“Foodies R Us,” a recently launched Facebook page, is a successful example of how information sharing among customers/restaurant goers has made the Lahore restaurant market more competitive and more attuned to customer demands. In a short span of time, this group has garnered so much influence that it has drawn in restaurants so eager to engage with customers that their activity on the group had to be capped.
Information symmetry in the restaurant market, i.e. availability of the same information, with regards to restaurant ‘quality,’ to both restaurant goers and the restaurants management has resulted in a self-regulated market. Good (according to customer priorities) restaurants get free publicity and media coverage. The not-so-good restaurants see first hand how information sharing among customers, on social media, has a wide reach, and reviews, both good and bad, can change customer perceptions about their restaurants. They may put that information to use by identifying and addressing weaknesses and turnaround their performance and reputation in the market.
This example illustrates a fundamental principle in economics; an informed customer is a prerequisite for efficient functioning of markets.
Now think about the recent high-income school fee fiasco. Capping fee, in the name of regulation, by the government is problematic. Private schools mushroomed in the first place due to the state’s failure to provide public schooling of sufficient quality. This applies to both elite and middle to low income private schools and has been established by several research reports/studies.
The government has proven to be incapable of regulating its own schools, so any ham-handed attempts by the government are more likely to backfire — it opens up the private school sector to myriad problems including corruption, the cost of which will be passed on to parents, if not in monetary terms then in the form of reduced quality.
Several states in India have already gone down the path of capping fees of private schools in the past few years. Given the many parallels in the two systems, our government ought to learn from the Indian experiment. Big lessons to draw from the Indian experiment, of capping fee, are; potential for corruption as the body responsible for regulation is also the arbiter for resolving grievances; schools closing down because of reduced business incentives which leads to further decline in access to education; reduced quality to cut cost; little incentive to up quality; and further decrease in competition as aspiring edupreneurs see little incentive in investing and entering the education sector.
Put simply, before the government attempts to hand down stifling regulations for private schools, it should give opportunity to the free market to regulate itself. There are several reasons why that has not happened on its own, including, but not limited to, cartelisation of the ‘elite’ private school sector as seen in the recent coordinated fee rise and lack of parental involvement in matters of schooling. However, perhaps an even bigger factor is that the customer/parent in this market lacks unbiased information for optimum decision making when it comes to choosing a suitable school.
When parents have unbiased information about the quality (on different variables) of experience offered by schools; one would expect a market where schooling is available for a price that reflects its relative quality. In such a market a customer/parent will likely have to pay a higher price for superior experience for their children and a relatively lower price for a lesser experience.
Currently, the availability of information on schools is asymmetrical, i.e. parents lack sufficient information about school quality. To select a school for their children, parents rely on information that comes through their immediate social network or hearsay. Provision of unbiased information demands creating an information sharing platform which gives parents/customers a global view of school statistics and a forum for the free exchange of additional information and experiences for parents who share the same concern i.e. quality education at a fair price. When parents make informed decisions, schools will be forced to heed customer demands and compete.
Consider a few examples of such an information-sharing platform.
A very recent example of where school data was made available to the public is College Scorecard, an initiative of the US Department of Education (DoE). A few years ago, the DoE set out to develop a ranking of US colleges. However, all rankings are a function of the weights assigned to the multitude of statistics, thus making it impossible to produce one “true” ranking. The DoE ended up collecting, maintaining and publishing all the data, but refraining from creating a ranking, thus leaving it up to college goers to decide how to prioritise the different statistics.
The reader should be cautioned that this is distinct from creating a ranking. An even better smaller scale example came a few years ago in the form of The Ranking Game for US law schools, created by Prof. Jeffrey E. Stake at the Indiana University Maurer School of Law. The Ranking Game allows players to assign their own weights to individual statistics, thus allowing them to create their own personalised ranking of US law schools. It gave some examples of how weights assigned based on personal priorities can radically change the rankings, in one example catapulting the University of Alabama, a low ranked school, into the top 10 and relegating Harvard University!
Rate My Professors takes the idea of reviews down to the level of individual college professors all across the US. In the context of K-12 education, many websites like School Digger and Great Schools provide a similar service to students by providing platforms for parents to compare school statistics across the US and leave reviews for their own children’s schools.
Our government has a decades long track record of failure in the sphere of education that led to the mushrooming of private schools in the first place. The approach should be to allow the education market comprising educated customers/parents and competing service providers/schools (public and private) to self-regulate.
In this scenario, a useful role the government could possibly play is to provide an information-sharing platform to both the customer/parent and the service providers/schools. Publishing school statistics will allow each parent to rank schools according to their individual priorities and circumstances. Differentiation in school quality (especially among brand names) will likely result in price variation where parents will pay more for better quality and lesser for anything else. However, if the disproportionately great exercise and the long delays to disseminate university data by the HEC is taken as a guide, perhaps a better approach would be to let private sector research based NGOs take the lead.
A phased approach towards providing parents a platform could be to begin phase 1 by developing a parental forum for publishing their school reviews. Once this platform for school reviews has gained momentum, and schools realise the influence of this forum, the platform should be extended in a second phase, to incorporate more objective measures and data, to be provided by schools themselves. In the case of public schools such data can again be collected by a private sector research based NGO, such as the Institute for Social and Policy Sciences (ISAPS) which has the human resource, infrastructure, and experience to conduct an exercise of this scale and collect data from schools that have the least incentive to furnish information.
Finally, this platform should allow parents to assign weights to individual statistics to produce custom tailored rankings, similar to The Ranking Game.
This platform will transform today’s un(der)informed parents into informed customers that are in a better position to hold schools accountable for the quality of education imparted.