Edu Plan Approaches (2nd)

PDGS 6102 Educational Planning Lecturer: DR. Angelo Cruz Maduli, PhD

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Educational Planning Approaches (1) (2) (3) (4)

Rate of Return Costs-Benefits Costs-Effectiveness Other Approaches by: Ainun Badriah 2 PGA 080114

Does the calculation really reflect the economic value - to the community of education? How much has education contributed to the economic growth? 3

Introduction

Woodhall (2004)

Fund Allocating for Educational Planning CONSUMPTION

INVESTMENT

Affecting the way in which decisions are made about allocation of resources

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Consumption • Consumed in the present. • Incurred now for the benefits it will provide in the present

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Investment • A way of increasing productive capacity or wealth in the future. • Incurred bow for the benefits it will provide in the future.

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EDUCATIONAL PLANNING CONSUMPTION

INVESTMENT

BOTH 7

Rate of return approach 8

Rate of return approach The objective of planning is to maximize the relation between economic benefits and costs. (Schultz, 1967 in Woodhall, 1974)

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Three basic ways of presenting the rate of return on investment in education 1. By means of a benefit-costs ratio 2. By calculation of the present net value of the project 3. By calculating the internal rate of return of the investment 10

A benefit-costs ratio Simply measures the ratio of discounted future benefits to discounted costs at a particular rate of interest.

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The present net value of the project The value of discounted benefits minus discounted costs.

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Rate of return analysis Simply the rate of interest that equates the discounted present value of expected benefits and the present value of the costs of the project.

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Presenting the rate of return (1) A benefit-costs ratio

(2) The present net value of the project

Measures of investment yield have been used to carry out cost-benefit analysis of education

(3) Rate of return analysis

Evaluate investment of education

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Two calculation types of rate of return Forojalla (1995) (1) Private rate of return To calculate the returns to an individual’s investment in his/her education by comparing the costs incurred and the returns or benefits received by him/her, as a result of his/her education.

(3) Social rate of return By considering expenditure on education as a social investment and to calculate the costs and the subsequent returns accruing to society. 15

Calculation of Rate of Return (Woodhall, 2004)

(1) Collecting earnings data and constructing age-earnings profiles. (2) Adjustments to earnings and cost data. (3) Calculating social and private rates of return. 16

Collecting earnings data and constructing age-earnings profiles The following list represents data requirements in ideal circumstances: (b) Data on earnings of a representative sample of workers classified by age, educational level completed or qualifications obtained including type of course as well as length of schooling, occupation, sex, social background, location of employment and some measure of natural ability such as scores in an intelligence test.

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Collecting earnings data………………………….cont’d (a) Data on current expenditure of educational institutions. (b) Estimates of the capital value of educational buildings and equipment. (c) Estimates of private expenditure on fees, books, stationary, etc. (d) Public expenditure on scholarships. (e) Average income tax rates. (f) Data on labour market conditions, including rates of unemployment and labour force participation by age, sex and educational level.

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Adjustments to earnings and cost data Made for: - The proportion of earnings attributable to natural ability. - The probability of unemployment. - The expected growth of incomes.

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Limitations/Weakness of rate of returns approach • Benefits: not all can be calculated. other form of benefits are immeasurable. (Woodhall, 2004) • Interpretations of planning: problem to summarize the state of resources into the economic contribution of education. (Woodhall, 1974) • The basic cost data are flimsy and critics take particular issue. (Combs, 1970) • Can be somewhat lessened with improved data but never eliminated, concern the calculation of future benefits. (Combs, 1970)

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Calculating social and private rates of return Steps: (3) The calculation of a net returns stream (benefits minus costs). (4) The calculation of the present value of these net returns at alternative discount rates. (5) Identifying the discount rate at which the present value of the net returns is zero.

