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01 / 03
Low-Cost Private Schools Are a Lifeline for the Poor

Blog Post | Wealth & Poverty

Low-Cost Private Schools Are a Lifeline for the Poor

Increasing access to affordable, high-quality education leads to better futures for children in poverty.

Twenty years ago this week – on Indian Republic Day, 26 January 2000 – I wandered into the slums behind the Charminar, in the Old City of Hyderabad, and my life changed forever.

Building on my PhD at what is now the UCL Institute of Education, I had become an expert on private education. Twenty years ago, everyone knew that private education was just for the elite and upper middle classes and I was in India doing consultancy work for the International Finance Corporation, the private arm of the World Bank, evaluating the elite private schools in the area. However, for whatever reason I had always felt that my life should be about serving less privileged communities.

So, on a day off from consultancy, I went into Hyderabad’s slums, down an alleyway and found a small school in a residential building. It wasn’t a state school, but a low-cost private one, charging in those days about $1 a month. Then I found another, and another, and soon I was connected to a federation of 500 of these low-cost private schools, serving poor and low-income communities across the region. I spent as much time as I could in these schools after finishing my daily meetings in the elite colleges that had initially brought me to Hyderabad. I watched lesson after lesson and witnessed young energetic teachers educating classrooms full of children, often in extremely impressive ways.

I remember going back to my hotel room in an upmarket part of the city and thinking that maybe the different parts of my life could fit together after all. I was an expert in private education, and in India private education seemed as much about the poor and disadvantaged as anyone. My life felt suddenly complete.

For many years I ploughed a lonely furrow, trying to convince those with power and influence that private education was good for the poor. Now, 20 years later, the extraordinary, disruptive revolution of low-cost private schools that is sweeping across the developing world is increasingly acknowledged, and sometimes even respected.

In both urban slums and rural villages, poorer parents are abandoning public schools en masse and sending their children to low-cost private schools, typically created by educational entrepreneurs. These private schools are ubiquitous. In Lagos State, Nigeria, for instance, there are 14,000 low-cost private schools, enrolling 2.12 million children, some 70% of preschool and primary aged children. Research from Nairobi (Kenya), Kampala (Uganda) and Accra (Ghana) gives similar results – the highest percentage is in Kampala, where 84% of primary aged children in poor areas are in private education.

Similarly, in urban India at least 70% of children are in independent private schools, while the comprehensive Annual Status of Education Report (ASER) shows 30% of rural children in private schools, a figure that is growing each year. Extrapolation from recent studies indicates there are roughly 92 million children in India who attend around 450,000 low-cost private schools.

The private schools are better than the state schools, where there is a lack of accountability; research has shown teachers in state schools typically teach only half of the time they are meant to. It’s no surprise that a review by the Department for International Development found children in low-cost private schools outperforming those in public schools, even after controlling for socio-economic background variables.

The private schools don’t typically suffer from gender bias and are affordable, even for families on the poverty line. And the majority of low-cost private schools are run as small businesses by educational entrepreneurs (with a minority run by religious organisations and charities), without subsidies from the state or philanthropic organisation. This means that low-cost private schools are already a fully sustainable solution to the problem of improving educational standards for all.

But there are still difficulties to be overcome. Sometimes governments try to close these schools altogether. More commonly they pass regulations that impose impossible conditions, such as the need for very large playgrounds in areas of urban overcrowding, or the insistence that all teachers must achieve the same level of certification and pay as their government counterparts, even though this would make it impossible for the schools to charge low fees.

So, the struggle continues. The work that began for me 20 years ago in the slums of India continues to this day. I’m currently building a team at the University of Buckingham to continue to champion the successes of low-cost private schools globally. Providing burdensome government regulation doesn’t get in the way, low-cost private schools and the education they provide for millions of poor children will continue to thrive.

This originally appeared in CapX.

Blog Post | Motor Vehicles

How the Market Drives Costs

Why has the U.S. cost of living fallen in some areas but risen in others?

