Market in Education

Fan-sing Hung

The Chinese University of Hong Kong

plan

• Government failure: why and what’ll happen?

• Public ed. failure: why and what’ll happen?

• Market in ed.: mk’t forces, mk’t consequences

• finance & operation of ed.: gov’t versus market

• School Voucher Scheme• Direct Subsidy Scheme

Gov’t failure: why?

• Gov’t monopoly– lack of competition– take for granted

• Producer-oriented– no risk-taking, no mistake– red-tape– production according to gov’t officials

Gov’t failure: why?

• Non-market decision making– politician interest: election– gov’t bureaucrat & employee interests: expansion, promotion, salary increase, provider captured

Gov’t failure: what will happen?

• high price• low efficiency• lack of choice, lack of due attention to consumer preference

• slow in change adjustment• market distortion• rent-seeking, corruption, abuse of gov’t power

Public ed.failure: why?

• Gov’t officials not educationally professional

• Public ed. tends to be– mass production, standardized– top-down, bureaucractic – monopolized by one entity (i.e. gov’t)

– risk averting, lack of innovation

Public ed.failure: what’ll happen?

• Educational efficiency drops• Educational choice narrows• Educational innovation averted

• Lack of educational initiative

• Lack of educational incentive• Bureaucrat mindset driven

Market in ed.: market forces

• Price determined by free interaction between supply & demand

• Consumer preference – choice of school, teaching & learning, curriculum, teachers

• Provider motives – quality improvement

Market in ed.: market forces

• Information accessible and available – quality of education

• Free mobility of resources – school, curriculum, teaching & learning, teachers, materials

Market consequences

• Product differentiation (curriculum, teaching & learning, teacher, school, ….

• Price competition• Reward/penalty by the market• Innovation stimulated

Finance & Operation of Education

• Not necessarily all by the gov’t

• Finance can be made by the gov’t if deemed necessary

• BUT operation can be in the hands of private individuals/organizations, for or not for profits making

School Voucher System

• Eliminate/reduce government bureaucracy

• Increase competition among schools

• Increase parents’ choice of education

• Efficiency in education thus increased in the end of the day

School Voucher System

• Universal versus Limited Voucher (scale, target, $ amount, mandatory vs voluntary, …)

• However, 3 domains to consider– Finance– Regulation– Information

Direct Subsidy Scheme in HK

• Autonomy in student admission, teacher and personnel establishment, curriculum, instruction, fees charged

• Gov’t subsidy on per head basis• Much higher subsidy from the gov’t than aided school

• Financially enhanced than aided schools

DSS Development

• 1988: DSS (for secondary school) (recommended in EC Report No. 3)

• 1998: review of private school policy

• 2000-2001: DSS extended to primary school

• 2001-2002: new measures introduced to DSS

Old and New DSS Compared Year Fee DSS MaxEffective Total Income 

1988 <= 2/3X X 1 2/3X 2/3X-1 5/12X X-1/4X 1 2/3X  >1 5/12 X ¼ X >= 1 2/3 X

2001 <=21/3X X 31/3X 

Gain (or Loss)(2001)-(1988) = + 12/3X = + 1.67 times of X 

『直資』 : 概念的討論

•   教育的資助 vs 教育的經營 教育的市 ( 競爭 ) 機制 教育多元化 教育選擇 教育的成本效益分析•

『直資』 : 政策的檢視

•   『直資』的理念是甚麼？ 『直資』學校是私校嗎？ 『直資』學校 vs 資助學校 : 有何不同？ 『直資』可帶來市場競爭嗎？ 『直資』可帶來教育多元化嗎？ 『直資』可帶來教育選擇嗎？•

『直資』 : 具體措施的檢視

“Give” and “Take” 資助轉『直資』 vs 全新開辦『直

資』 : 應否有所不同 ? 資產流失 尋租 (Rent Seeking) vs 生產力改善

(Productivity Augmenting) 教育資訊 : 『不對稱』資訊

『直資』 : 具體措施的檢視 ( 續 )

助學金 ( 對低收入同學 )

• - 學費及一切雜費• - 『直資』學校提供 vs 政府全面『包底』 收生：學校收生自主 vs 隨機收錄 教師 : 薪酬及穩定性 ( 合理？ ) 辦學權：永久 ( 必然 ) vs 定期檢討

『直資』 : 具體措施的檢視 ( 續 )

•   財務管理• -   盈餘 : 儲備 vs 分紅 ( 辦學團體？管理委員會？

校長？老師？ )• - 虧損 : 辦學團體 vs 政府• -     資本性開支 : 辦學團體 vs 政府 市場佔有率 : 多少百分比 ? 市場均 ?•  •  •