Sunday, August 02, 2009

Unproductive education

Dean Baker complains about a Post article on South Korea:
The decline in South Korea's saving rate, which is the main issue in the story, turns out to be much less of a story when you read through it. According to the article, one reason for the low saving rate is the large amount of money that Koreans spend on education in the form of private schools, tutors, and other expenditures to ensure that children do well in school.

In GDP accounts, education spending by households is counted as consumption. In reality, it is a form of investment. More educated workers are more productive workers. If the next generation of South Koreans all have the equivalent of medical degrees or PhDs, they will not have to worry about their lack of saving.
This is theoretically plausible, but I don't think it matches the facts on the ground. Education in Korea is essentially a desperate struggle for admission to prestigious universities, where acing the test and getting in is much more important than the actual education that comes afterward. You see some of the same tendencies in America, but they're taken to an extreme in Korea: high school students stay in private cram schools until after midnight, and then wake up early to study the next morning. Once they manage to get into college, most students don't try nearly as hard—the name of the university, not their record once there, is the credential that will define their working lives.

It's hard to imagine that a system with such bizarre extremes is really a productive way of educating people, and indeed it bears all the hallmarks of a signaling equilibrium run amok. Education is prized not for its productive value but as a means to societal prestige, and as the level of competition rachets ever upward, the wasted resources from the struggle to climb to the top grow vast. Baker is right that spending on education can be a useful form of investment, but just as I don't think he would say that billions spent on test prep courses in the US are accomplishing anything societally useful, it's wrong to assume that similar spending in Korea will pay dividends for the economy.


Justin said...

I think this post is exactly right, and I'd only add one thing. You say many or most students don't try hard in college. I won't necessarily dispute that, since my knowledge of South Korean education is just that they have cram schools and play a lot of Baduk. However, I don't think you need that premise for your argument.

Even if the students entering college work hard and benefit from the college degree, the cram schools still only pay off if they improve the benefits of college. They can fail to do so in one of three ways:

1) Roughly the same students attend college as before--the ones with "raw intelligence" (or whatever you want to call it). Cram schools just mean they work harder to maintain their spots in the top colleges while they compete against students of lesser intelligence. Neither the distribution of productivity gains nor total social productivity are substantially affected.

2) Different students go to college as a result of high school preparation than would have attended in a low pressure equilibrium. Still, their gains in productivity from college are no greater than the students who attend college in the low pressure scenario. Cram schools change the distribution of productivity gains, but not the quantity. Society as a whole is no better off, but some individuals are.

3) Cram schools prepare students to enter college, but by providing a narrow focus, they reduce the productivity of some individuals. There's substantial evidence that some high-achieving individuals thrive when they can pursue wide-ranging interests in less formal settings (think Steve Jobs, Bill Gates--weird examples, since both were college drop-outs, but they still work, I think). Cram schools either force some of these individuals to spend more time on test-prep, limiting their future productivity, or mean that these students lose out on credentials that put them in a position to provide social benefits. The distribution of productivity gains shifts towards conformist workaholics, while the overall level of social productivity drops.

alex said...

"...I don't think he would say that billions spent on test prep courses in the US are accomplishing anything societally useful..."

Not sure about this. Sure, the SAT tests some pretty useless stuff, but if preparation for it forces you to learn to learn basic math adequately, practice reading, and increase your vocabulary (which makes future reading easier), I'm guessing you'll improve your academic performance later on. Something similar may be true in Korea.

repagent said...

I will obviously generalize in this comment. I have observed that Korean culture is much more focused on signaling than other Asian cultures. Koreans are much more into pop music and fashion than other nations in the region. I doubt that this is explained by income differences. I have also observed that Korean Americans are not as interested in learning for the sake of learning as other high-achievers.