reductions are still OK. But perhaps like the most inefficient part of our education system is the fact that teacher salaries are so high and relative to either the market or private schools or kind of the multiple metrics of what the outside wage for the human capital that's as public school teachers is, is we've now got Large-Scale studies showing you that even unconditional doubling of teacher salaries gives you zero impact on learning.
And so given that the bulk of our budget, once you kind of take a big commission, recommendations that absorb 60, 70, 80 percent of the education budget. So when you look at our education budget is going up, most of that is just being absorbed by salaries. And those salaries are not translating into outcomes because we have a binding constraint about governance and pedagogy. And so the story in terms of the business as usual is very depressing because and most of what the government does and then the last thing is kind of mid-day meals and other kind of inputs.
But again, the effects are positive, but they're very, very modest. So and one reason is what we've seen multiple studies is when the government provides a bunch of inputs, books and meals and stuff like that, you actually see a little bit of substitution in the household because the household then offsets its own expenditure. So this is not to say that the household did not benefit from the expenditure because they save money, but it doesn't stick where you send it because money and resources are fungible.
OK, so the bottom line is that you can get this even from looking at the big picture, that expenditure has gone up and learning outcomes are flat. And then if you start looking at this component by component, you'll kind of see that each of these big expenditure categories are not really having much of an impact. OK, now this can be very depressing. This can be very depressing because you say, boss know, this is what I spend all my time on.
Is that any hope?
And on an optimistic note, I think there are two very robust classes of interventions and public schooling that have time and again been found to be effective and found to be massively cost effective. So and the first basic thing is just governance, that our public school system is incredibly weakly governance. And, you know, my best known study is still the study I did 15 years ago, 17 years ago, just measuring teacher absents that on any given day, about twenty five percent of teachers are absent and some people have gone and quibble and said, no, it's lower than that.
But actually, you have to include the times and you make a surprise visit and the school is closed because there's nobody there. Right. And I think some some studies have not included that as absolute. So but the true numbers are about twenty five percent. Then we went back in about 2010 and measured in the same villages. And what you found was that on every input based measure, the number of pilots is going up, number of electricity, connections, compound walls.
Every input based measure of quality has improved, but the absence had reduced by only about two percent. And in fact, in more recent ongoing work in specific states like my depositional, if anything, the absence looks like it's continuing to go up. OK, so that's a problem. That's just not change.
So they give you a sense the fiscal cost of teacher absence alone at 2010 salaries, we estimate it was about ten thousand a year. That's just one line item of kind of just money down the drain. And given the increase in salaries right now, that's probably even higher. Now, this is not to say, therefore, that you should not hire teachers. The key point we make is that what's missing is the governance. Right. So the most robust finding in our earlier work is that the biggest predictor of lower absences?
Just has there been any monitoring visit to a school that has any superior officer visited your school once in the last three months? And what you see is that this kind of staggering vacancies at the level of the block education officer and even the tenure of a district education officer in our data, an average of about one year. These guys come, they go and and we can discuss all the pathologies of public sector personnel management later. But the bottom line is that the public sector personnel management is just incredibly weak.
And if you manage, we have the. Multiple studies from different kinds of governance interventions ranging from better monitoring to even slight amounts of time, better measures of performance and learning outcomes, and we can come back to whether we have the capacity to implement. That's one of the reasons I have not been recommending that even though I did the study and performance, I've not recommended we scale it up because I don't have the confidence that we have the capacity to implement that right.
But the reason that study is important is more as a proof of concept of how much slack there is in the effort of a typical teacher, that even three percent of pay that is linked to performance with nothing else can give you dramatic improvement in performance. So the default level of slack is very, very high. OK, so the first class of interventions is governance. And there's another variant of this where you see the study after study after study finds that locally hired contractors who are hired typically at the village level, who have 10 to 12 kind of credentials, no formal teacher training, and who are paid one fifth of one tenth of what a government school teachers paid, is at least as effective, if not more effective, at improving primary school learning outcomes.
OK, so and so. What that tells you is that the training and the salaries need the necessary, not sufficient. So where most of your resources are going right now is saying, I want to train teachers and I want highly paid teachers. But neither of those things seem to matter relative to kind of are you there and are you in fact teaching at the end where the students help? Which I'll come back in a moment. OK, now to one part of the problem is governance, but not for the moment.
People, teacher unions and others will often kind of, you know, really get upset at me. Like, you don't know, your studies and teacher absents have been a real setback for teacher morale. Get back to this thing. And I'm like, boss, you know, the problem is not the fact that I'm calling up the twenty five percent who are absent. It's that those who are absent are shedding a bad light to those of you who are sincere, OK, because there are a bunch of sincere teachers.
OK, so this is not to paint all public school teachers with a bad brush. There are many, many, many incredibly sincere teachers to overcome a lot of hardship, go travel to remote areas, are very committed to the students and try to do a lot. OK, so this is not meant to be teachers like broadly with a broad brush. Right. So now let's look at the second part, which is let's look at the highly motivated teacher.
OK, and this is an even bigger problem, because if you look at what is a highly motivated teacher, a good teacher defines his or her goodness by, have I completed the entire push? OK, so you take the textbook, you can get the textbook into lesson plans and you say each we very diligent. You say this is my class lesson plan. I would teach, I will do the homework. I discuss the exercises I do, OK.
Now the problem and this is the elephant in the room that pretty much like, you know, people just have to recognize is that what has happened? Is that because your curriculum standards are set at a time when the fraction of people who are going to schooling was relatively small, that these curriculum standards are in fact many very high, and you have tens of millions of first generation learners were entering the schooling system without the LTG that most elite kids have.
And so they fall behind the curriculum. They fall behind the curriculum so fast that if you get to class three and if you don't have foundational literacy and numeracy at that point, you could be sitting in the class. And even though the teacher is very sincerely teaching, I think it's just not making sense. Right. It's like, you know what, the engineering college to the guy out there can mean to use a cricket analogy. And this is, I guess, the one place where the podcast is limited relative to videos.
But maybe you can even just put a link to this one picture you don't have have put in a bunch of my articles, which I think is the single most important feature for understanding education in India is this picture that and assuming you kind of put a link to this that shows that on the X axis, if you have students by grade and Roland and then the Y axis, you have the grade appropriate standard. If the children are on the grade appropriate standard, they would be on the forty five degree blue line.
OK, but in practice, the true learning level is about half of that. OK, so the progress that's being made is about half of the curriculum. But what is even more problematic is the enormous variation in learning level within the given classroom. So if you look at that picture, you'll see that and this is partly a result of the new detention policy and another case of good intentions, kind of back fighting. And but because you have promoted children through, regardless of learning level, to end up in a situation in a class six or seven or eight when you have children at second standard level, the Senate level folks, entry level, fifth, sixth and seventh.
Right. So it is like humanly impossible for a teacher to cater to that kind of variation in a classroom. So the teacher defaults to completing the syllabus and the curriculum. And so what happens is that children are going through the motions of sitting in school learning nothing. And that's because the system has already left them behind. And the one very powerful way of just seeing this point is, you know, people now and doing great harm to our podcast.
We may that maybe by the person now you have little motivated, uneducated about in a highly qualified, highly motivated maps. And and they are not feeling work at the your homework or penalty correction or elected life Octopussy lecture or the content or the lecture. And now on the blues in Sierra Leone of our. Then you and then go on to certain drugs. You don't want to continue nine years old in an airport now in the name of tolerance and want to go to Arthur, you know, not look under the David or whatever to keep an eye on this one out at the podium.
I'll put on a bucket load on that one, the one that could put you on the ground that potentially anybody in the world that this will a problem with another one up don't know either.
So what have I done to you?
I have given you 45 seconds in the shoes of an Indian child in a typical Indian class, which is that and this is that sense of helplessness that you feel sitting in the classroom, that you feel that this is beyond me, is basically the lived reality of the majority of our children day to day in our school system.
And that's because essentially that and this then brings me back to the situation and thought, OK, which is how do you make sense of this education system that, you know? And so so once you understand that this is the binding constraint, that is also now tons of evidence. And in fact, this is a big part of the work that was cited in the Nobel Prize awarded last year, which is still in a budget in partnership with many Bannerjee and others have done a series of studies that just show that, you know, if you you don't need highly qualified teachers, you can have volunteers with a standard education.
But all that they're doing is teaching at the right level. If a child is not able to read those who teach them, because if you can't read the words, you teach what, you can't read sentences, sentences, and you kind of build the scaffolding and meet the child where they are and teach as opposed to kind of going in lockstep with the curriculum, because this is what I need to do. And now I have tons of evidence that if you manage to kind of teach at the right level, that that becomes highly, highly effective and cost effective.
OK, so if you take this kind of overall picture on the public education system and say, how do you make sense of this, is it useful to then take a step back and realize that education systems have historically served three very different functions in society? That is a part of this, which is about creating teaching skills and teaching actual content. And you can call that the human development of human capital, the function of education. But the other function that education itself historically is it also served as sorting and screening function of identifying who is smart so that you can then allocate the people who are smart into positions of higher education, positions of leadership, and because you want your kind of highest ability citizens in positions of responsibility that affect kind of that logic.
Now, don't get me wrong, there is nothing wrong in every society needs sorting that. That's kind of whether it's Europe or that's China. Every society finds a way to identify the most talented and direct them to positions of responsibility. And that would actually be consistent with the Rhodesian view, because you want your scientists and your people who are doing things that have broader social impact would be of the highest quality. The problem is not the sorting, but the problem is that because you obsession sorting, that if you're not going to meet that cutoff, then the system basically abandons you.
Right. And so when you're below that, effectively, the only thing that the system cares about is are you passing this exam? OK, so which is why the best way to make sense of the Indian education system is that we are not an education system. They are fundamentally a free system. So if you look at the ideas, people will look at varieties. And then when I talk in the US, people often are very stupefied. Right, because I thought India had the best education system in the way you guys produced the CEO of Microsoft, the CEO of Google, the CEO of IBM, the chancellor of my university, UCSD, the former provost, they all you know, and then I tell them that, you know.
That's right. But the magic of the Iot in some ways is that you maintain the stringency of the selection process. And so if I manage to select the top point, zero zero one percent of a billion percent distribution, I could put those kids in a circus and they will still do fantastic things. Right. So what we have is and this is true of the yes, it's true of everything. I mean, it's true that we have this selection focused education, an exam system.
And that's what drives everything. It drives everything to the point that then if you're a student that's behind the exams, what do you do? You don't try to learn concepts. You try to say, how do I cram every post exam paper to give myself some shot at passing this exam? And because why you then get this phenomenon of completely unemployable graduates? Because they have crammed their way into something but without any understanding of what's going on and famously captured and three idiots.
So I think the point the reason this is important is that people rail against the exam based system. But sometimes that can also give you a very counterproductive like in a well-intentioned but backfiring kind of approaches like, you know, with I think a couple of people in order to try to do a thing, let's get rid of board exams. But that is actually a mistake because getting rid of board exams doesn't get rid of the fact that society still wants the sorting.
And so the rich will find other ways to signal that they'll take it. They'll take other fancy boards, that other horse riding and find out. Ways to show that they're smart and for the poor. In fact, your board exam is the only option. OK, so by taking that out, you've actually made it even harder. So that's, again, an example of why you need to not just kind of identify the symptom and go after it, but identify what are the deeper structural factors of the education system that give rise to these two very conflicting pressures when the human development paradigm is something that is regardless of where you are.
I want you to be better than they were yesterday. Right. Because what we want our education system to be doing that is the ranking and sorting paradigm is all about can cannot get past this.
So I think my larger point, and this is something I mentioned in my in my book, the paper that I wrote for the volume that ABC managing Raghuram Rajan and Peter Gopinath and my editor, as well as those who are very much in my comments to the committee in the new education policy, is that the fundamental challenge for us is how do we move our education system from a filtration system to a human development system that's able to add human capital for children and every part of the distribution and allow you to be better than where you were yesterday, as opposed to kind of chasing this ranking system, because that's a Zero-Sum game, by definition is zero sum and you don't create the pressure without creating or creating education.
So, you know, I've said a lot there. So let me just take a pause and let you comment on what you would like me to elaborate on you. I don't know. I've been listening with rapt fascination. Amarone temptation's I'm your Bangladesh, but it's OK. I won't burden my readers with a minute. The minute of Camil, which was most alarming, by the way, if I was a student in your class, that would have been the high point of my class.
So what are you talking about? But let me unpack some of what you just said, and you can tell me if I understood it correctly and if I'm summarizing it. OK, number one, I want to go back to the slide before you took, which I don't think is what you do. I think in many ways a central if you want to get ahead, just the role of research where I mean, something that you have spoken about in the past, of course, is the difficulty of research and social science, where there are so many variables like Gopalan ones for this very well.