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Cost-Benefits Approach 22

Cost-Benefits Approach CBA principle is what a rational individual roughly applies when deciding how best to spend their money when their desires exceed their means. Combs (1970)

The use of CBA is more valuable in deciding how to allocate resources within education. Woodhall (1974) 23

Cost-Benefits Approach ………. cont’d Forojalla (1995) CBA consists of the identification, measurement and comparison of the economic cost and benefits of investment programmes and projects. CBA is a rational approach to important decision making.

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Cost-Benefits Approach ………. cont’d Prest and Turvey, 1965 in Forojalla, 1995 CBA is a practical way of assessing the desirability of projects, where it is important to take long view (in the sense of looking at the repercussions in the farther, as well as the nearer, future) and a wide view (in sense of allowing for side effects of many kinds on many persons, industries, regions, etc.), it implies the enumeration and evaluation of all the relevant costs and benefits.

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The purposes of CBA Investment in human capital in order to assess it’s economic profitability. Shultz (1961), Becker (1964), Bowman (1966)

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IS THE EDUCATION CONTRIBUTE TO ECONOMIC GROWTH Do pupils and students or their families take this into account when making educational and occupational choices Which makes the greater contribution to future economic growth: investment in human capital or investment in physical capital

Are all forms of education equally productive Is education a profitable form of investment for the individual as well as society How does education compare with other forms of national investment

The relationship between the costs and the benefits in education, viewed as a form of social or private investment 27

Main benefits of CBA • Provides vital information about the links between education and the labour market. • Gives an idea about the economic consequence of alternative educational policies

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The measurement of cost Social costs

Private costs

Direct • Teachers salaries • Other current expenditure on goods and services • Expenditure on books, etc • Imputed rent

• Fees, minus average value of scholarships • Books, uniforms, travel, sports, housing, living costs, etc

Indirect (opportunity costs) Earnings foregone

Earnings foregone

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The measurement of benefits External Productivity

Internal to the education system

Link: education and training – economic productivity (their contribution to the production of goods and services to the economy)

Internal efficiency (enables system to produce more education) and is measured in terms of the reduction in the unit costs per graduate

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The measurement of discounted cash flow Woodhall, 2004 All costs-benefit calculations involve the discounting of future flows of income, as the purpose of the calculation is to compare the present value of expected future benefits with the costs of the investment, which must be incurred in the present. If the costs of the project are spread over a period of years, these must also discounted, so that all money values, whether negative (costs) or positive (benefits), are expressed in terms of their present value.

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CBA Objections 1.

Earnings differentials reflect differences in the natural ability, motivation, social background, sex, occupation, non-formal education, etc. of workers as well as differences of education, so that earning differentials cannot be used as a measure of the pure benefits of education. 2. Education does not make workers more productive but simply acts as a ‘filter’ or ‘screening device’ that enables employers to identify those with superior natural ability. Earning differentials therefore reflect this screening or certification function of education and employers tend to demand higher and higher educational qualifications, which leads to waste of resources.

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CBA Objections …………………………….cont’d 1.

2.

3.

Earnings differentials do not adequately measure differences in the productivity of workers due to imperfections in the labour market, so that differences in earnings do not provide a measure of the direct economic benefits to education. Education generates indirect or ‘spill over’ benefits, that is to say education may raise the productivity of people other than the educated worker and these benefits are not shown up in earnings differentials. Rate of return calculations assume full employment of educated workers whereas many developing countries are experiencing unemployment of graduates and secondary school leavers.

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CBA Objections …………………………….cont’d 1.

2.

Age-earnings profiles drawn from cross-section data that provide the oasis for rate-return calculations reflect present and past demandand supply conditions, whereas it is future demand and supply that concern the planner. Thus, rate of return provide a poor tool for educational planning. Private rates of return are meaningless as individuals do not make educational choices as though they were making a purely financial investment decision.

