Monday, December 15, 2008

Is more budget for education always a good idea?

Is mandating the government to allocate at least 20% of its budget for education a good idea? I don't know. But surely it has a downside: it creates a distorted incentive, especially when the budget for education has never been that high. People care more on how to spend the budget and less on making priorities and finding what really works.

This is an example of the distorted incentive at work: creating elementary schools with "international standard." Is it the priority for now? For me, some other problems need higher priorities. First, quantity and maintenance of school buildings, especially junior secondary schools in remote areas. For every 7 elementary schools, there is only one junior secondary school, so achieving a universal enrollment rate for children aged12-15 is more difficult. Don't get me start with the physical quality of existing schools.

Second, lower cost of schooling; not just tuition fees but also expenses for books and uniforms.

Third, teacher management. Pupil-to-teacher ratio in Indonesia is about 14 to 1, that's quite low. But the average class size is 37 students. This shows that we have oversupply of teacher with short working hours. Geographical distribution of teacher is also another issue. Sixty-five percent of all schools in Indonesia are overstaffed. Yet we often here the stories of a single teacher taking care of all students in a remote school.

Then you can add the quality of teacher, low perceived return on education, and other issues that are in higher list of priorities.

Of course, having more schools with international standard is good. But, for Rp1 billion allocated subsidy for three years to each school - with only limited number of students can be admitted - surely there are better ways to spend public budget. And, should such project be a public-sector one? The private sector can fill the gap for the international-level schools (and they have done it), while public budget will be better used to improve access.

Update: a friend of mine wrote this op-ed about another idea to use education budget to improve PC-per-student ratio. Again, the idea is good. But when you think you have tons of money in your pocket, you care less on how to spend it efficiently.


  1. Pe

    Theoretically, more budget for education should be always good idea. But in a reality, it is not not only depend on budget alocation like you said, but also moral hazard and indonesian style transaction cost he2.. Whether the budget will be used as purposes or not..
    I am agree with your idea to improve the quality of primary education, especially in the remote region..
    I think the rest money is also huge enough to improve the quality of higher education in the province level..
    Personally, It will better if we alocate money to improve the quality of higher education according international with strong Research activities and close collaboration with industry as new engine for indonesian economic growth rather than create number international standard primary school (for what?)
    Give the responsibility to create international standard primary school to local goverment and private sector, national government only need to provide comfort environment to it.
    National government should focus to create equal access and quality of SD, SMP and SMA to ensure everybody have same opportunity to got education.

  2. I wish the government would just set aside 1% of the education budget for research. Rp.2t would buy quite a number of randomised trials.

    Oh well. Back to the real world. :P

  3. apparently it's not. but bigger numbers sound better to many ears, don't they? it's pretty much like those college days when we (or i, to be exact) would have felt better if i had had the photocopies of almost all materials for the exam; it gave an artificial sense of security.

  4. Agree with Daniel on setting 1% for research, but I'd go for detailed (panel) data collection on education first before randomized trials. I feel there's so much we don't know about so many aspects of our education system.

  5. maybe what is needed is to find out return to investment...or how much the benefit of financing per dollar in the long run.

    My hunch is the most needy (poor people, remote area, unqualified teachers etc) will give the highest benefit.

    But it is an empirical question that need to be studied empirically. More randomized trial everyone?

  6. Berly, how do you propose measuring long-run investment returns in education? Using randomised trials, nonetheless? I can't imagine how to do one.

  7. ideal world it would be great to have a long running tracer/experimental study.

    Maybe i should put that in my santa wish list :-)

    on the mean time, IFLS would have to do