When she said that, you know, in the hard sciences, let's say if you want to test the proposition about whether flipping a coin in a body of water will displace water or not, you know, you can take a jug of water, put it there, you can measure it. It is water going in and you can measure it again. But in the social sciences, you're basically there's a swimming pool with one hundred people swimming inside and splashing inside and you're throwing a coin in there.
And then you're trying to come up with, you know, was this an effective intervention? And, you know, like you said, that, you know, bad studies which can you know, what correlation for causation can often sort of go around and water sort of begun to happen in the last 20 years. And by your esteemed friends and teachers got the Nobel Prize was talking about randomized control trials and how even within the social sciences, there is a rule for doing well-designed studies which can throw light on certain things.
I was struck by a couple of those studies which you cited in your papers, like number one. And the interesting thing about many of these studies is that the conventional wisdom about what happens if you if social science research is all and you can't get any conclusions, conventional wisdom tends to propagate itself and become hardwired into the way we think about education. And you pointed to a couple of studies which actually challenged conventional wisdom. One was there was conventional wisdom that one laptop per child would actually improve learning outcomes for children and all of that.
And it just seemed so intuitive and obvious that no one really bothered to test it until someone did a study in Peru, as you pointed out, and they found that it had absolutely no impact, which is counterintuitive. But there you are. And similarly, you referred to the study in Indonesia where teacher salaries were doubled and no impact at all on outcomes. Now, why is this important? What is important here, which I kind of want to stress and I think is an enormous point to make, is that it is not to say that giving a laptop to every child is not desirable or that paying teachers well is not desirable.
It is to say that our resources are limited. There are limited things that we can do with them. There is a scarcity of resources, and especially because this task is so mission critical, because we need to educate our children, it has a moral dimension. Therefore, we need to focus on how best we can use the limited money available to us and the center. The sort of thinking of the Indian state over the decades of this has been a focus on inputs like even the RTC, which we can discuss in detail when you get to private schools.
But even there, the focus is on inputs. How much are we paying teachers? You know, how are the buildings? How many toilets are there is in a playground. And as you pointed out, the fees, which I found very telling, these are neither necessary nor sufficient. And the research shows that. So it is no longer a question of coming from a particular ideology, say, you know, the socialist ideology was is a Marxist ideology or whatever, and saying that this is bad, that is wrong.
But what you are doing is you're saying that, one, these things matter. And to now we can measure these things, so let's measure them and let's sort of design interventions accordingly because we have limited amount of money to play with. So we need to know what works and what doesn't work. And I think that's a profoundly important point, because when we think of state action, we often take a lot of things for granted. We assume that the money is unlimited and we also assume that just increasing imports.
So everybody will talk about how we should spend a greater percentage of GDP on education or the point is spending more is not enough. What are you spending it on? What are the outcomes you're getting? Those are extremely important, as you've pointed out. And the other point that you made and in fact, that graph, if listeners go to CNN senior Diane on the on the show, notes of the episode will actually produce a graph because it is a very powerful graph.
And what the graph basically shows is two things that, number one, you know, we are not meeting the outcomes that we should be meeting. One recent example of this that you have given from Tom's annual Status of Education report, which is called is the report is a quote from Europe, something that you've written where you said, quote, Data from Platinum's annual Status of Education report shows that a half the children in rural India cannot read at the second grade level after five years of schooling.
And B, the large increases in education spending in this period have not led to meaningful improvements in these outcomes. And people can look at inputs and say that, hey, we spend so much more, we are doing something about education, but not if you don't focus on outcomes. And your growth is powerful because not only does it not show that we are nowhere near those outcomes like a fifth standard, it doesn't have anywhere near the highest standard proficiency that you should have.
But I was very interested in just that visual depiction of the range of outcomes in that fifth standard where if on a scale of one to 10, 10 is that you are wary of the standard, it should be and one is, you know, nothing at all, and that there are just a massive number of people all the way between 10 and one, even at one, two, three, four. And that also explains to me that other big reason for which I entirely blame the state, which is that there is this really bewildering gap between supply and demand when it comes to the workforce in the sense that, yes, of course, it is a jobs crisis in India.
But it is also true that most of the people who get an education that do not have any skills, they are useless. Why is that gap there? Is this not a problem we need to solve? And you forget the people who don't get educated, the people who are finishing the tent, who are getting graduate degrees, postgraduate degrees, have no skills. They're unemployable. And you know what you said about the way the whole system works, the emphasis on rote learning and the fact that, you know, the index of class, the guys who are on 10 or nine, they are okay and understand what the teachers are saying.
The guys are one or two. They are like, you know, keep listening to something in a foreign language or Bengali if they don't know those languages. So it is a great sort of tragedy that we have to address, which you so eloquently explained just now and in all of these people. So two questions. One is the recognition of this within the policymaking world. And number two, what are the kind of ways that you have recommended that we can actually improve the system, given, number one, the core issue that, you know, we are optimized for filtration rather than education, we are sorting instead of teaching all the kids left behind.
I mean, this is almost most child left behind, right? And, you know, we are optimizing wrongly optimizing for sorting versus human development. How can we correct that? And number two, how do we change the mindset where inputs are considered so extremely important? But like you pointed out, they're not private schools who pay their teachers. One fifth of one percent do so much better. And the other point I make there, of course, is that the difference is not private or public if the differences in incentives, and that's also something policymakers perhaps don't consider enough.
So I think I've asked many questions, and I think this is you know, I could we could easily go for six hours and break a record of the longest show you've done.
So let me I think I agree with and reinforce a couple of the important points you met.
Right. When you talk about the role of the research and I said this in my op ed commemorating the Nobel Prize and going back to the private sector as an economist, I don't worry so much about how Toyota produces its cars and how much it produces.
The reason is that you faced market prices for your inputs and you faced market prices on your own on the products, which means that if you are inefficient on either how you're sourcing or kind of how you're pricing or how you're able to compete in the market will be competed out of business. So, you know, so there's a natural selection process by which you have to be efficient and the efficiency is rewarded in terms of profitability. Right. So and there is something just relentlessly beautiful about the private sector and scale where if a McDonalds manage its pilloried for being cookie cutter.
But if you. Needs to improve, like, you know, the efficiency of a process by two seconds and multiply that by the number of bugger's a number of times, you need the implication of that for the bottom line, is it not? OK, so Toyota has a Kaizen like approach to management, which is to say continuous improvement. Let's keep on finding out epsilon ways in which you can improve things. And that, multiplied by the sheer scale of what you do, is going to give you a bigger guns.
Right now, the fundamental problems in the public sector is that you can spend other people's money badly for a very long time because there is no market test. And so essentially what you spend on, you know, the bureaucrats goal is typically how to minimize my kind of. So even the best intentioned bureaucrat has has limitations in terms of time horizon has limitations in terms of the technical knowledge and capacity that's available on these things and is also responding mainly to the pressure groups around.
And so it's a it's a basic function of the politics of what is visible. Right, that you end up focusing on input because the inputs are visible. You can have a school building, you can have a politician go Catrambone and things like that could be a better school for you and me and coming to laptops.
Right. So it's actually been I give I have this whole paper on technology education fact, which is in the air, and it kind of highlights and does build on that example a little bit and then come back to the politics point, which is what we find is that.
So here are these studies with one laptop per child that have zero impact. On the other hand, we've got an incredibly optimistic results from a study we did in Delhi using an Indian develop software called Might Spark. Right.
And the key is this is a company based in India, but now in Bangalore, you know, and they've spent 15 years developing a bunch of assessment products and over the years have kind of this online tech platform.
But the key is that because they have millions of data points and kids, they're able to calibrate your learning level and customize your instruction to exactly where you are. And what we see is that that program give you stunning improvements, that within five months of exposure, we saw bigger gains than in other programs over five years, OK? And the main reason is that it's because it's able to customize instruction and actually achieve the human development paradigm. Right. As opposed to the sorting paradigm.
So the good news is that that's incredibly effective. The bad news is if you go look at the national tech policy, the national tech policy is still fundamentally an important procurement policy. It's OK. Everything is based on estimating budgets for how many computers, how many schools, how many. And again, you can't blame them because if you go to and not to pick favorites across states, this was a lot of this is true in Europe, that when the chief ministers announced the laptop programs, the most important thing they wanted was to put their photo on it so that the laptop program had a little spot on the laptop program is even better.
It had like I think 30 seconds of Samajwadi Party propaganda. Like in the logit, they can come in, you see you know, you see a lot of smiling and giving it to you. And of course, then there was an aftermarket and getting rid of that software.
But the point is but the point is that politics is about what is visible. And that's kind of what makes service delivery such a vexing problem that our usual machinery of democratic accountability rewards what is visible and the seen and the unseen. Right. So the scene is the is the input. The unseen is the outcome because you don't measure this. And so which is why in many ways, the most important contribution of research and kind of public interest work is just good measurement.
Right. So there's this wonderful example from Bannerjee. So 15 years, Pratham has been doing this work on learning outcomes. And in fact, one of my colleagues, I think, has this beautiful new paper on administrative data integrity. In a way, he shows that if you go look at the official measurement of learning outcomes and then do an independent audit of that, you'll find that the true learning level is less than half of what is reported in the official data because everybody has an incentive to inflate these outcomes.
So many has this great story where I think she accountable. She said it in the conference if she wrote it in an op ed. But, you know, I think she went to a village somewhere. And again, she goes to school, says kids, and they can't do anything. And she goes to the Grand Prodan and saying, Do you know that your children can't read? And the president refuses to believe it. And then she takes the position and shows them that this is what the learning levels are.
And then there's an Education Department functionary, or maybe it's a teacher who gets very upset at her. And apparently this is wonderful.
This is made up of a lot of people like you, honey.
Don't even look in a school, but try to get a point where.
But why do you want to come in until this balloon with this pesky thing called reality?
Like, let me try that for the readers. Obviously oscillograph you have means. Why are you so attached to reality? It is.
But but it kind of then goes back to how some of the most important contributions of research and I think is just measurement that if you kind of you know, in a world where marketing has kind of taken over substance in so many areas that, you know, to insist and, you know, I get that I come to this that come to this think. We still want to be able to market and present insights, but you need the substance of that first, which is why I spent five years before I come to any presentation after learning what's going on.
Right. But, you know, but it just highlights going back to the politics of all of this that has the lesson to be learned. And I think, you know, when I go to the academy in Massoudi, I will find many, many thoughtful IRS officers who will come after my seminars and saying, you know, this was wonderful.
We agree with everything you said, like, you can please come and help us do something in our state. So there are multiple different styles, multiple education ministers, secretaries who will be motivated and try to do something.
The problem is and this is why I have this whole book which I'm working on, which I won't even get over the title.
It'll be out next year. But it's this kind of it's my 20th arc of kind of trying to improve the Indian state right. On different aspects.
But one of the challenges that even the best intentioned people like will have any of two years or three years. Right. So which means that the time horizon you have means that even the highest quality bureaucrat can at best create the new scheme, get it funded and get the truth out. So the metric of success that's available is fundamentally an input that you get to show in your time frame. But it's getting these outcomes improved, our kind of wicked problems that take a generational investment five, 10, 15 years.
And these are just incredibly difficult. In fact, you know, every time I go to Amitava and go to the Secretary Elementary Education's office, I kind of have a smile on my face because the first time I went there was 2001 when the education secretary was asked to party. And then I look at the names on that board and there's been at least 10, if not more names in that period between then and now. And there is like those of us who are in the weeds out there thinking about this long term basis.
So, you know, and so this is a tangent that maybe we should just do a complete second show on this, which is why so much of my policy engagement these days is done with the states. Right. And, you know, I talked to I've always provided inputs to the Planning Commission. I am an informal honorary advisor, Betio. But again, in practice, where I find the highest return on investment of time spent is in the States because, you know, education is a state subject and there are states that are trying a bunch of things.
So that's maybe that's a good pivot to talk about. So I think all I've done here is clarify what these issues are so difficult that it's easy to spend taxpayer money badly. Other people's money, like everybody wants to spend other people's money know. So that then goes back to the collision, which is why I sometimes get nervous when the government talks about raising tax revenue, because I don't want to raise tax revenue till I can be assured in the quality of expenditure.
But and this is a dominant theme in a lot of my work when in fact, I think we need more public spending, we need more public kind of provision. But efficiency is so low that can mean that I kind of know that. I know that often that are more efficient ways. And I'll come back and talk about this with a very concrete example of early childhood education. So, yeah.
So what I think my bottom line is I agree with you. I've tried to clarify for your listeners two or three additional concepts about why, you know, value for money in the public sector so difficult because you're spending somebody else's money.
Why the politics of kind of visible the scene and the unseen? I'd not even planned that. But it's beautiful, right? Because what I've seen is the inputs and what is unseen that the outcomes. And so, you know, you will naturally focus on what is seen.
