Balancing Efficiency and Quality in Education


When it comes to education, "efficiency" is always a controversial term. To some, making education more efficient is simply a matter of better budget management and improved allocation of resources. But to many others, speaking in these terms at all when talking about a child's right to learn seems inappropriate.

And even though funding levels matter, the truth is more money doesn't necessarily increase education quality. In Latin America, we know that well. We have regional average spending that is comparable to the OECD average of 5 percent of GDP -- with some individual countries spending over 6 -- yet our test scores are at the very bottom of the major international rankings (such as the OECD's Program for International Student Assessment, or PISA) and fewer than half of our students are even finishing high school.

"Spending explains less than a fifth of the performance difference among countries -- that is, two countries with similar spending can produce very different educational results," says the OECD's Andreas Schleicher in a recent report from private school operator GEMS Education Solutions. This discrepancy means that, however taboo discussions of efficiency are, a better understanding of how best spend the limited funds available for education is fundamental.

Indeed, policy priorities are defined by the budget. Yet neither policymakers nor academic experts are clear on how different spending models ultimately impact the learning process. Is there a direct relationship between more spending on teacher training and an increase in student achievement? Will more money for school infrastructure lead to improved national test scores? Do investments in education technology truly prepare kids for 21st Century jobs?

We need to better understand these questions, and the systemic impact of funding on human capital development. The GEMS Education report, "The Efficiency Index: Which Education Systems Deliver the Best Value for Money?" offers some much-needed insight by evaluating the 30 countries of the OECD group of advanced economies.

The GEMS Report, compiled by a team of international academic experts and practitioners led by Economics Professor Peter Dolton, presents a number of interesting case studies of countries that have found success using different models. "The merit of looking at questions of efficiency, I believe, is not simply to find out which systems are more efficient than others," says Lord Andrew Adonis, former Education Minister of the UK. "Rather, it is to use efficiency as a lens through which to examine how excellent results can be achieved in different environments, and using varying methods."

Their main conclusion? That "teacher salaries and class size, measured in terms of pupil/teacher ratio, are the only two contributing factors, of the 63 different components studied, that have demonstrable impact on education outcomes." The best performing countries -- like Finland and South Korea -- strike the most effective balance in their spending, since GEMS finds that "there is a point beyond which increased investment does not guarantee an increased return." The lower performers, including Brazil, Greece and Indonesia, pass that point and get very little quality for their often high levels of spending.

The education leaders show that there is no one magic formula. Finland's teachers receive salaries that fall below the European median, while performing the best. And Korea sees a major discrepancy in funding between the "hard sciences" and other, more creative coursework, but all of its scores rank among the world's best. As Adonis argues, "high achieving education systems come in more than one form, and broadly equivalent...spending levels can generate very different methods and cultures of learning."

One area that the GEMS report doesn't focus on is the role of political economy -- the way in which different institutional and political arrangements provide better or worse incentives for the allocation of state resources. While there are clearly good and bad policy options, in many countries there are also possible -- and impossible -- political realities that must be taken into account.

That is why the best policies proposed with the best of intentions by reformers oftentimes hit a brick wall due to the ineffectiveness of public institutions, or the outright opposition of interest groups or influential stakeholders. The true struggle for more efficiency is more often fought in the gritty realm of politics than in the academic reports of think tanks and research organizations.

Progress in the political realm often comes down to leadership -- not only to define and communicate the best policies, but also to rally support and create buy in from society for reform. Unfortunately, that is precisely the type of leadership that is too often lacking in emerging economies -- but hopefully cutting edge research like GEMS can help push this debate forward.