Why don't we invest more in Education?

Responsible researcher: Angelo Cruz do Nascimento Varella

Article title: POVERTY AND THE POLITICAL ECONOMY OF PUBLIC EDUCATION SPENDING: EVIDENCE FROM BRAZIL

Article authors: Leonardo Bursztyn

Location of intervention: Federal District, Brazil

Sample size: 2,003 individuals and 80 heads of low-income families

Big theme: Education

Type of Intervention: Experiment to assess preferences for public spending on education and income transfer programs

Variable of main interest: Preferences about public spending

Evaluation method: Experimental Evaluation (RTC)

Policy Problem

Despite the existence of evidence that points to high rates of return on investments in public education for the poorest portions of populations in emerging countries, many of these nations have relatively low rates of this type of public spending. Part of the academic literature suggests that this phenomenon derives from the action of the richest portions of the population, which would act as an obstacle to educational investments due to dominating the layers of power and, among other hypotheses, preferring spending in other sectors, in addition to having interests economical in maintaining low levels of education, which would result in cheaper labor and a greater possibility of social control.

However, data from emerging countries, in different contexts, point to a different reality. When evaluating countries with more consolidated democratic institutions, it is clear that these nations do not have higher levels of investment in public education. In fact, evidence points to a negative relationship between levels of democracy and public spending on education. In other words, despite not excluding the hypotheses of control of the richest layers, it is difficult to imply that this is the only reason why more emerging countries have lower educational investments.

To investigate these findings, the authors propose an alternative hypothesis: is it possible that poor countries invest less in education due to the preference of the lower socioeconomic strata of the population to allocate resources in another way? More specifically, is it possible for low-income citizens to opt for income transfer programs instead of educational investments, due to the need for more emergency expenses?

Assessment Context

Despite unsatisfactory results in the International Student Assessment Program (Pisa), investments in education tend to present high returns in Brazil. The country, which ranked 53rd out of 65 participants, had 98% of children aged 7 to 14 enrolled in school, with the vast majority (77% of students) belonging to the public education network, according to the National Sample Survey of Households (PNAD) of 2011, carried out by the Brazilian Institute of Geography and Statistics (IBGE).

It is also worth noting that in the 25% of the population with the lowest income, the enrollment of young people in the public education network was 97%, while in the 25% of the population with the highest income, this percentage was reduced to 38%. In other words, it is exactly the poorest Brazilian homes that benefit most from investments in public education.

Policy Details

By analyzing data from the Basic Education Development Index (IDEB), the Superior Electoral Court (TSE), the Ministry of Economy and IBGE, the researchers state that higher levels of public spending on education in low-income municipalities reduced the probability of re-election of mayors, while this probability increased in cities where the income level was higher.

To validate these findings, the authors carried out research and an experiment in the Federal District. In the survey, carried out in August 2009, an electoral research company interviewed 2,003 individuals, with an average age of 37 years and approximately 9.5 years of education. The aim was to measure the impact of public investments on citizens’ voting intentions.

In the experiment, carried out in November 2012, in the Administrative Region of Varjão, 80 relatives of 4th and 5th grade students from a large public school in the region, which is low-income, were interviewed. The age of the interviewees was approximately 34 years old, with an average of six to seven years of education. The intention was to quantify the preference of students' guardians for additional private lessons compared to an income transfer program.

Methodology

In the first survey, individuals were informed about local government public spending and asked to give a score from 0 to 10. Then, respondents were divided into four groups. Three groups were presented with different spending scenarios on education or income transfer programs and one group was treated as a control. Thus, based on the general scores of each group, it was possible to measure the preference of the public covered by the terms of the research.

In the experiment, interviewees were divided into three groups and invited to participate in an income transfer program for two months. Participants in the first group would receive 10 reais per month, those in the second group would receive 210 reais per month and the third group, the control group, would not receive this initial amount. Then, the researchers asked the interviewees if they preferred to receive an additional amount of money to the first amount offered, in a range that varied progressively between 10 and 90 reais, or if they preferred to receive an additional amount of 10 reais, plus three hours of classes per week. private to their children.

Results

Both studies collaborated with the theory that low-income individuals prefer the allocation of public resources to immediate income transfer programs, rather than long-term spending on education.

In the first survey, low-income participants, compared to high-income participants, gave worse ratings to government officials when they were informed that public spending on education had been proportional to or greater than the resources allocated to income transfer programs.

In the experiment to choose between extra income and free classes, the interviewed relatives who received the unconditional initial funding preferred that their dependents receive free additional classes. In the group that received 10 reais per month, the amount equivalent to classes was 24 reais per month, while in the group that received 210 reais per month, the amount that made them give up classes was, on average, 39 reais per month.

 Public Policy Lessons

The research findings indicate that the poorest sections of the Brazilian population tend to prefer public spending on income transfer programs to the detriment of investments in education, when compared to the richest sections. The result does not indicate that poor individuals underestimate the value of education, but it demonstrates an immediate need for this part of society.

It is understood, from this study, that poverty reduction is an indispensable condition for the country's sustainable development. Another relevant development from this conclusion is characterized by the opportunity to link income transfer programs with educational initiatives, as is the case with conditional income transfer programs. This way, the urgent demand of the population is met and investments are made in long-term educational initiatives.

Reference

Bursztyn, Leonardo. "Poverty and the political economy of public education spending: Evidence from Brazil." Journal of the European Economic Association 14.5 (2016): 1101-1128.