And then the last part is that the issues in terms of the time horizon and the nature of some of the reforms that are needed are so complex that they cannot be done just by an education secretary. So if you want to change aspects of it, you need coordination with finance and coordination.
And let me also, since anecdotes are so powerful, just like the city, like you, let me give you one more true anecdote. Right. And I won't give you the year because that will give away the person. But, you know, the other problem in government is that individual departments typically have zero incentive for cost effectiveness because what they're trying to do is maximize the budgetary allocation that they get.
And a very senior Education Department official once looked at my work and actually with a straight face said your research is going to hurt education because the finance ministry is going to use your research to cut my budget, OK, and because you're showing that we can do this at lower money and I'm like, you know, so Dormammu, I won't even reveal that.
Right. Like an oath that I want to keep your budget the same. If anything, I would like to increase your budget, but I cannot in good conscience make that case when there is so much inefficiency in your expenditure. So and I want to connect back to a very important point you made, which is I think the one of the source of tension between activists and economists is the activist guy. That is the loud, sanctimonious left in this country that believes that we need the state to do more of everything and think about the economist has been counting Scrooges who say he was right.
But I think the point is that in a world of limited resources, cost effectiveness is not just an economic convenience. It's a moral imperative. It's a moral imperative, precisely like you said, because these problems on terms of human development visits malnutrition. But it's learning outcomes are so pressing that in a world of limited resources, it is kind of morally unacceptable to not put cost effectiveness at the center or at least give it a very high weight in how you allocate scarce public.
And that's kind of a unifying principle that informs a lot of my work. And the other thing I sometimes say get I had an entire three hour kind of lecture, just an education that I give to the top officials is, you know, if you look at education outcomes and look at per capita income, now, of course, there's a strong positive correlation.
But if you look at the countries that are big, positive outliers, again, what you learn is that for any given level of per capita income, if I can pay with my public expenditure from things that are less cost effective, the more cost effective, you can deliver much better outcomes at any given level of fiscal and administrative capacity. And so, you know, and let me just say very quickly what I think about the new education policy and then come back to, you know, my own views on kind of policy way forward.
I think the new education policy on public schools is, for the most part, an excellent document. I think the process was good. I think they solicited they had a very, very extensive set of consultations. You know, I've gone and met with the chairman, met with the members. I have provided extensive written comments. And in fact, a lot of in fact, sometimes I worry that people, like, know there's a plagiarism risk here.
There's a side story about that, which is I have provided the same sort of input into the committee and also put that in my paper and debated, yet I didn't book. So I think some of the language, including and foundational literacy, numeracy has been taken verbatim, like, you know, from from what I've said.
I feel very happy about that. OK, so at that level, I think it's a good document. It recognizes the centrality of foundational literacy, numeracy. And I said this. I said, if you do nothing else as a country in the next five years, then make sure that every child who is today coming to Class One is able to be functionally illiterate, innumerate. You would have done more for this country as an education system than we've done in 70 years.
And that's because what my data also shows is that if I class three, if you haven't read foundation literacy numeracy, that's when there's an inflection point where that additional time in school is almost kind of irrelevant. And going back to some of the Skilling points, I think it's money.
Sabharwal, who once said that the best killing program for India is a better school education system because by the time you get to Skilling and location, it's already too late because the building blocks are not OK. So I think the NDP in that sense is an excellent document in the sense that it is moving away from the input based dogma of the party. It correctly identifies the priorities. And I think a lot of the ideas in there I think are incredibly sensible.
I think the big blind spot, again, is I'm not seeing enough discussion of cost effectiveness.
So and there is this kind of general sense, OK, we need six percent of GDP to get this. And that's maybe, you know, as with all of these things that are produced by committee, is because when you are a educationist, you feel that your kind of you know, it's amazing how much of the international aid community for education of any sector measures the success by resources raised and will not ask about what the opportunity cost of those funds in other sectors.
So it becomes the Holy Grail, the to come and ask for 6%. And my own view is given where we are as a country in terms of tax to GDP ratio, we don't have that kind of money. And given what we know about how much inefficiency there is in the status quo, that I would have liked to see much more emphasis also on just cost effectiveness. And how do you deliver these goals in a cost effective way. But that's, I think, my main quibble.
Now, there's another issue with regard to how you deal with private schools, and I'll come to that later. But as an aspirational document, I think the NDP is excellent. I think it says all the right things. And there's very little to disagree with that substantively, I think. But what it does, what it says a lot less on is the how and that how that requires engaging with the nitty gritty of the state that we have with this limited fiscal and administrative resources.
And then how do you make this happen? So that's kind of my big picture take on the NDP and maybe that's a good point. Then Segway into maybe four or five or six, depending on time, very specific policy ideas that I feel can be implemented before we do that.
Let me quickly once again unpack some, of course, come back to the NDP and I have a couple of further questions on that. But you mentioned about the sanctimonious left, so to say, the activist versus the economist. And one of the big mistakes I find the sanctimonious left, so to say, often making is giving importance to intention of what outcome? So if there is a policy which has a good intention, then the judge judge it on that and we don't actually see the outcome.
And the point is, there are many good intention policies which lead to terrible outcomes. We've seen and unseen, as we've routinely seen over the decades, like the labor laws, for example, or like much of what is happening in education, the Right to Education Act, for example, which we can also discuss when we come to private schools and what we were talking about, you know, the bureaucrats saying that all this will harm education because actually it would have harmed his or her budget was very sort of failing for me because it reminded me of Parkinson's law.
So Parkinson's Law Court Parkinson wrote this book called Parkinson's Law and Parkinson's Law basically is that, you know, work expands to fill the time available, which often explains why I get so little done. But the corollary for these four bureaucracies is that bureaucrats just want to maximize their own budgets. They don't care about anything. You want to close your department or the number of people who report to you or anyone to grow your budgets. And that's the incentive.
And that's a. And, you know, you brought up incentives, one with relevance to the bureaucrats that is a bureaucrat is to plan ahead. If he's got tenure in a particular department for three years, how does he show he has done something? You cannot show outcomes because outcomes a lot of good policy will happen 10 years, 15 years down the line and cannot be easily attributed to any one policy. So what does he show? He shows and puts and these sort of bad incentives then become a problem within the system.
And I would say, you know, politicians have the same kind of incentives where they're always catering for the next elections. So not only are they catering to populist sentiments which might be devoid of economic logic, but they are also catering to short termism. So this kind of long term ism may not really have an impact. A couple quick questions about the NDP since you brought it up.
And then before you do that, you know, because I don't want to kind of have one important one said it because I think any discussion or comment that we make about the political time horizon can easily be interpreted as kind of an indictment of democracy. And I want to make sure that that's not the implication.
But I think what we need to do a lot more hard work on and again, I have a whole chapter in my book on the political economy of these reforms because all the well-intentioned ideas will not happen without thinking through. How do you make this incentive compatible politically? I think, you know, the answer is not to say and it's very naive to kind of say, look at successful states like China, South Korea, they all kind of develop under stronger leaders with longer time horizons.
And that would be a big mistake, because I think the biggest kind of the biggest disasters have also happened under strongmen and as we've seen around the way. So I think that the implication of this is not to say, OK, the limitations of democracy mean that the politicians are going to focus on it. But the implication is how do you make democracy work better? And a key part of that, again, goes back to decentralization because because education.
So if you look around the world, education is incredibly local subject. And if you're voting for your local empowered mayors or local thing, essentially on your service delivery, then you're making your vote work better by kind of unbundling what the board does so that your vote at the national election can be four functions that ideally sit at the level of a federal government, you know, the issues of national security issues of, you know, overall economic growth and national performance.
And then there are issues that matter at the state level. And so the delivery should be sitting at the local level. So I just wanted to come in because, you know, it's very easy to interpret some of these frustrations, the political incentives, that kind of thing, frustration of democracy. But the answer is not get rid of democracy answers, make democracy work much better.
I couldn't agree with you more. I mean, to give in to an authoritarian system is basically to give the state endless power and the incentives are there and that's not going to end well. So it's like someone said, democracy sucks, but it's the best of all the systems we have available to us. So we got to make it work. And one way of making it work is to think about incentives. Quick question on the NDP before I'll ask you to elaborate on what your solutions for public schooling would be.
And if you have time, I have time and I think my listeners would like to hear all of them in detail. But before that, a quick question on the NDP that a couple of quick questions. One is, of course, my bugbear that, you know, this whole mindset we have against allowing for profit private schools, does the NDP restrict in any way? And secondly, the bugbear that the both of us should. But you have much more on an elaborate tutorial that does start to sort of maintain focus on inputs rather than outcomes.
Is there a change to that at the productivity level?
Yes, I think so. Let me do the second one first and come back to for profit. When we talk about private schools, I think on the second point, the NDP does, I think by talking about a national testing agency, by talking about measuring learning outcomes a third, fourth and eighth, it's already, I would say, a step function improvement from the they can only try to kind of move away from testing and measurement altogether.
You know, they had this very utopian idea of continuous and comprehensive assessment, which I mean, I guess to be fair to the RTC, like some of the ideas were absolutely spot on and not inconsistent with what I'm saying, because what I'm saying about the human development paradigm, that is the sense that exams are fundamentally about sorting and that this continuous and comprehensive assessment would help better in terms of learning.
The problem is you still need the exam as a way of providing objective feedback to the system. Right. So it's not the key is you don't want the test to be a test of the student as much as a test of the system. And that's a very important distinction. Right. So you're not using the test in third of a standard at the same time failing? You're right. It's more like saying if my goal is to make sure every one of you pass an absolute standard, what do I need to do as a system to give you the additional support needed to meet those learning objectives?
So I think in that sense, the NDP is definitely a step in the right direction in terms of improving the outcome focus. So and to its credit, I think it's not just talking about the blind expansion of input. So there are many things about NPR actually like a lot. And it is, I think, a very thoughtful document in that regard.
I think the bigger challenge is that bureaucracies are so good at converting goals into inputs.
OK, and I'll give you an example of this in the context of, again, education.
Right, with the. One of the things I have argued, in fact, the one piece of work I did analytical work in detail was kind of device a single school education quality index where, you know, we would essentially the broader idea here is that high performing organizations are characterized by autonomy on process to frontline workers with more accountability for outcomes. OK, so you say I'm not going to micromanage how you deliver, you know, the situation on the ground you deliver.
OK, but I will hold you accountable for outcomes. Right? But as in government, we do exactly the opposite. Right. Which is we micromanage micromanagement process with zero accountability for outcomes. And this is seen even in the centrally sponsored schemes of how the government of India interacts with the states. So because the government of India gives you budgets under these central sponsored schemes that often have like I think a family dog advisory telling me that in health there's about fifteen hundred line items under the National Rural Health Mission.
And so every state, every year has to send up what's called a project implementation plan, which is how they are spending against each one of those line items. So you have an army of consultants preparing these reports on one side and army verifying them on the other. And in the end, this is just meaningless paperwork on both sides. So if you could shift some of the focus to saying, OK, we're going to provide some more untied funding to states to figure out how you're going to do this, but equally accountable for outcomes and start paying a little bit of funding to improvement and outcomes.
That would be I think those are that's the next level of the help that is missing in the. But the good news is it doesn't bite your hand.
I think the reason that it was such a kind of I would say negative impact is because it tried to micro specify so much. Right. That is policy documents, I think are more effective, particularly national policy documents I think are better. A statement of principles like of what we want to achieve without getting too much into it. So that's both the strength and a weakness. I think the weakness is, of course, you said now, how are you going to do this?
Can you apply your thinking to that? The strength is by not prescribing one model. It allows kind of a thousand flowers and state level. And so which is why I think the most important next step is how does MHR translate the NCP into a set of programmatic interventions that then translate to the states view priorities, of course, Minister of Human Resource Development.
So but to give you an example, in my view on outcomes, is if you look at the three goals of education of access equity and quality are three very, very sensible goals. But my view is that if you measure learning outcomes in a systematic way in the census, that when you're able to do this, that the best thing you can do for access is improve foundational literacy, numeracy, because the drop offs are happening at some level.
The drop dropout happens at some point because the child realizes that going to school is pointless today. There's no child or no parent who doesn't want the child to study. The dropouts happened because even the most illiterate parent recognises that after four years in the system, my child has learnt nothing. And I remember a field visit of mine now about 10, 15 years ago that we we went on a field visit to identify dropout children.
And we found this one child who was working in a motorcycle mechanic shop. Must have been about 11 years old. And, you know, I think there was this big push to the parent school cannabidiol. And, you know, this guy was illiterate, but he very, very clearly said he said, listen, I've sent my child to the school for four years and I know he has learnt nothing. What's the secret? He's actually learning something. And I'll come back to that when it comes to vocational education.
