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Better information to improve service delivery: New evidence

David Evans's picture

Countries around the world have experimented with “school report cards”: providing parents with information about the quality of their school so that they can demand higher quality service for their children. The results have been mixed. Andrabi, Das, and Khwaja bring a significant contribution to that literature in last month’s American Economic Review with their article using data from Pakistan, “Report Cards: The Impact of Providing School and Child Test Scores on Educational Markets.”

Here's the abstract: "We study the impact of providing school report cards with test scores on subsequent test scores, prices, and enrollment in markets with multiple public and private providers. A randomly selected half of our sample villages (markets) received report cards. This increased test scores by 0.11 standard deviations, decreased private school fees by 17 percent, and increased primary enrollment by 4.5 percent. Heterogeneity in the treatment impact by initial school test scores is consistent with canonical models of asymmetric information. Information provision facilitates better comparisons across providers, and improves market efficiency and child welfare through higher test scores, higher enrollment, and lower fees."

One difference between this study and previous school report card studies is that this intervention is at the level of the local education market: It’s not at the level of the school or at the level of child, but it’s across all schools within a community (and essentially all children attend school within the community). That creates a unique opportunity to see the interplay between public and private schools.

Here are a couple of interesting nuances:
  • The price reduction is driven by high-performing private schools. That seems counterintuitive: Even though “parental knowledge improved as a result of the intervention” – meaning that “perceptions of school quality became better aligned with school test scores” –  the prices of private schools with the best test scores actually came down. Why? This is consistent with what we call a “separating equilibrium,” where higher quality schools in part signal that quality with big price mark-ups. Better information reduces those mark-ups. The best private schools still charge higher prices – after all, they have the best test scores. They just don’t charge as much as they used to. 
  • The biggest test score gains (0.31 standard deviations) come from private schools that were performing poorly at baseline. But there are also gains in public schools (0.09 standard deviations). Even though public schools don’t face the same market pressures as private schools, there is a “significant increase in interactions between parents and schools in treatment villages following the distribution of report cards,” suggesting that parents may be exerting social pressure on public schools. These test score gains are not driven by children switching schools. “Very few children switched schools in treatment villages.”
The track record of report cards on service delivery has been mixed, from resounding successes (in health centers in Uganda) to non-results (in schools in India). The unsuccessful program in India provided results at the level of the community, so competition across institutions within the community would be unlikely. Some interventions have focused only on public institutions, relying only on social pressure from parents when faced with the knowledge that their school isn’t very good. As in many classes of interventions, success may be in the details: Understanding that there are better private or public school alternatives in one’s own community may increase social pressure significantly, as opposed to knowing that some school that is far away and inaccessible is better.

Children and parents are better off as a result of this intervention. Getting information out at the level of the market is a promising avenue.
 
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