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Cost-Effectiveness Approach 35

Cost-Effectiveness Approach CEA is a technique that compares alternatives such as different types of school, different combinations of inputs or different educational programmes in term of their effectiveness, measured by variables such as examination results, test scores, retention and completion rates. Pscacharopoulos (1985) and Levin (1995) and Woodhall (2004) 36

CEA Steps

(a) The costs of the alternatives must be carefully measured (b) The outcomes or educational effectiveness of the alternatives must be measured. (c) Costs and effectiveness measured are combined to calculate a costeffectiveness ratio The most cost-effective alternative can then be identified 37

Levin (1995) The measures of educational effectiveness can be those which a decision maker would normally consider, such as improvements in students’ test scores, and that costs-effectiveness evaluations generally require less time and other resources than costs-benefits analysis. 38

Hanushek (2003) There is mounting evidence that quality measured by test scores is directly related to individual earnings, productivity, and economic growth.

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Sector-wide Approaches 40

Sector-wide Approaches SWAPs is an approach to international development that "brings together governments, donors, and other stakeholders within any sector. It is characterized by a set of operating principles rather than a specific package of policies or activities. The approach involves movement over time under government leadership towards: broadening policy dialogue; developing a single sector policy (that addresses private and public sector issues) and a common realistic expenditure program; common monitoring arrangements; and more coordinated procedures for funding and procurement." (WHO, World Health Report 2000). 41

SWAPs cont’d 'All significant funding for the sector supports a single sector policy and expenditure programmes, under government leadership, adopting common approaches across the sector, and progressing towards Government procedures to disburse and account for all funds.‘ Foster (2000) 42

World Bank (2001) Four main features: (2) Partnership (3) Comprehensive sector policy framework (4) Expenditure framework (5) Management systems and capacity building 43

Component Programmes • • • • • • • • • • • • •

Programmes management School infrastructure Teacher development; deployment and compensation Equity and gender School health and nutrition Curriculum development Capacity building and decentralization Quality of education Access and gender Non formal education Technical education and vocational training Finance and management procedure Institutional development 44

Non-conventional Approaches 45

The aims • To review and analyze the current situation and the experiences of participants’ and other countries relevant to developing alternative approaches to primary level education. • To develop a better understanding of the ways and means of accelerating the process by adopting non conventional methods and structures. • To provide insights into the procedures of achieving the desired quality of education trough alternative learning systems. • To examine the provisions and procedures that need to be worked out to ensure functional linkage and articulation between formal and non conventional practices, including the use of resources. 46

The Target Groups • Children and young people who are not enrolled in school • Early school leavers who have not completed the primary education cycle • Special population groups identify by their particular situation and environment Adults who have been deprived of primary education WERE NOT totally excluded

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Design framework • The target population • Alternative non-conventional arrangements/structures to meet their educational needs • Need-based content/appropriate curriculum • The learning teaching situation methods, materials, use of media • Monitoring and evaluation (achievement and impact) • Teachers/facilitators of learning and related aspects

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None of those approaches provides an adequate basis by itself for educational planning  a new synthesis of all approaches is needed  would leave important gaps to be filled 49

Educational planning now needs to get down inside the system and change it to make it more relevant and efficient and productive  the main way to raise the future rate of return on educational investments. 50

References Blaug, M (1967) A Cost-Benefit Approach to educational Planning in Developing Countries. IBRD Coombs, P.H (1970) What is Educational Planning?. Paris: UNESCO Forojalla, S.B (1995) Educational Planning for Development. London: St. Martin’s Press Meeting of the IWGE (2001) Sector-wide Approaches in Education: Issues for donor agencies arising from case studies of Zambia and Mozambique. Paris: UNESCO Ranaweera, A. M (1989) Non-conventional Approaches to Education at The Primary Level. Hamburg: UNESCO UNESCO (2003) Different Approaches for Achieving EFA: Indian Experience. New Delhi: UNESCO West, R. C (2004) Education and Sector-wide Approaches (SWAPs) in Namibia. Paris: UNESCO Woodhall, M (1974) The Fundamentals of Educational Planning: The investment approach to educational planning. Paris: UNESCO _________ (2004) Cost-Benefit Analysis in Educational Planning (4th ed). Paris: UNESCO Free article: Towards A New Approach To Cost-benefit Analysis.

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Thank you Terima kasih

Selamat

Syukran

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