So therefore, if you want access, but foundational literacy, numeracy, education is going to be the best way to keep kids in school because then they'll actually be learning something.
Equipe, again, what you want to do is you just want to be monitoring outcomes and seeing are you bridging outcome gaps. Right. Because if you are doing that, then you're actually achieving equity and quality by construction would be learning outcomes.
Now, the beauty is if you then look at how an education bureaucracy takes these three goals and then spits out programs out of them to access becomes school construction, equity becomes do I have schemes for girls and minorities and every underprivileged groups, every department of the government is running its own scholarship schemes that can offer its narrow slice of the population that it's meant to serve.
And then quality becomes how much have I upgraded facilities and how much have I trained teachers, which again, they have shown has zero correlation with. So in that sense, the RTI was a much poorer kind of document because of how much it micro specified these things. And the only thing I feel is in that sense a much better document, but it can become as bad as the majority decides to take it and micro specify a bunch of things. So the key step now is going to be how do you design an architecture of simple state relations where the centre, you know, provides the funding and provides the technical support as needed, but provides more autonomy to states and figuring out how they're going to deliver the goals.
And maybe there should be an entire separate topic of Indian federalism that we can do it, because that is the many, many threads in. So one question that comes to mind quickly, and what I'll do is before we get to the rest of the episode, we will, for the first time ever, take a second go another commercial break in the show so you'll get a break as well. But before we get to that one question that sort of comes up from this, and this is a thought that I often had, whenever there's a sea change from one system to another, let's say that in education there was a state of affairs.
And now with the NDP, it's the you know, the idea is to move to another state of affairs. And my question here is that when one design. A shift like this, a new state of affairs doesn't take into account, number one, the transaction cost of shifting from one to the other, so to say. And number two, you know, whether there is the state capacity and the intellectual capacity within the state to do that kind of shift to these considerations and have to be part of the design.
Because, as you pointed out, you know, if goals can just become these inputs and, you know, because any metric that exists can easily be gamed and the whole system can just go to hell very fast. So does the NDP sort of address some of this, or is this stuff that people like you who are trying to bring about changes in policy as well as, of course, incremental improvements, but also broad changes? Is this something that you guys have to keep in mind and think about?
Yeah, I think so.
The challenge of policy documents for countries as large and diverse as India, again, you know, we have one point four billion people. That's more than the entire Western Hemisphere put together for the North America, Central America, South America put together. And you don't have like a government of the Western Hemisphere. We have more people than all of Africa put together. You don't have a government of Africa. So to that extent that the sheer heterogeneity of the lived reality of Indians is so large that I think trying to micro specify any more would be a mistake.
So in that sense, I think the NCP has the right balance of kind of being essentially a statement of national goals. So what is it that we want to achieve? And providing some frameworks for national public goods, including standards, accreditation and stuff like that, and hopefully providing a lot more policy space for states to do this.
And I think and the reason that's important is because the state capacity to vary so much across Indian states. Right.
And that's why I think we should we should definitely do a complete separate issue, an episode on federalism, because I think given my work in the States, what I see is one of the other problems of these overbearing, centrally sponsored schemes is that over the years it has essentially atrophied the policymaking muscles at the state level. Right. Because you go to the even state departments, the Education Department, health departments and better functioning states, the Tamilnadu or Marussia.
And, you know, often the default is like a central guideline, Mahagonny, because if it's in the central guideline, it means the money will flow. But is if you have to come up with your own policies, you need to argue for that case with the finance ministry. And that's why the lack of intellectual kind of machinery to do this comes in.
So it's a very fraught problem. Right. And so there's a very big literature on decentralization that says that one of the problems that kind of decentralizing too much is then the technical capacity and state capacity doesn't exist in that kind of because as economies of scale, in terms of designing some of these architectures of policy. So you don't kind of have that necessarily at the level of every district.
So which is why I do think we should do a separate issue on federalism and go to the first principles of what kind of, you know, functions in a different part and how would we structure a national policy framework that also maximizes our chances of getting it done, given our limitations of state and administrative capacity. But I think it's very hard for a policy document to explicitly talk about that because you can maybe acknowledge that constraint. And you know, and I haven't read it, what the word maybe that's even there somewhere.
But the constraint is very, very real. That's fascinating.
In fact, I had an episode with chronic Otterson on centrally sponsored schemes and way up at any point was there should be restricted to just in and obviously a call for greater federalism as well. For the first time ever in the history of the state in the Unseen will take a short break. And one show and I hope you'll still be here on the other side of that. I think the second break, but breaking it, I think one break right after the intro outro, which I haven't recorded.
So even even I was about to say a second, but then I realized, wait a minute, it's actually the code. And let me point out that no one actually buys advertising for the show. I just put my own random things in the commercial break, but it gives a moment of pause. You know, you can endure dishwashing station here if you're listening and then resume at the you know, the next time you have to wash dishes. So let's take a.
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Welcome back once again to the scene in The Unseen, I'm chatting with Karthick about the state of Indian education, and it's about time we actually get down to concrete prospects and talk about how we could actually improve the state of our public schools and reading Gothics, many papers and watching those interviews and all of that. I've always come away with so much insight into what the problem is, so gotta go ahead. What are those sort of things that if you had unlimited power, if there was no democracy and you were the man in charge, what would you do?
Let me first of all say I want democracy. And in fact, I you know, I'll tell you what I would do if I was in charge, like, you know, but certainly there's an aspect of this that and, you know, and let me take a step back and talk about the power of good data and the power of good ideas.
I mean, and in my interactions with Toshiba's weapons and again, they would say this again and again is that, you know, your typical policymaker is just it's so easy to criticize the bureaucrat. But if you spend a day observing their lives, I mean, it is not a life anybody would want in terms of the sheer pressures that they're under, in terms of, you know, the almost inhuman number of things that have to be delivered in a time bound way.
OK, so and they just even the best of them, you know, and as you know that the other version of Parkinson's law is the only reward for good work is more work.
So even then, you get very good people. They get saddled with more and more responsibilities, still the best. Each person has enough responsibilities to be close to their breaking point. So which means that it's kind of it's really more about not criticizing the bureaucracy, but recognizing the incredible constraints under which they function. And then for those of us who had the luxury of time to kind of think deeper, harder thoughts about what is wrong and how do you then want to improve?
You know, it's our kind of response because so much it's just so easy to throw stones from the outside. That part of our kind of moral responsibility is how do we contribute? Our piece of this ecosystem is to just clarify the basic facts. Right. And want to clarify the basic facts. And then going back to democracy, it's like we think about this good democracy and bad democracy. Right? So there's the there's good politics and bad politics about party politics is the pursuit of power and keeping power, which is unfortunately what most of the time the media is focused on.
There is a good part of politics, which is how do you adjudicate conflicting claims in society and come up with a win win solution.
So and I'm very glad you brought up politics, because many of the ideas I'm going to talk about, I'm also going to talk about what might be political constraints and what would be, you know, essentially a sensitive, democratically validated way of implementing some of these reforms. And so the reason I keep coming back multiple times to push back at any suggestion somehow that like, you know, if you're a czar, you will get things done. It is it's all about making democracy work better.
And one part of making democracy work better is just more facts and transparency on where the money goes. Is it being spent in an effective way? Because what you do is you kind of like to send it for good intentions. It's like if I have said something good, the problem with the right to education is like it is like, you know, it's like the national fucking apple pie.
I mean, how do you object to a right to education? You don't. Right. The problem is that the you know, that act are disastrous. Right. And so you need to then flesh it out and saying the problem is not a right to education. The problem is this provision and how misguided it is. And so that's a long, hard slog. Right. So anyway, so I think that caveat aside, let's come back and talk about so let's say I was a state education minister or an adviser to the union education minister and trying to set up certain priorities for what we need to do as a country and how do we actually make it happen?
OK, so the first part I think is very clear. And in the NEPI is a foundational literacy numeracy mission to make sure that every child in the next five years that every child in this country has functional foundational literacy, numeracy defined as the point where you can read to learn.
OK, so the first two or three years in school as you learn to read, but are you able to then read to be able to absorb new content? Right. So that to me is my functional definition of foundational literacy. Are you at the point where you can read to learn so and that's what primary school is supposed to get you to the point of doing, and we need to deliver that. OK, now the question then is how are you going to deliver that?
And I think part of the problem is because it is the lack of coherence with regard to goals down the system. So if you go spend time with a teacher or spend time with the black education officer, if you look at the and this is why you need to get into the symbols of the state. And so much of my work is kind of the last mile service delivery architecture of this country is if you go look at what a teacher and the worker is being held accountable for their mean, be held accountable for paperwork.
So when you get a supervisory visit, the first thing this person does is come and check your registers. Right. Is the paperwork in order? Is the enrollment correct? And you know that is there any sense of learning outcomes is nonexistent at best. You might have somebody you might call a child and ask a question or two, but that doesn't happen with any clarity down the chain as to what is it that we're trying to achieve. And so the first part of this is just.
Coherence and clarity as to what foundational literacy numeracy means with regard to achieving certain absolute standards.
Right. So it's not about MOCs. It's not about it's about if I give you a sheet of paper in second grade or I'll give you a passage, are you able to read it and answer four questions? Right. And again, this should not become like, have I memorized that paragraph? In fact, it's kind of shocking coming back to curricular reforms. I remember British ones looking at a standard in the exam. And I look at this and I would feel this, even though obviously my Hindi is is decent enough to certainly pass set an exam.
But it's because that exam was essentially about reciting verbatim explicative that. If you have learnt Cavitat by heart, then it'll be Cavitat McAvaney sponte make alcohol right. Which is what did the Boyette say in this line, which is essentially an act of memorization as opposed to in any way at a test of language or comprehension. So the first part is this coherence on the assessments and measurement so that everybody down the chain, from the Education Minister to the education secretary to the District Education Office, the block education officer, teacher and parent understands that as an education system, our goal is going to be to deliver every child to these levels.
OK, and once you have that, then there's the question of so it's not just enough to measure. Right, because you have this foundational problem of data integrity. And so it's not like and in fact, some of the better initiatives in the country, Gujarat, again, to be able to see him. And I think there are many effective things here. Try the chief minister, including Garozzo, which was his attempt to do a universal kind of census of learning by senior officials, would go and do this measurement exercise and then multiplication fact expanded this to what's called Poterba part, which is off and on paper.
It's a fantastic exercise that actually happens. Right. They do a census assessment of every child every year who kind of say up children learning. And in fact, the exercise is so comprehensive that you can actually put this is one of the examples of best practices in the country for education measurement. So the elephant in the room, and that's this kind of beautiful paper by my colleague, I think, you know, that's just come out of the working paper.
And it's called the myth of official measurement. Right. And so what it does is going back to a solid silver of right. It just beats a random sample of schools and a random sample of kids. And that's the same children on a subset of the same questions two months later and finds that the true learning level is actually remarkably low now. And it's a very interesting kind of data fudging, which is if you look at the ranking of the students, the ranking of the students is exactly the same.
OK, so on other independent tests, as well as the official data, the ranking is not fudged. OK, but what is fudged is the level so that and that fudging is disproportionate at the bottom because there might be children who can't do anything and they will still be shown as being able to do the question.
And again, this reflects the fact that the system understands that at its core it is a sorting system and not a human development. So the reason you don't compromise with the ranks is because the ranks will matter for a child at some point in the future. And it is unfair if I flip that. OK, but you don't mind compromising the absolute levels of learning, right? Because who cares? And teachers will then see, I tell you, if I show this child is not performing, then I will have to do remedial education.
And who will do that? OK, so the Internet full mission will fail if you don't have not only administrative data, the level of every child, but a system of administrative data integrity of making sure so. And in some ways, again, this is all chapter on outcome measurement in my book, where I talk about a structure of nested supervision, where you can the kind of inspection we did, it's not that difficult to actually build into a system.
And the key is that you hold the teacher accountable not just for outcomes, but accountable for the truth.
So coming back to system costs little bonita here, which is how you will actually deliver outcome. This is then the nitty gritty plumbing that is not in the policy document, but that comes from our research and shows how important this is going to be.
So you need the goal clarity. You need a system of administrative data on learning outcomes with data integrity so that at the level of the child, you're able to follow progress and make sure that you're getting the interventions needed to be able to succeed. OK, so then the third key part of this is the pedagogy, going back to what I said at the beginning of the syllabus and the tyranny of that exam is not going to go away any time soon.
OK, so and the teacher is still going to face this fundamental tension between should I complete the portion or should I be doing customised instruction for children who are below the levels? And so concretely speaking, the NGOs like and Muthee and Tamilnadu like have done a lot of micro optimizing of the time within the classroom. And the best practice right now is that you have about 90 minutes a day and the timetable, which is meant to be for revision or supervised work.
