The first European Symposium on Economics of Education, organized by the European Expert Network on Economics of Education (EENEE) on behalf of the European Commission, took place in Brussels on November 16/17th, 2004. Its general theme was, “Making Efficient Use of Investment in Education and Training”. At the Symposium, the EENEE network members met with representatives from education ministries of all EU Member States and from four Directorate-Generals of the European Commission to present latest scientific results and to open a dialogue between research and policy-makers.
The meeting was opened with a welcoming speech by Ludger Wößmann, who coordinates the European Expert Network on Economics of Education (EENEE) at the Ifo Institute for Economic Research at the University of Munich. Wößmann introduced the network members and external advisors and made the audience familiar with the networks’ mandate and specific tasks. The ten network members cover all major research fields in the area of economics of education and represent the major European regions. One of the main objectives of the network is to contribute to the improvement of educational decision-making in Europe by disseminating knowledge from researchers to policy-makers – a goal to which this symposium was expected to assist. You can access Wößmann’s presentation, as well as all other presentations, through the Symposium’s program.
Klaus Van der Pas, Director General for Education and Culture (DG EAC) of the European Commission, raised additional welcoming words to the audience. He acknowledged the importance of an efficient use of resources in the field of education and training in assuring the success of the Lisbon Strategy. Van der Pas expressed his hopes that the meeting of researchers and policy-makers for a symposium on this vital issue should help disseminate what we know as well as encourage discussion and increase awareness of open issues that remain to be solved.
The first session of research presentations dealt with “Evaluating Investment in Education and Training”. Angel de la Fuente from the Institute for Economic Analysis in Barcelona opened the session with a talk on “The Fiscal Returns to Schooling in the EU”. He suggested that public expenditure on education might be viewed as an investment decision by the state, since they may increase future tax revenues and reduce expenditure on social benefits. Within this line of reasoning, de la Fuente provided estimates of the fiscal returns to a one-year increase in average educational attainment which indicate that in most EU countries, public investments in post-compulsory education largely pay for themselves in the long run. These gains can only be realized, however, if educational policies are not solely dictated by short-term budget constraints.
Dinand Webbink from the University of Amsterdam focused his presentation on “Effectiveness of Educational Interventions: Correlation and Causation”. He raised the attention to typical evaluation problems of assigning outcomes to specific policy interventions when selection into interventions is not random. Despite these problems, there are many opportunities for (quasi-)experimental research. As one example, Webbink presented results of an evaluation study in the Netherlands which shows that additional funding for computers for schools with a large share of disadvantaged students did not increase students’ educational performance. Webbink concluded that researchers and policy-makers can help each other to increase knowledge about the effectiveness of different education policies by developing credible designs for (quasi-)experiments.
Giorgio Brunello from the University of Padova spoke about “Market Failures and the Under-provision of Training”. He took his starting point from the fact that the intensity of employer-provided training varies considerably across countries and across socio-economic groups. Brunello raised the question whether these differences can be seen as indicators of inefficiencies. Another main question was how policy could react to under-provision of training and how equity considerations could be taken into account.
Following the research presentations, David-Pascal Dion of the European Commission’s Directorate General Education and Culture (DG EAC) opened the debate on the “Relevance of Research on Investment in Education and Training to Policy-Makers” by making the audience familiar with the Directorate’s work on the Lisbon strategy objective of “Making Best Use of Investment in Education and Training”. The Working Group on this objective is in the process of providing a toolbox of proposals for member states both on “Institutional Reforms” to increase investment and improve governance and on “Incentives Changes” to raise the quality and enhance the attractiveness of education. Both the systems of education and training and the labour and financial markets provide room for institutional reforms. Possible incentive changes for a better use of resources in education and training can take both financial and non-financial forms. Dion stressed that country-specific factors need to be taken into account when implementing the recommendations, and that evaluations that study the impact and assess the success of specific reforms are necessary if we want to improve the effectiveness of educational investments.
The subsequent open discussion between policy-makers and researchers acknowledged the vital role of enhanced communication between researchers and decision-makers for the success of the Lisbon Strategy. Likewise, discussants pointed out the usefulness of more and better communication between the different disciplines that touch on issues of education and training, including psychologists, educationists, sociologists and economists.
The second research session was focused on “Incentives and Accountability of Educational Institutions”. Ludger Wößmann of the Ifo Institute at the University of Munich presented evidence on the effects of school autonomy and accountability systems (specifically, external exit examinations) on students’ educational performance. He made the point that school autonomy alone is no silver bullet for increasing school quality. This is because possible positive effects of autonomy due to superior local knowledge can be countervailed by negative effects of local opportunistic behaviour. His empirical results based on several international student achievement tests suggest that accountability systems can ease the negative effects of school autonomy and ensure a positive net effect of school autonomy by providing information and proper incentives against opportunistic behaviour. Thus, education policies that aim to make efficient use of resources should combine school autonomy with external examination.
Eric Hanushek of Stanford University emphasized the importance of accountability systems for school quality by illustrating the effects of the introduction of accountability systems in the United States. His research shows the importance of how accountability systems are designed and whether they are high- or low-stake systems. High-stake systems which do not only report schools’ performance but also attach sanctions or rewards to it are found to be associated with improved student performance.
George Psacharopoulos illustrated the effects of exclusively public financing and provision in the Greek higher education sector. He identified the state role in university financing and provision as a major factor in the poor quality of Greek universities and contradicted the view that university education is a public good in the economic sense. Psacharopoulos suggested that the benefits of university education are appropriated by the graduates and hence private returns. Exclusive state financing thus means that the poor finance the education of the rich. Psacharopoulos proposed instead a model in which the provision of higher education can be left to private universities and the state plays an active role on the financing side by providing student loans in general and income-dependent vouchers to address equity issues in particular.
David Figlio of the University of Florida concluded the session with a discussion of the importance of competition for the higher education system. Competition between universities and between faculties within a university, as well as the evolution of a university ranking, allow universities to specialize on their core functions. A second positive effect of competition is that the price mechanism results in a more efficient allocation of resources and hence welfare gains. Figlio also discussed the pros and cons of private funding of universities and issues associated with the introduction of accountability systems for higher education institutions. He concluded that policy-makers need to be very careful in designing private financing of universities and accountability systems to earn the full benefits of such reforms.
The subsequent open debate on the “Relevance of Research on Incentives and Accountability to Policy-Makers” was again introduced by a short statement by David-Pascal Dion of DG EAC. In the discussion, many researchers repeatedly pointed out that education systems could achieve much better outcomes with the given amount of money if the money was used efficiently. More resources alone would not necessarily solve the problems. In this regard, insights from the economics of education may help politicians to make the right decisions on how to spend scarce resources. As a starting point, it is vital to move from an inputs-based perspective of investments in education to an outcome-based perspective. It was also pointed out that countries can learn a lot from each other’s experiences and should use this opportunity of knowledge dissemination to avoid mistakes made in other countries.
As fields with particular need for additional research, participants pointed to the determinants of equity objectives, in addition to efficiency objectives, and to teacher-related topics such as the impact of teachers, what makes a teacher a good teacher and how teachers will react to reforms. During both days of the symposium, issues of data availability and accessibility were repeatedly raised as vital problems in the advancement of knowledge on how to make efficient use of investment in education and training.
David Coyne, Director in DG EAC, moderated the concluding discussion on priorities for future action. It was stressed that there exist both a knowledge gap and an implementation gap. Enhanced cooperation between research and policy-making can help in closing both of these gaps.
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