First Principles March 2007

The Ten-Cent Solution

Cheap private schools are educating poor children across the developing world—but without much encouragement from the international aid establishment.

If good ideas were all that mattered, everybody who has heard of Jeffrey Sachs would have heard of James Tooley as well—but they aren’t, and you almost certainly haven’t. In fact, even if you are keenly interested in education, aid, or Third World development, which are Tooley’s areas of research, you still probably haven’t heard of him.

This is not because his work is dull or unimportant. His findings are surprising, and they bear directly and profoundly on the relief of extreme poverty all over the world. (Name me a more important issue than that.) The reason you haven’t heard of James Tooley is that his work is something of an embarrassment to the official aid and development industry. He has demonstrated something that many development professionals would rather not know—and would prefer that you not know, either.

Tooley is a professor of education policy at England’s University of Newcastle upon Tyne. Several years ago he was working as a consultant in Hyderabad, India, for the International Finance Corporation, an arm of the World Bank. One afternoon, while wandering around the alleys beside the Charminar (a sixteenth- century monument and Hyderabad’s best-known tourist attraction), he came across a school for the children of slum dwellers. To his surprise, he found that this was not a state school but a private one—providing education to the extremely poor and collecting fees (of a few rupees a day, or less than a dime) for its services. Intrigued, he kept looking, and found other, similar schools. They were typically small and shabby operations, sometimes occupying a single classroom, staffed in some cases by just the teacher-proprietor and an assistant. Yet they were busy—crowded with eager pupils—and the teacher was actually teaching. (This, Tooley knew, was not something you could take for granted in the classrooms of Indian public schools.)

For years education officials in most developing countries (and workers in international aid agencies, too) have talked as though private education for the very poor barely existed. The only hope for equipping these unfortunate people with basic literacy and numeracy, they’ve said, was to improve the reach and quality of free, compulsory, state-provided schooling.

But that hope appears dim at the moment. Public schools in most poor countries, where they operate at all, have long been recognized to be ineffective. Teachers are frequently unqualified for their work. Perhaps worse, they are often uninterested in it: In many poor countries, teaching jobs are viewed as sinecures, and many teachers are disinclined to show up for work at all. They do tend to organize, however. Their salaries add up, and public schools in most developing countries make heavy demands on the public purse. The whole issue has therefore been seen as a daunting question of resources: Vast sums will be required to provide free universal education of tolerable quality in Africa and South Asia; there is no cheap alternative; and the help of foreign donors will be essential.

The many fee-based slum schools that Tooley saw within a few minutes’ walk of the Charminar made him wonder about all this. So he began researching the reach and performance of private schools for the extremely poor in India and elsewhere, supported not by an official agency but by the private Templeton Foundation. What he found was startling.

In Hyderabad, a city of more than 6 million people, Tooley and his team—confining their search to poor areas lacking amenities such as running water, electricity, and paved roads—counted 918 schools. Only about 40 percent were run or financed by the government; 60 percent were private. Of those, some were “recognized” by the government, but most were officially unknown to the authorities. These black-market private schools were smaller on average than the other kinds—but they still accounted for about a quarter of all the children in any sort of school. Remarkably, some of the slots in these private slum schools were offered free or at reduced rates: The parents of full-fee students, desperately poor themselves, willingly subsidized those in direst need.

This flourishing educational enterprise is all the more surprising once you understand that India has deliberately discriminated against private education—forbidding for-profit schools, for instance, and requiring schools to be run as trusts rather than proprietorships, and limiting their ability to borrow. Despite these handicaps, private education for the very poor has evidently thrived.

What Tooley stumbled onto in Hyderabad turns out to be typical not just of India but of all the other places he subsequently researched—including parts of China, Ghana, Kenya, and Nigeria. In every case, private education is a principal lifeline for the abjectly poor. In the areas of Ghana and Nigeria that Tooley’s team has canvassed, an outright majority of poor children are attending private schools run without support from the government. Often, the schools are run by just a few teachers. They put out shingles in the way that physicians do in the United States, and are paid directly by their charges.

As Tooley relates it, the response of the international development community to his research has been less than enthusiastic. Even if private schools are much more prevalent than we had previously thought, he’s been told, they are obviously no good. Standards in such schools are bound to be low.

But the development community seems to be wrong about that, too. On the whole, dime-a-day for-profit schools are doing a better job of teaching the poorest children than the far more expensive state schools. In many localities, private schools operate alongside a free, government-run alternative. Many parents, poor as they may be, have chosen to reject it and to pay perhaps a tenth of their meager incomes to educate their children privately. They would hardly do that unless they expected better results.

Better results are what they get. After comparing test scores for literacy and basic math, Tooley has shown that pupils in private schools do better than their state-school equivalents—at between a half and a quarter of the per-pupil teacher cost. In some places, such as Gansu, China, the researchers found that private schools serving the poor had worse facilities than comparable state schools; in Hyderabad, they were better equipped (with blackboards, desks, toilets, drinking water, and so on). Regardless, the tests so far show that private-school students do better across the board.

Why have these findings been so reluctantly received? The answer is politics. The consensus on economic development—specifically, on the role of the state in promoting growth—cycles to and fro. At the moment, orthodox thinking embraces a leading role for the market in most areas of economic life. But in most developing countries, as in many rich ones (including the United States), schooling is widely regarded as quite another matter. Children’s education is higher than commerce. These realms must not be allowed to mix. Many development and education officials wish to enshrine free education as a universal human right. Education, in other words, is too important to be left to the market.

In this view, if state schools are failing, which nobody denies, they need to be fixed, whatever the cost. And this is how the challenge of education in developing countries is currently framed: Governments need to spend more on their schools. One could more easily sympathize with that view if the state systems were easily fixable. In many developing countries, certainly in India, it would be unrealistic to think so, even if one could say, “Hang the expense.” The problems seem systemic, not fiscal.

Most of those who campaign for greatly increased aid to poor countries would wish to see governments spend much of that money on state-run schools. The goal is admirable, but the method may be counterproductive. Tooley’s research suggests that small-scale support for private slum schools—through scholarship programs, backing for school-voucher schemes, or subsidized microfinance—might do far more good than a big aid push directed at government-run education.

Tooley has been publishing his research in education journals but has also written for libertarian and conservative think tanks. Unfortunately, these associations have pushed him further outside the development mainstream. Perhaps most alienating, his findings (as he notes) conform very well to the views of the late Milton Friedman, who spent the last years of his life arguing that publicly funded vouchers and a market of privately run competing schools were the way to fix another education system in urgent need of repair: America’s. All the more reason why, so far as some development officials are concerned, Tooley’s obscurity is welcome.

As for Tooley himself, he is now moving beyond research alone, preparing to embark on a new project: the management of a new $100 million fund to invest in private schools for the very poor in developing countries. Development professionals need not be concerned, however. The money is from a private foundation. It won’t waste any country’s aid budget.

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