OK, so it's very difficult to tell a teacher to take away some of your regular periods because the syllabus completion pressure is very trivial. But then you can use that other 90 minutes of unstructured time to say, OK, now let me do the additional work on foundational literacy numeracy to make this happen.
OK, so that is the pedagogy piece of. So you need the clarity, you need to be able to measure that with integrity, you need to direct your pedagogy towards delivering that. And then, of course, you know, so there's that governance piece overall. And frankly, I think, you know, even more than attendance, which even though my own work has been in attendance, I think it can get a little really intrusive to then say, I'm going to do cameras and biometric scanners, because, frankly, in the end, I don't want to kind of invade the sense of agency as long as the outcomes are done right.
So I would much rather have a culture of autonomy and process and accountability of outcomes. And if the governance machinery is able to ensure administrative data, integrity and learning outcomes for every child, I am reasonably confident that the system is capable of delivering improved outcomes.
Once you know that this cannot be fudged and that it's a piece of actually providing supplemental instructional resources.
And so, you know, ideally there would be a way to hire kind of teaching assistants or contract teachers or on short term two or three hour as a day to provide that additional instruction to the children who are falling behind. And that can be incredibly cost effective, as we've seen in study after study. So and I'll come back to my third big idea that I will integrate this. OK, so I think the first part of this is the effort, the mission that's there.
And I think the majority is going to come up with these frameworks. So but the key thing is going to be getting to the next level of detail of measurement, as well as data integrity, which is not in the paper which will need to happen. So that's, I think, point number one. Does that make sense in response to the action? It makes sense.
I mean, my response to that is like when you started speaking of goals, I immediately thought, wait a minute, you know, like when I speak to I teach a class on writing. So I, I always tell my writing students that everybody has goals, that bad writers will have the same goals as the good writers. What is important is the process. But then I get what you're saying, that we should at least begin by having clarity of what are we trying to achieve?
And if these are the outcomes we're trying to achieve and we have that clarity, then those goals are very useful. If they are then communicated to everyone that I feel a little skeptical of, what happens after that is when you talk about the integrity of measuring it. Because my experience in India, which is, you know, the the center of jugaad in the whole world, is that if there is a metric, it will be game. No, and I agree.
And I think that in the end, these are all about probabilities. Right. So you'll have about 20 percent of teachers and administrators who will be high integrity. There'll be 20 percent who you will never be able to fix. But that middle 60 percent doesn't respond like, you know, to what the overall thrust from the system is. And I think we have additional micro evidence and how using technology from measurement can really be a game changer for data integrity, because then it's kind of realtime measurement that gets uploaded.
It's hard to fudge it. So we've done a bunch of pilot on this and I think a bunch of these inputs we will probably put in a memo and a and send to states. And hopefully some of that gets reflected because the NDP has been announced. But there is still a set of details that still has to show up.
Yeah, that makes sense. I mean, so let's move on from the left coming back to Cost-Effectiveness. So I think so one thing which anybody does talk about, it talks a little bit about school consolidation. I was starting school complexes, not school consolidation. But let me again provide some facts for your listeners.
Right. So one of the problems of our approach to access of creating schools within a kilometre every habitation is that 20 years ago that may have been necessary to get marginalized groups into school because they would not be able to travel. Right. But one of the consequences of this is that your public schooling system, the countryside is pockmarked with these subscale schools, with enrollment of about 20, 30 children, that you have five grades to teachers. And, you know, it's bad for governance, it's bad for pedagogy, and it's bad for cost effectiveness.
Right. So it's bad for governance because going back to my point about monitoring visits is really hard to go and visit every school that is so far out and remote and you have limited administrative capacity. It's bad for pedagogy because you buy construction, you have multiple teaching. The teachers are now teaching simultaneously across five grades. So it gets really, really hard even for a motivated teacher to deal with that.
And it is also really bad for value, for money. And that's because you have a normal minimum. Two teachers you end up with beat the odds of about 10 to 15 in these places and pupil teacher ratio. So the cost per child in these small schools ends up being me or from the few states. What I've calculated, the data ends up being over seventy five, sometimes eighty thousand rupees a child compared to an average cost per child of maybe thirty thirty five thousand if you are at a school of about thirty.
OK, so one simple idea is that there is a trade off obviously between access and skill. Right. So if I try to provide access in this way of building schools to do kids right now and ultimately providing access, which is what we see in our Bihar girls bicycle paper, maybe see that that was an incredibly effective program, is that you can have schools at larger scale in the middle of a gram panchayat and be able to provide transport and to have a larger catchment area.
And you don't even have to provide transport vouchers. You can literally run a bus service, you can run a bus or you can contract a bus service to say, yeah, this is my catchment area. That's actually two or three kilometers and I'm just going to go pick up children and. And have this local school in the middle of the Grampians or anywhere else in the catchment area is and then once you have enrollment of about 150 to 200, then you're at a place where you have much better pedagogy because you have a single teacher, a subject, you have much better governance because you can have a principal, you actually get better teacher morale, because teachers actually enjoy having a community of peers as opposed to being out there in the villages.
The only kind of educated person.
And you also get much better value for money. And that gives you the skill that allows you to then invest in whether it's the computers or the or the other facilities. So I think 20 years ago, twenty five years ago, it might seem that this was unrealistic because we didn't have the road transport infrastructure. But given the investments we made in the rural roads and all of that, in fact, it's a very nice study by the relatives be looking at, I think, child mortality, maternal mortality.
I'm not sure what the exact outcome is, but what it shows is that, in fact, that you get much better health outcomes from investing in roads than from investing in clinics. And that's because the clinics, when you build them remotely, these are some skills and they're not used as often. That is when you build roads, you're able to bring people to where the skill facility is. So that same logic, I think, can apply with the logistics of how we organise our schooling system.
So this is, again, a very promising kind of discussion, but it is enormous in terms of cost effectiveness because the bulk of our money goes to teacher salaries and the cost per child in these schools, about 70, 80, 90 thousand.
OK, now, but coming back to political economy, what are the important potential political economy concerns? So the one is that local communities tend to take a lot of pride in their school, which is often something that has been created after lobbying a lot. And then whatever it is like, I mean, I'm at a school that is a source of pride for the local community. So a top down position of saying you're going to shut down the schools and consolidate will backfire on day one.
Right up to what you need is to kind of have a democratic validation of this process by having a policy or a project that says here is a proposal that in this budget, what this would mean is that we would build a school, we would provide this transport. This is what would happen and then let the Punggye themselves vote on that. Right. And say that is something they would like to do. And so, again, as a way of accommodating heterogeneity as opposed to going down, if you have an approach like that, maybe there'll be hundred villages, 200 villages that say, please try this and then you'll try it out.
And then if it works right, then it spreads by demonstrated success as opposed to trying to do this by top down. Sometimes policymakers have a view that is known and are the only way to do things at scale is to force it down the throat. But, you know, going back to the coercive state and how do you make democracy work better? I think where you balance the economies of scale that come from the higher level with kind of the agency that you want to provide to citizens and communities is to use the analytical horsepower at a higher level to say here are some policy reforms that may make sense that within a given budget envelope can deliver much better outcomes.
And now you, the community, come back and tell us if you would like to do this and if you would, then let's roll it. So I think that would be my approach to this larger issue of school size optimization, I think is the right way to frame it.
And then from a teacher's perspective, there's likely to be some union opposition, because in the long term, the cost effectiveness of this comes from the fact that you're reducing potentially the number of teacher posts. Because, you know, but there are two, I think, broad answers to that. One is that, in fact, it actually improves working conditions for teachers significantly because most teachers live in urban areas and commute to the rural areas. So by kind of making the school in a more central area, actually making the school more accessible, but also improving the working environment by having a profession, a community of peers, you go in.
It's much more fun to in fact, what we document is the absenteeism, even in health care, is much lower in district hospitals. And it is kind of a strike because that is a sector, because there's both the monitoring and this kind of a community of practice. So I think from a teacher working condition perspective, this would almost certainly be a positive. And you're also not fighting anybody. So you're basically ring-fencing this and protecting incumbents. And so the fiscal savings will come over time.
But this is then something that will substantially improve not just cost effectiveness, but governance. And it's a very concrete idea. So and what I try to do in my writing is kind of cover both the principals as well as very concrete ideas because abstractly them. But it's like now give me five implementable ideas that as a state education minister to secretary, I can do so. This the foundation literacy mission that I told you about is something the state can do.
This is something the state can. OK, so does that make sense before I move on to my third?
Because it makes a lot of sense. I mean, a couple of the actions. One, of course, the point of education is to educate children, not to employ teachers. So something we should keep in mind. So I don't know what the outcomes for teachers are is going to be relevant for me, though I can see why in the political economy, the unions would matter in the same way that the point of markets, for example, is not to protect local businesses, but to fulfil the needs of customers.
And we often get the wrong way around. And for me, the big a ha moment that you just provided is when you refer to that study about how you know, you'll get better outcomes for health care if sometimes if you build roads rather than clinics. And similarly, you can get better. For primary education, if you are buses instead of building schools, which is, you know, such a phenomenal in a very counterintuitive way of thinking about it, and I think, you know, if local communities are given all of these choices, you will have a thousand flowers blooming, different experiments.
I mean, you know, there's a limited set of conventional ideas on this that exist within government. Economists like you bring in somebody like you just did or just open it up to local communities and I'm sure they'll be stuck with even. You can't afford a boat, so you have to kind of enable that to happen.
I'll ask you to move on here. And I mean the challenge and again, which is why I think we definitely need an episode on federalism because the entire culture and in government is one of kind of lack of trust. Right, to one of the reasons you don't move the money down and the title gets siphoned away by the local political elites. So which is why you need to combine that autonomy and process with accountability and outcomes. And so there is this very delicate federal architecture that should be discussed at length in a separate in a separate episode.
So I think the third idea and frankly, if Commodify was an education minister, this is the single most important thing I would do, OK? And this is something that straddles a whole range of service delivery sectors. And it basically has to do with the following simple idea that one of the foundational aspects of state capacity in India is we don't have enough frontline employees, OK, we're understaffed and education, be understaffed and understaffed and healthy, understaffed. And I'm going this.
But the reason they're understaffed is because salaries are too high. And one way, you know, salaries are too high is you get like two hundred three hundred applicants for every government job. Econ 101 will tell you, like you lower the wage and increase the quantity. And we don't do that. Now, it's not enough to just say that the salaries are too high because maybe the high salaries are attracting high quality workers, which is why you then need the kind of research to show that the salary level seems to be completely uncorrelated with effectiveness.
So I'll send you another paper, which I didn't want to do, but I have an entire paper on restructuring public on public sector labor market. But I document all the pathologies of public sector labor market. So which is all range, everything from hire. Right.
To compete on the spatial distortions that's coming back to education. Right. So what we have is we have very, very robust. So let me give you the idea first, OK? And then give you how it kind of it's consistent with the research, but also navigate some of the problems, the political problems, which I think, again, in a democracy, one of I think the basic mistakes that many armchair economists will say is this, that if I'm like, you know, I mean but it's just these silly politicians who don't do it.
But I think, like the prime minister of Luxembourg once famously said, he said, we all know what to do. We just don't know how to get reelected after doing it. OK, so so so it's actually irresponsible of economists to kind of not you know, you don't need to be political to say what are the political constraints and how do you make good economics be good politics. So that's incumbent on any economist who wants to do sensible policy work.
OK, so therefore, coming back to what is this idea? The idea here is that I would like to restructure teacher training so that we make teacher training a much more practical, apprenticeship based system where what happens is you can basically pass some exams somewhere and kind of get hired as a teacher with maybe Tolkan four weeks or six weeks of kind of practical training. And what I have in mind is actually much more ambitious than that, which is to say, let's have a three to four year teacher training program.
That's basically seventy five percent practicum. OK, so you take the current content, which is all the theory and everything, and you put that in modulo quartos, OK? And each year you do one quarter whereby you kind of satisfy one modulatory and then you do nine months of practice. But in the practice, you basically made a statement and you're working in an actual school providing the instructional support specifically for foundational literacy, numeracy. And then what happens is you get paid a modest stipend in this period.
And at the end of four years, you get a credential as a bachelors in elementary education that has a teaching credential.
But then the key additional pieces when it comes to time for regular teacher recruitment, what you say is that you will provide extra points for every year served as an apprentice. OK, so in a practical so what you're doing here is you're killing many, many birds in one stone. Right? So what you're doing is you're improving the long term quality of teacher training by kind of making a practicum based and making teachers actually understand what it means to be effective.
