How much is spent on private education in Brazil?

Responsible researcher: Viviane Pires Ribeiro

Article title: ESTIMATING PRIVATE EXPENDITURE ON EDUCATION IN BRAZIL

Authors of the article: Naercio Menezes Filho and Diana Fekete Nuñez

Location of intervention: Brazil

Sample Size: 10 Education Products

Sector: Education

Type of Intervention: Estimation of private expenditure on education

Variable of main interest: Private expenditure on education

Assessment method: Other – Analysis of Brazilian families’ expenses

Assessment Context

Investments in education can increase returns in several dimensions, whether in better job opportunities, greater individual income, better quality of life and even improving the country's economic development and growth. Most countries have both public and private education networks and it is up to families to decide which is most suitable for their children's studies. In Brazil, for example, many families prefer private schools to the detriment of public schools, as they add low value to the public education system, as they are not enough to train individuals for the job market and for professional and personal success. In this way, the private education market emerges to meet the need of families to provide better quality education to their members, but this choice often requires a high financial expenditure on the part of families.

Intervention Details

Several studies analyze public spending on education in Brazil, but few go deeper into this study regarding private spending. Menezes-Filho and Nuñez (2012) estimate, for the first time in the literature, total private spending on education in Brazil, using micro-data on Brazilian families' spending from the Family Budget Survey (POFs) for the years 2002/2003 and 2008/2009. The POF provides information on the composition of household budgets, which analyzes consumption habits, expenditure allocation and distribution of family income. Such research is carried out over a period of 12 months, to obtain information on annual, quarterly, monthly or daily expenses, depending on each type of expense.

Subsequently, the authors analyzed the relationship between these expenses and the Brazilian Gross Domestic Product (GDP) at two points in time, making comparisons with expenses in other countries. The annual GDP values ​​were obtained from the Ipeadata website for the years 2003 and 2009. The data with the percentage of public spending on education as a percentage of Brazilian GDP were obtained through the page of the National Institute of Educational Studies and Research Anísio Teixeira (INEP) and data on private and public spending in several countries were obtained through the Organization for Economic Cooperation and Development (OECD).

Methodology Details

To calculate total private expenditure on education in Brazil, the authors used the table in the POF “Individual Expense” record, corresponding to expenditure on education. These expenses were divided into ten products: Textbooks; Language courses; Extracurricular courses; Entrance exam; Postgraduate studies (Masters, Doctorate and Specialization); School items (teaching materials, transport, uniform, snacks, food); Regular courses (preschool, daycare, nursery, 1st grade, 2nd grade); Private classes; Others (school fees and documents, excursions, housing rental, graduation costs, conferences and seminars); and Regular courses (higher education).

The calculation of total private spending on education was carried out by summing up spending on all ten products mentioned above, subsequently multiplied by the POF expansion factor. Thus, Menezes-Filho and Nuñez (2012) obtained the private expenses of Brazilian families with each product and the sum of all private expenses with education in Brazil. On the other hand, the relationship between private spending on education and Brazilian GDP was estimated through the ratio between total spending on education in the POF and annual GDP.

Results

The results of the analysis of data on private spending on education in Brazil show an increase in the total amount spent on private education (in nominal terms) between 2003 and 2009. This increase was approximately 25%, for an accumulated inflation of 39%, the which means that the increase in spending did not keep up with inflation during the period. In this scenario, the majority of expenses went to paying for regular private courses, divided between expenses on basic and higher education. Spending on basic education represented 33% of total private spending in 2003 and declined to 30% in 2009. Spending on higher education went from 36% to 35% of spending, maintaining some stability. Between 2003 and 2009 there was a significant increase in private spending on postgraduate studies. These expenses went from R$ 1.4 billion in 2003 (at 2009 prices) to R$ 2.4 billion in 2009, which practically represents a doubling of total spending on this item.

In relation to private spending as a percentage of GDP, the data showed that in 2003, the national GDP was approximately R$1.7 trillion and spending on education totaled around R$32 billion, which corresponds to 1.9% of GDP. In 2009, there was a drop in this percentage. As private spending on education was R$40 billion and GDP was R$3.1 trillion, the percentage of spending on GDP was 1.29%. A comparison with other countries shows that private and public spending is higher than the average for OECD countries. Education spending is not related to countries' average educational performance, as measured by the latest results from the Program for International Student Assessment (PISA).

Public Policy Lessons

The analysis of Brazilian families' private spending on education showed that families invest a lot in education, not only in regular courses, but also in extracurricular and postgraduate courses. Between 2003 and 2009 there was a nominal increase in private spending on education, but a reduction in real terms and as a proportion of GDP. In addition, there was an increase in public spending in relation to GDP. Compared to the countries analyzed by the OECD study (2010), Brazil's public investment rate in relation to GDP is high, but private spending is on average for the other countries analyzed. In total, expenses are relatively high, but this does not imply good academic performance for students, measured by performance in the 2009 PISA Mathematics exam.

Menezes-Filho and Nuñez (2012) emphasize that it is of great importance to study the private expenses of Brazilian families on education, so that it is possible to compare the quality of public schools with private ones and the costs and benefits generated for families by the two types of system.

References : MENEZES-FILHO, Naércio A.; NUÑEZ, Diana Fekete. Estimating private spending on education in Brazil. Policy Paper , vol. 3, 2012.