And then the theory starts making much more sense, because today I can have a credential and show up on day one and have twenty five screaming kids and have no idea what to do. They cannot. So you are improving the long term quality of teacher training. You are providing a fiscally feasible way of augmenting teaching staff because you're now saying I'm taking these apprenticeships seriously and providing a stipend of five seven thousand rupees a month. Right. Which again, in the rural areas is something that people will happily line up for those jobs.
And so you're providing a stipend that makes this a serious kind of engagement. And what you're doing is it's consistent with all the research and evidence on the contract teachers where what we see is that if you have even a tenth of the 12th pass, kind of typical young woman from a village that they are incredibly effective at early childhood education and.
Providing the foundation that's now you can't do middle school math because at that point your learning becomes a binding constraint. But when it comes to foundational literacy, numeracy, you're more than able to do this.
OK, now the question is and then the other big thing it does is it helps with some of our issues of female labor force participation, because one of the big barriers is that women are not able to leave the village. OK, so now you're creating employment opportunities within a village that both creates employment as well as role model effects that cascade. OK, now, if you look at the evidence, the contract teacher, there are studies after studies that basically show that these teachers were highly effective, if not more effective, certainly more cost effective and equally effective at one fifth the cost.
So the correct comparison is not contracting to a regular teacher, but for the budget of one regular teacher. I could hire five of these guys. Right. And so and that comes back to the basic private school economics, which is to say, I hire many more teachers at lower wages and so I can provide a better education. OK, now the reason the contract teacher model is widely believed to have failed and why kind of the RTG explicitly kind of proscribed it is because the education establishment hated the idea, OK?
They hated the idea that you could have untrained professional teachers, untrained teachers. So there's kind of the occupational licensing sorts of objection. Now, you and I might believe that that's just a source of rent seeking. But like it or not, like that is certainly a part of kind of the ecosystem that says we need qualification and training.
OK, now the second problem is judicial, because once you got enough, you would have a bunch of these guys going to the courts and saying, you know, we are doing the same work and being paid one tenth. And so you have this equal pay for equal work kind of things. The courts will arbitrarily come in and say, no, you need to regularize these guys that come out.
And then there was a political problem, which is because this was done as a regular teaching was frozen. This became kind of this purgatory where you had kind of cohorts and cohorts of people who were wanting to become teachers, who were in this limbo. And every time before an election, there would be massive pressure to promise regularization. And once you do that regularization, then you have the worst of both worlds, because if regularize them, but they're not even college.
Right. Which is why it's like my depression. Like I mean, now they say that even though the improvements they got in the 2000s with the Shekar education guarantee scheme were actually very loaded, that it kind of backfired because eventually they had to yield to the pressure of regularization. And that has kind of started them with a bunch of civil service teachers who are not even qualified. OK, so that's great. So the economics of contractors works, but it feels for ideological reasons, kind of legal reasons and political reasons.
So what I'm doing with this teacher apprenticeship idea thing, how do you take the kernel of that idea of what the seen in the evidence and make it pass through all of these filters? Right. So now what you're saying to the professional crowd, that is we need credentialling. You're saying I absolutely believe in credentialling, but if anything, it to improve the quality of the credential over time because this is now a practicum based training. OK, so this is going to improve the long term intake and into teaching.
You're solving the judicial problem because this is you're no longer in this problem of equal pay for equal work because it is an apprenticeship, it is defined as an apprenticeship. That is part of your training that has you know, if it's not like an endless stop gap kind of arrangement and you're elevating the political pressure by saying that, listen, you know, having a teacher training certificate is no guarantee of a government job. So today, people take dozens of exams and try to get in.
So just like taking exams is no guarantee of the job. But sitting for the test multiple times actually increases your chance of cracking the exam without making you a better teacher. What you're now saying, it's like the mean that I'm going to provide some weight for this practical experience in the regular teacher hiring. Right. So and this reflects, I think, what is realistic in our political economy setting. But you're not going to say get rid of government teachers, you're not going to say reduce the salaries.
So what, you can at least do a thing.
Let's improve the pipeline so that the people who make it are people who actually want to be teachers, because today, essentially most educated youth are playing the government job lottery. Right. Of essentially applying for every possible government job. Because if you cannot get a sexual life right, so you have tons of people who are in-between who are more interested in teaching. So once you've done this for three or four years, you're actually improving at least a two sided match on unobservable with kind of what the job characteristics are.
And you are improving the longer term kind of pipeline of teachers while also solving your short term problem of providing augmenting your teaching resources in a cost effective way by taking the apprenticeship very seriously. And the other thing you could do is to kind of say that, listen, each district can have one of these, the Dietze, the district, the school education training can run these practicum programs that you say for the apprenticeship itself, I will select the standard candidate from every panchayat and then your practicum is based back in your budget.
So you come three months into the district headquarters, do the training, and then we use technology to kind of monitor you every week to kind of give you additional refresher. So there's a bunch of details that can be worked out. But the core idea going back to my paper and speech on the labor market distortions in the public sector is it also deals with the spatial distortion that most people don't appreciate. Right. Because the problem with public sector. Recruitment is because you recruit on the basis of exams and who cracks the exams, the candidate who crack the exams are typically from urban areas, or at least once you have a government job, your kind of aspirational classes to be in area.
But the jobs are. OK, so part of the absence comes from the fact that you're sitting far away from the community that you're serving. And part of the effectiveness of the contract chose comes from the fact that you belong to the local community.
So and there is kind of this occupational licensing mafia that sits in both health and education and every sector. But this is one way to kind of be cognizant of that and not try to wish it away, but then try to create a pipeline that allows you to kind of augment. And the reason I so passionately believe in this is given the jobs crisis, that you also don't have a way of increasing just the utilization and opportunities for educated, unemployed youth like you have.
And it's a way to provide structure.
And frankly, what also happened is there is a lot of women who, for good or for bad, will drop out of the labor market once they get married and have kids. So but you are providing from the age of 18 to 22, like, you know, for rural educated women who today might get married at 18, that campaign, after finishing 12th, are providing also that additional window of delaying marriage and fertility, of improving empowerment. And I think it's one of these win win win things that any politician should also latch on to because it gives you visible outputs and will allow you to do this in a cost effective way.
So tomorrow, if I were an education minister in a state, I would apply an enormous amount of energy to making something like this happen.
It was fascinating and it's very impressive also how, number one, you get to the grassroots and you figure out exactly what's happening, the nuts and bolts of everything, then you get to root causes and these are the root causes. And then when it comes to fixing it or not, coming up with a policy brief that is one mile high up in the sky. But you actually taking the political economy into account and saying, OK, I have to cater to the incentives of the politicians who will bring this into force and the policy mix and the actual people on the ground who will implement it and all of that.
That's very interesting. So what stands in the way of something like this happening? Sure, it's a great question.
Right. And I think, OK, so and I don't know if I should give this away, like, you know, because this is like a topic for a new thing. But one of the big kind of things that I'm doing right now, which, you know, we are not yet public with it. We don't even have a website, but we're starting to do some deep work is. So the two big things I'm doing right now is one is writing this book on tape capacity, which has a provisional title of fixing the Indian state.
But there's the other part of what I'm doing, because I'm setting up this whole new institute in India. Right. Called the Center for Effective Governance of Indian States. And the whole idea is to then have like a few Corak people who are embedded in state government were able to take these ideas and then translate that into actual policy they taught. In the past five years, I've had access to policymakers at the highest level. So I've served on Rajastan Stephens's advisory council.
I've met the chief ministers routinely with education secretaries and basically like know all the access can at best plant an idea, but it doesn't translate the idea into action without kind of having a slightly embedded presence within the government. So it's a long haul. It's a long kind of it's a 20 year journey of capacity. But I genuinely believe that there are enough. And that's another reason why I believe so much in working at the level of states, because if I'm pitching ideas at the center, one joint secretary can kill an idea.
Right. But if I'm putting it to the states, I just need one guy to bite. And then you kind of see can this work? And the way you will actually make change happen is by making things happen properly, one or two states. And then I shouldn't be the one evangelizing that that education secretary, education minister can have a workshop of other states and saying this is what we've done. So our role then becomes here are the principles.
Here is the evidence. Here is an idea that I have designed in a way that accounts for your constraints. Now let's make it happen. But I think the challenge to making that happen is still and this is partly why our basic rights over the past four or five years, that is almost not a single senior government official who has not said that the idea makes the kind of sense. In fact, the current expenditures that the government of India, someone who was the joint secretary in the prime minister's office when he was the discussant on my paper on public sector recruitment.
So and he's a tough nut, OK?
He has a Ph.D. and he has very little patience for Ivory Tower academics because he's brilliant. He's been in the government. And so his highest praise for me on the paper was that it shows an admirable understanding of ground realities. And then he said he said, like, you know, the way you will make progress is by doing this at the level of one or two states and even at the level of states. The challenges is making this thing happen.
It requires kind of a stability, a policy vision that is beyond the lifetime of even an individual secretary, because it requires thinking about a training architecture that will still show you results with three or four years. It requires them thinking about what are your public sector recruitment rules. Can you tweak that to then provide? So and it turns out that individual officers who understand will be very sympathetic, but it is beyond the remit of any one person, even the secretary, to make it happen.
And that's. Why you need it embedded institutional presence in the government that since this is a strategic initiative, that we are going to coordinate across ministries and make it happen. So it's a very long journey.
And I don't want to talk about too much about this because, again, the chances are we will fail. OK, but at least we have to try and do this right now reflects my best bet. How do you take all of these ideas and try to make something like this happen? But maybe we can do an episode on this next year.
And I think once we have the book and once we have some results to show, once you are a grand success and perhaps even who knows in the future, the Nobel Prize winner. There's so many advisers. You know, we have a few minutes left and it would not behoove me to leave a subject like David's coming out of this because it strikes me that everything that we're talking about and I think you barely even scratched the surface of all your great suggestions on public schools and a link to all your papers and let listeners discover that for themselves.
But you coming to private schools, No. One, I've sort of had a bunch of episodes on education before, on the profit motive in education, which are linked to on the disastrous impact of RTG, which are linked to those episodes as well. And the kid. But, you know, to just give like a Cliff Notes version of what that is, it's basically that there was all this focus on inputs and a lot of low cost budget.
Private schools had to shut down because it was like if you don't have a playground, you can't teach. And these people are like, you know, we are not setting playgrounds. We are selling, you know, education, teaching. And like you pointed out, 70 percent of schools in urban areas are private schools, people instead of budget, private schools, instead of going to three government schools, which are also giving freebies like vitamins that people are actually choosing to pay or their own pocket, the hard earned money, rickshaw drivers, slum dwellers, because they want the kids to have a good future.
And one scheme that you've discussed in, you know, over the years, many times as, of course, school vouchers, again, to give a Cliff Notes version of what that is for my listeners, school vouchers basically means that what you do is the government doesn't fund the school. It funds the student. So the student gets an education voucher. He takes it to a school of his or her choice. And, you know, the education happens.
So what you have is that you have parents making the decision and they're in a much better position to decide than the state is parents making the decision, where should I pick my school and giving them that autonomy? And there is also a moral imperative. Plus, you bring in the value of competition. So schools compete with each other for the money of the state. It is still the state that is providing the money for it. But the education, the services provided by private schools, which are far more efficient, their outcomes are more or less the same or sometimes better as various papers have shown.
But they are much more cost effective because the dictates of the market come in play. As I said at the start, it's not that I'm entirely a supporter of school vouchers myself. My sense is that, listen, if you just let the free market operate, which you don't, if you just let the market operate, society can solve its own problems. If you allow it to be allowed that space and telecom and airlines and so many other things, you'll get 80 brands basket in the market, but you only get one kind of education.
And if we need a little more of markets coming into play now, I know that you've written extensively about private schools, where you've written about school choice. You also written about charter schools, which is a relatively new concept in an Indian context. What are your sort of thoughts on this? The margins? One is that there's this fundamental distrust of private enterprise, which it seems to exist in the mind of the state, whether it does or not, in the mind of individual bureaucrats, I don't know.
But in the way the state approaches it, it seems to me, is that going to change is a recognition that that is a problem. And secondly, at a more granular level, when you come down to actual policy and you've spoken about the need of redefining the relationship between the state and markets when it comes to education, what are the on the ground policy proposals or suggestions that you have?
Yeah, and, you know, I think the just speaks to the richness and complexity of these issues, I think on private schools. Let me take about just two minutes to summarize some of the key facts.
Right. Which is, again, I've done years of work on this, but I think the key facts for the listeners are your typical budget private school.
Here is the problem to take a step back.
There is a naive sense that there's a naive sense in which private schools are OK, which is if you look at the test scores, the private schools will do better. But that is completely naive because it's essentially reflecting different household selection into private schools.
So the kids are going to private schools that obviously parents are more educated, that even though they are kind of going to budget private schools and poor, they're still better off than those who are going to the public schools. OK, so that's simple comparison of public and private can be quite misleading and also because your typical private school has actually two extra years of schooling.
So if I compare public and private schools and third standard and say private school is doing better, it's really not apples to apples because your typical private school kid has had educated and has 40 years of schooling compared to two years of schooling.
And so therefore, it is essential to have a credible control group. And so what we did was kind of run one of the largest. Controlled trials and school vouchers anywhere in the world which were done in India and Pradesh from 2000 to 2012, and those results, if you like, some very, very interesting insights. Right. And and as with good research, there was enough in this to annoy both the left and the right. And so I got criticized on both sides.
OK, so and basically what you find is that when you took a bunch of poor kids who were attending government schools and gave them a voucher to go to private schools, and they attended a private school of their choice in the village and attended for up to four years, that at the end of four years, surprisingly so. Let me talk about the processes. Right. So the private schools are poorer on observable measures of input, but do better on every measure of effort.
OK, so they have the teachers are less educated, they're less qualified, the less trained they're paid, much lower salary. So in an AP framework, these private schools look miserable because on inputs they are actually way inferior to the government. But once you kind of go measure effort, you'll see that the private schools do better on every measure of effort to lower teacher absence, higher time on task, longer school year, longer school day.
And we also have like a model that measures management practices. And in fact, that's a new working paper which will release in the next couple of weeks. And you see that on even concrete measures of management practices, the private schools do much, much better.
OK, so but but the but the kind of the stupefying result is even though the observable characteristics of the private schools are so much better, at the end of four years of this, we find that the kids who went to the private school did not do any better on either matter, that which was because this was a unified ondra.
And so, you know, what this tells you is that at one level, the critics of the private schools that say that most of what the private schools are doing is functioning on the selection margin as opposed to the education budget is actually correct because there is a selection aspect of both the better, relatively better off, as well as private schools trying to screen out children who might be slow learners or disabled or whatever. OK, so in that sense, there was enough in the results to kind of put a note of caution to the kind of blind voucher that they got because there's nothing.
But on the other hand, what we see is that the private schools are actually delivering the same output at one third. The cost rate to the cost per child is actually much, much lower. So if you look at the cost per child in the public school, that's much higher. And because the private school has to compete in the market, they are much more cost effective.
The other subtle thing that's going on with the private schools, and this is what makes education research so vexing, which is that, you know, so what we did is we went and looked at the timetable that what you saw is that the private schools actually spend much less time teaching Telugu in math and they use that extra time to teach other subjects that are not in the government school. So they were teaching more English, teaching more Hindi, OK. And so this makes it very difficult because now it's not an apples to apples comparison.
So even though the level of learning is the same, it was being achieved with much less instruction. So the productivity in the private school was higher and we see that the fiscal results are higher in English. OK, and now but even then, you can have a difference of opinion as to should you aggregate these results and saying that the private schools do better or is the problem that and obviously Banerjee himself told me this, is that like, you know, what is the point of not being able to read in three languages that you're not able to read, even in your mother tongue, so that you're diversifying your curriculum and part of what's happening?
And if you look at the private school curriculum choice, that is one view that says these guys have been incredibly forward thinking because the labor market returns to English and Hindi are going to be higher than if you're in the British. Hindi gives you access to a national labor market. Right. So just given the amount of internal migration, say workers from behind and coming to be if you are if you are Hindi speaker, maybe that increases the chances of being a factory foreman and so and supervising these workers.
And so the returns in the labor market may be higher. And even if you can't speak in one voice, these guys are being very, very far sighted. The other view is that, no, there is isomorphic mimicry even in the private schools that they just like mechanically copying the curriculum of elite private schools and elite private schools do multiple languages. They do that. And even though that may not, in fact, be optimal for these vouchered.
OK, so and so I think basically the school choice argument relies on two pieces. It relies on kind of there's a productivity argument and there is a choice argument. And I think the challenge here is that the market metaphors break down for multiple reasons because choice in assessing school quality is an incredibly challenging problem.
I have a beauty in economics from Harvard and I have no idea what's going on in my child's preschool. So you only have some proximate measures of quality. And so it's very, very hot. OK, so the punch line from all the results is to say that the private schools are more productive.
But it is not obvious that expanding a voucher system in the current status quo will by itself give you better learning outcomes that might give you a better value for money, but that is not the same. And which is why when I look at the global research and education, there is a different model. Right? So what are the. Problems, even with vouchers and I think is that when kids have the freedom, parents have freedom, it's very attractive, but there is no guarantee that the school has to accept you right to.
That goes back to the point I made in the beginning. Like, you can afford it, but you're not getting in because Harvard's partly a club. Right? I mean, that's kind of excluding based on multiple characteristics. And most private schools in India, at least elite private schools, which kind of play in the consciousness of the policymaking class, are also fundamentally clubs.
By kind of the way, the interview, the parents and everything that they do to one place with the market metaphor breaks down is when the school is not actually trying to maximize market share in the first place, but trying to maximize exclusivity.
So you want to design systems whereby schools are competing on effectiveness as opposed to selection. And there is interesting theoretical work that shows that how unbridled voucher system can actually make outcomes worse by moving the margin of competition to selection rather than valuation. OK, so that's something we need to be cognizant of.
Now, there's another part of the choice argument with voucher studies have shown a need for caution, which is the parents often pick aspirational schools. You pick schools that you think are aspirational, they look good. But going back to this curriculum mismatch issue that I highlighted, that if you're picking a school where the curriculum is so far ahead of where your child is, there is a real sense in which this could backfire. And so there's an alternative model of saying, how do you bring the efficiency of private management while kind of minimizing some of these pathologies, private schools?
OK, and that's basically what the idea of charter schools is to the idea of a charter school, is that you maintain the public characteristic of a school, but you basically provide a management contract. Right, that you need to a private entity that says, I was sorry before I get there, maybe just get your quick reactions to the area before you go to private schools.
But quick reaction is, first of all, you know, I'm familiar with your study and I also read the responses by Githongo in the Kingdom and James Tooley, where they pointed out that illegal entry point. No, no, my my my sense of it is that, you know, and they've also done studies and the you know, there are other studies which show that, you know, private schools get better outcomes and so on. But leaving that aside to just kind of focusing on this issue, my sense of this was that leaving the choice angle, aside just from the productivity angle, that one, yes, they got, you know, outcomes at much cheaper.
So better value for money. That's a site. But also, they didn't get worse outcomes on any margin, even if they were the same, if they're getting it cheaper and they're learning a couple of extra things, Kazuki. The second thing that sort of struck me was that I think the choice argument is actually enough on its own because I think all of you know, if a choice has to be made for the child, it's very condescending to say to the parent does not have the ability to make their choice.
It is only the parent who should make that choice, in my view. And what I would say is that, like you pointed out in your paper as well, like your 2013 paper, which you think was quite nuanced on this issue, where you pointed out all these different sides, and there you pointed out that, you know, even if parents make a mistake sending their kid to a place where the main medium of instruction is English rather than Telugu, because studies have shown that learning happens at that early age, much better in the mother tongue.
Despite that, that could be offset by a little premium that they get for having gone to an English medium school later on in the labor market. As you said, it's too complex for anybody to judge and therefore morally, the choice of where they could go should just stay with the parents, given that there is such muddiness of information either way.
And I'm very, very sympathetic to that. And I think I mean, the only slight pushback to this is know and it goes back to the third goal of education systems, the public education systems, which we haven't spent enough time on.
Right. Because, you know, but this is very, very important. And it's important to understand that the spread of mass education actually had very little to do with either of the first two. Right. Because the sorting goal that can happen by kind of elite exams, which Chinese bureaucrats have been passing for a very long time, I thought, where the modern state was willing to invest in mass education. In fact, my colleague at UCSD, Augustin Paglen, is a political scientist and she's done some very nice work on this.
Is that the third objective education system, the human development that is starting, but the third is actually creating a common shared sense of citizenship.
So what makes education inherently political? Right, is that as economists, we are used to saying how does the free market of free agency make choices conditional on your preferences? Right. But we don't ask where the preferences come from. And so the what makes education inherently more political than any other market analogy is it's because it's the place where you actually forming preferences. Right. That can mean of a generation. And so and that creates externalities. And then that's a good question about should the government have a say.
Right. And so by the language question and again, they couldn't get it. So just on the vexing question of language, but it's an incredibly vexing question. Right? So and it's because no language is morally superior or inferior. Right. That can mean. And then but the market attraction of a language is a function of a bunch of other things.
So but the larger point here is that one of the reasons public education systems try to.
Put that come with regard to language is precisely because there is a certain public good with regard to culture that goes beyond the individual choice, and that's a much more nuanced discussion that I don't agree with the spirit of what you said, that in the end, however complex it is, it's the parents and the ultimate users who should make their decisions. But even without coercion, you can still put your thumb on the scale as a society that says that as a collective good.
And this is classic public externalities like, you know, there's a certain collective good in maintaining a language or culture and we find ways to put up on the scale. And that one we ought to read is one.
Whenever I hear the word collective, I'm like, no, we should think in terms of individuals, not collectives, whatever. That's just me.
But let me pose that, because I think there is a limit to kind of the extreme individualism which we kind of see in the US with kind of the disaster and muskeg right now. Right. So then you build this kind of myth of kind of the frontier man like, you know, who's out there on his own doing things.
Then when you need the public good of wearing a mask, not for yourself, but for the public good, you find it very hard to do that to get on on that issue.
I agree with you entirely. But the point is that if you look at the negative externalities of how this Indian state has messed up education, they are disastrous, you know. And my point there would be that earlier we were talking about how both of us, of course, support democracy because you want every individual, every citizen in a democracy to in a nation to feel empowered. And democracy gives you that. And similarly, I would say that the current education system is actually the opposite of that.
It is an authoritarian system where you are building a model. And, yes, some experts like you are having some input into the model model and hopefully the model will be improved in the margins. But it is one model being imposed on everyone. And what would be nice is to see many, many models flourish. One way of doing that, of course, which we will discuss in our next episode, which will hopefully be even longer than this, is the federalism model where you have so much local governance that you have different models coming out locally.
But another model would be that just let entrepreneurship flourish in this field, unleash the market. You know, society will solve its own problems. That doesn't happen. But we only have a few minutes. And it would be a travesty if I do not let you speak about charter schools because you've been very insightful and eloquent on that as well. So I'm on private school policy.
Let me say two things. There is one set of policies that matter that you say unleash the private sector regardless of your ability, even if you don't cater to the poor. And because that's kind of the status quo anyway, 50 percent, 60 percent are doing OK.
So on that, I think my biggest policy thrust, which I think you will also agree with, is to say you regulate based on disclosure as opposed to mandates. OK, so you still need some regulation because, you know, there are problems of asymmetric information that are problems of safety, public goods, etc. But what do you say is same?
If a qualified teacher truly matters, let the market decide, you know, whether parents are willing to pay for that. And if a school decides that I can provide better education by hiring for teaching assistants, that instead standard parts were able to provide small group instruction, let them have the freedom to do that. And the only requirement is that they. So basically it goes back to my point about Admon data integrity. So my basic approach is to regulate based on disclosure.
This if you lie, I will track you down. OK, can, but as long as you're telling the truth, you can do whatever you want.
Let me quote you on this. Since you brought up regulation, let me quote you on this because I like this quote and which is why I sort of copy pasted it into my notes quote, While these reasons for regulation make sense in theory, earlier, you've basically given reasons for regulating private schools when they are public spaces, too. There is information asymmetry in the sense, you know, parents have no way of knowing schools are so complex. Like you said, you don't know what's happening in your kid's school.
And then there is a symmetry of power that private schools can arbitrarily do whatever and parents have no power. So on these, you say good. While these reasons for regulation make sense, in theory, the Indian approach to regulation of private schools has in fact been heavy handed and arbitrarily enforced. In particular, the approach has placed a lot of power in the hands of school inspectors who can shut down schools for a wide variety of reasons and extort bribes from school management to overlook regulatory violations.
Further, this problem has worsened since blah, blah, blah. And then you talk about the Right to Education Act. Very eloquent. I want to I don't want to take up your time, but I agree with you entirely. And your solution, as you were saying, is that rather than make them comply with a whole bunch of these things and then inspectors will come to their state and they'll have to be bribed and everything goes haywire and you let them disclose everything.
And then if you find they happen to lie about something, then you take them to task. But otherwise you reduce the regulatory burden.
And the status quo is particularly kind of corrosive because what happens is the burdens are so onerous that kind of very few legitimate operators can, in fact, meet them. Right. So you kind of get negative selection that the good guys don't participate and the only people who will participate are the ones who are willing to pay the bribes to kind of get so you get this corrosive equilibrium. They cannot meet this.
And so the good guys go out and the ones who are dead are the ones who are willing to kind of, you know, right the way through the inspection certificates. And of course, I mean, and that's a status quo that benefits like obviously the inspectors and. But it also goes back to this kind of cognitive dissonance that I think the government finds it incredibly hard to separate its role as a policymaker, regulator and provider. And so those are three very different functions that require different approaches to the private sector.
So on the policy side, that's basically all I would do. Right now. There's a second part of the policy side on private schools, which is I think that is a case for saying how do you harness the creative energies of the private sector? And going back to something I said at the very beginning, right, that if the problem with the market, the democratic ideal is one person, one, the market ends up doing one to be one book.
OK, so what what kind of a left libertarian do is you say you equalize the playing field or reduce inequality by putting purchasing power in the hands of the poor and then let the market cater to that.
Right, which is kind of exactly the voucher idea. And I think we're all in sync with that. And in fact, to connect back to that, your listeners understand that first one of it was not a long ramble of different things, but everything is connected right through those principles. So going back to why this is consistent with the market, then, right? Because the Indian point is that providing purchasing power and then letting the market provide the food was in fact a better approach than trying to actually send food aid to the famine hit areas.
Similarly, the voucher providing the purchasing power would do that. Now, I think the limitation of the vouchers is not the conceptual point of empowering parents and letting them choose. It is the challenge that we have seen evidence in multiple settings that because parents perceive school quality based on the level of achievement and not on the value addition, it creates incentives on the school side to basically focus on selection as opposed to evaluation. And so the question is, how do you harness the energies of the private sector and kind of architect a system that harnesses that for the public good that you have a charter school is very simple.
Right. Which is you basically say this is still a public school, but you board management contracts to kind of qualified private school operators and they get reimbursed on a per child basis. And the only two restrictions are that you cannot do selective admissions. So any child who applies to the school with public funding should be admitted. And if you have excess demand, then you're on a lottery. And the second is that you're not allowed to charge top-up fees because then that again creates a gradient based on the ability to pay.
But subject to that on the child and what the evidence in the US shows is that the charter schools are being much more effective than the vouchers.
And the main reason, and this goes back to pedagogy, is that because the charter schools are often set up in low income communities, the entire pedagogy in the school is optimized for a context where children don't have the kind of home support that is envisaged by a typical private school. So a typical private school will assume that the parents can do this and parents can do this and parents can do that. And a lot of in fact, what we see even in our own AP data is if you look at the value adds, the typical child who goes to the private school actually does much better gains than the typical child go into the government.
Right. It's the voucher child who doesn't disproportionally benefit. And that's partly because they are much lower and starting at one point, eight standard deviations below, which means that teaching at the right level problem is probably a.
So what the charters have been doing is optimizing pedagogy for low-income settings, making sure that you have extra time to complete homework because your parents are not able to support you. So there's a bunch of additional pedagogical innovations that are optimized around how to improve learning outcomes. So the way I would think about a policy framework for India for leveraging charter schools is almost to say, let's set a grand challenge that we see as a grand challenge.
The truth is, we actually have not yet cracked the problem of how do you deliver learning outcomes at scale the first generation? I mean, this is an incredibly hard, wicked problem with throwing a lot of money. We've tried all kinds of approaches. I have talked about a foundation literacy numeracy mission to certain principals, but there's no guarantee that will succeed.
Right. So maybe a better approach would be to say that here is the budget for child. I'm going to open up a bunch of schools to these charter management. And what are you seeing already in India? There are a bunch of these education providers who have come to exactly the same realization that they would like to serve low income communities, but that they would like to have management autonomy on schools. And so there are nonprofits, I think people, Akanksha, Maddie, that bunch of people who are actually doing this.
The problem today is that the government is allowing them in, but they are raising the money from CSR. Right, until the government is not kind of reimbursing that. And so that gets us to money. Sabharwal is wonderful quote of the impossible trilemma service delivery here. Right. Which is that the government has an execution deficit to the private sector, has a trust deficit and civil society has its deficit because civil society has both intentions and ability to deliver, but is limited by kind of its fundraising.
Government has skills and legitimacy but can't execute to save its life. The private sector can execute that skill. So, you know, in all my years of fieldwork in rural India, the time and I started getting drinking water was when, like Coke and Pepsi started having Chilian Aquafina. So that kind of logistics and delivery networks would reach the hinterland way before, like any any government yojana would reach. So in that sense, the private sector can deliver that.
The problem is that. And this is where it gets so difficult when you think about private sector and health and education, which is there is a point up to which you can improve outcomes by squeezing inefficiency out of the system. But beyond that, even the private player also becomes at least partly by excluding difficult children. So there's a bunch of aspects of school, the public spaces, which kind of limit the unbridled use of the private technology. So what's nice about charters is you're saying you're maintaining a couple of essential characteristics of public education, which is non-discriminatory admission and no top up fees.
But you then have the autonomy and kind of come in and bring all your ideas to solve this grand challenge. How are we going to improve learning outcomes at scale? Now, there's a bunch of other complications with regard to procurement, with regard to the fact that there's this wonderful study in Liberia published in the American Economic Review recently that was done by my own former student that looked at a charter school experiment like this. And what it found was that there were eight different providers.
But there is enormous variation even among the providers. So there are some who are very good and somewhat less than the public school. So a naive sense of private versus public is also misguided because you need that heterogeneity, but which I think is again, consistent with your view that over time if you had a well functioning market, the poor guys would be weeded out. But I think the last point I want to leave with on this is this requires incredibly nuanced view to architecture of service delivery.
Right. I mean, that recognizes that public and private both have their weaknesses. And you want to design systems because and make them to complement and not substitutes because we should do a separate episode on health. But to give you a headline of one of these recent papers that we just published is that what we see is that improving public systems is actually highly correlated with the quality private quality because the private has to compete with the public and so that forces out the level of the private distribution as well.
Right. So it's like when we think about education in India, this is all a joke about two guys in a jungle being chased by a bear. And the first guy says they need all we need to outrun the bad. And the second guy says, no, I just have to outrun you. And that's basically the story of service delivery, that the private sector, in absolute terms, the quality is nothing to shout out about. But it is epsilon better than the government.
And that's enough like mean. But it's not going to prevent this kind of the bad of illiteracy that has been kind of laying waste to generation after generation is not going to be solved by private schools in their current form. It's going to take more than system architecture. How do you harness the creativity of the private sector to come and correct this problem? And that's what I hope, like well-designed charter pilot might allow us to start to agree with all of that.
And we should have further episodes coming up. Let me say, number one, federalism. Number two, have no TV, but actually, I let my listeners know we were actually going to do an episode on a covid before we decided that, hey, the education policy is out. And I think very kindly offered to educate me and all of you on the state of Indian education, which has been very enlightening. We have two minutes to go before your heart to heart stops.
So a quick final question, which is that, you know, one sense that I get from looking at your work over the past few decades is clearly that this is not the most profitable thing you could have done in terms of, you know, your material ends. I mean, had you just stayed in the private sector when you worked in Singapore, you could have been an offshore CEO somewhere. And even within academics, I'm sure there are many interesting options which all constitute an opportunity cost for your passion for Indian education and solving these specific problems and working with the state and working with state governments and getting your ass out there in village after village and figuring, you know, actually looking at all of these problems so closely.
So when you look back on this journey, how does it kind of feel like there? Do you feel a sense of satisfaction at the fact that you've been able to make a difference on the margins? Is it frustrating that the differences are so small and that by and large, most of the fault lines still remain? What motivates you? What keeps you going? It's very fascinating to me because on one hand, you're a professional. You're right. You're a professional academic.
You're the social, you're all of these things. But on the other hand, it often seems to me that it's not just you, as I've heard other people on the show like you who are doing things they don't need to do, and yet they're doing it out of the sense of mission. So, you know, what keeps you going? What's what's your favorite juice?
So the quick answer is, I think I have the best job in the way. Right. Because the and one way of knowing that I have the best job in the world is, you know, if Comodo I had many millions more in my bank account, I would do exactly what I do. I wouldn't change a single thing of what I do. Right. So in that sense, I think it was very clear to me in the private sector, my two years that there's no shortage of incentives for talent to be in the private sector.
But what I wanted was to kind of take that level of understanding and apply those insights and whatever kind of opportunities I've had in the largest got right to anything. But I'm not unique in that. I don't think I deserve any special moral kudos for that. I think that's a whole range of people who are very public spirited. And I think we all just need to find the ways in which you can contribute. And so I think if you look at the studies on happiness, what the studies on happiness will say is that if you kind of obsess about a long term goal without enjoying the journey, then that doesn't make a satisfied life happier.
BCU, I want to be this, you get that and think like, what's the big deal? Because I've lived here twenty five years and has it all gone right? On the other hand, like, you know, if you kind of keep living for the moment, then you can go from pleasure to pleasure like you without any concrete achievement.
At the end of it, I feel incredibly fortunate is that I kind of love the day to day craft of the research and kind of there's an artistic element of high quality research is. So, in fact, when I was in Italy a few years ago, I think the you know, what people don't see is the amount of blood, sweat and toil that goes into every one of these papers that's published in the journal. It's takes six, eight, 10 years.
So that's the I felt the highest affinity with sculptors because each paper kind of feels the same way.
You start with a block of an idea. You have some idea of how this is going to look like. And then you carve and you come and you chiselling. You chisel to the point of then your writing. And maybe my need for your writing course is the opposite. Right. Which is how do I not spend so much time? And it's diminishing returns of kind of micro pruning every word of what I'm writing. But there is almost an artistic process in that that just gives me intrinsic joy for its own right.
But at the same time, the motivation for everything I do has always been from the beginning about affecting the larger good. So I feel incredibly privileged that I have a Day-To-Day vocation that allows me to interact with some of the smartest people in the world. And the interaction with the students keeps me forever young. I think that once famously said that God made these students to keep tenured faculty honest because you can't wing it right to the moment you leave that academic research life and become a talking head on TV.
Your satellite is maybe three years and then after that and then you've lost that edge. So it being in academia, being with the students is kind of what keeps the technical side of me active and alive. I enjoyed the day to day basis, but it's also true that if the only thing I cared about was publishing papers, published a bit more. But I don't think like I'm particularly regretting, you know, that aspect of it. And it's also true sometimes that the academic economics profession doesn't fully value the amount of time I spend with policymakers, the amount of time I drink with secretaries to then kind of make things happen.
Right. But again, I go back to my adviser, Michael Kramer. And one of the most important things he said to me is like, never apologize for the fact that your fundamental motivation is to make sure that one million kids in India have a better education and that economics is a tool to get to it. Right. It's a very powerful tool, but it's not an end in itself. So in that sense, I feel super privileged of having a kind of approach that keeps me constantly at mentally agile with the freedom to do high quality work.
And so my trifectas, rigor, relevance and impact. So but the rigor is measured by publishing the work of the very best journals and passing the technical scrutiny off the top scholars in the world. The relevance is that I'm not publishing on obscure topics. Right. So I work on my rule of thumb because I work on topics of at least ten thousand dollars a year of annual expenditure. So if you're improving it by one percent, then that's kind of enough.
Ottoway on my time invested and then the last part is impact, which then requires me to spend the time. I do like doing the work I do with governments.
So yes, I feel very, very contented. I think there is a lot of schizophrenia in my life about the balance between the US and India. This is something I struggle with a lot. There's many, many times I feel like packing my bags and just coming back because you know who me for everything I do is India, right? And I've got one project in Indonesia, one in Tanzania. But other than that, everything is India. So the motivation of all my work is unapologetically Indian and in a way that may have actually limited some of my academic success because there is fetishizing of insights to be more general in pure academia as opposed to contextual right.
And so there are papers of mine that could get rejected from the very top journals saying that this is only about India. Right. Whereas if I was working on something kind of more general, then you get more narrow success in the academic sense. Right.
So but on the other hand, it's I would be not true to my journey and my motivation because it's kind of improving things in India that have been everything. So and right now the balance is I spent nine months ago in the US, three months in India, but in a post covid starting next year, I'm even twitch that I may kind of start spending much more time in India taking sabbaticals and coming here and teaching. And particularly as I'm building just and trying to do much more detailed work with states.
I might I might just in the second half of my life, pivot that to have a lot more time in India.
So I do hope you'll spend more time in India because we can actually meet in person and, you know, fight in some cafes somewhere while arguing about state coercion. I think you're so inspiring. Thank you so much for sharing your insights on the show. I've had an incredible time talking to you. So thanks. I thank you.
If you enjoyed listening to this episode, you can follow Kartika on Twitter at Karthick, underscore Econ. or to underscore you see all and you can follow me along with whatever you might be able to check out the show notes for links to cortex work interviews and many of the things we spoke about. You can browse past episodes of the scene in the unseen scene unseen. And thank you for listening.
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