Summary: This article examines how the market economy drives down the cost of automobiles over time, making them more affordable and accessible to ordinary people. It compares the nominal and time prices of the top ten most popular cars in America in 2000 and 2020, and shows that Americans had to work fewer hours to purchase a car in 2020 than in 2000. It also highlights the improved quality and features of modern cars, and argues that such improvements are largely possible through the innovation and productivity facilitated by a free-market system.


One of the greatest features of modernity is that living standards tend to gradually improve rather than remain largely stagnant – as they did for millennia before 1750 or so. Today, ordinary people have access to goods and services that the royalty of centuries past would never have thought of. Air conditioning, air travel, cell phones, personal computers, automobiles, modern hospitals, antibiotics, GPS, the list goes on. This improvement is largely due to the robust market economy that, through competition, encourages innovation rather than stagnation and complacency. As new technology arises and productivity per person increases, access to goods and services spreads, and the overall wealth of society increases. 

There is much talk about U.S. economic stagnation, but, in many respects, we are better off than we were just over twenty years ago. One positive trend that’s often overlooked and underappreciated is the reduction in the length of time that blue-collar workers need to work in order to purchase a vehicle. 

The falling time price of automobiles 

The table below contains the names of the top ten most popular cars in America in 2020 according to Insurify, a company specializing in online insurance comparisons. It also contains the nominal prices for the base models from 2000 and 2020. The prices come from Autoblog.com, a popular American automotive news and shopping website.

As you can see, the price of cars has risen over the last two decades, reflecting a multitude of factors, including inflation, better technology, and safety features. Cars are no longer simply metal boxes with engines but impressive machines packed with advanced technology.

Over the same period, economic productivity, and by extension wages, have not only increased but outpaced rising car prices. According to measuringworth.com, a website of historical economic statistics, the average nominal compensation rate for manufacturing workers rose from 19.36 dollars an hour in 2000 to 32.54 dollars an hour in 2020. The table below shows the number of hours that a blue-collar worker needed to work to earn enough money to be able to afford each car in the years 2000 and 2020. These “time prices” were calculated by dividing the nominal price of the car by the nominal hourly compensation rate.

As shown by the data, Americans in 2020 had to work fewer hours to purchase a car than in 2000. Increases in productivity, which typically lead to higher wages, outpaced rising car prices. And, the cars for sale in 2020 were much higher quality than those in 2000, many of which had worse gas mileage, fewer safety features, and no air conditioning.

On average, Americans save 35 hours of work (almost a week) when purchasing a vehicle. Those working hours can now be used for other things, a perfect example of how free-market competition gradually improves living standards for all members of society.

Losing ground in some other areas 

Although Americans are seeing many improvements in the quality and quantity of products relative to their wages, the trend is not universal. In the automobile industry, the incentives are arranged in a way that drives competition and innovation. However, some industries are not as exposed to market forces, often due to a combination of excessive government intervention and insulation from fluctuations in supply and demand.

Mark J. Perry from the American Enterprise Institute, a think-tank in Washington, D.C., shows that dynamic in the healthcare sector. He notes that the cost of medical care services and hospital fees rose 128 percent and 220 percent respectively between 1998 and 2020. Meanwhile, the costs of cosmetic surgeries have increased at a far more gradual pace, with some even declining in price.

Perry argues that some of this disparity can be explained by the manner in which cosmetic surgeries, on the one hand, and medical care and hospital services, on the other hand, are paid for. He writes,

“One of the reasons that the costs of medical care services in the US have increased more than twice as much as general consumer prices since 1998 is that a large and increasing share of medical costs are paid by third parties (private health insurance, Medicare, Medicaid, Department of Veterans Affairs, etc.) and only a small and shrinking percentage of healthcare costs are paid out-of-pocket by consumers.”

In particular, he notes that out-of-pocket costs have gone from almost half of total healthcare costs in the 1960s to just under 11 percent in 2019. With the consumer paying only a fraction of the bill, health providers no longer have to keep prices low to stay competitive. Instead, they negotiate prices with insurance companies and the government, institutions which have a far smaller incentive to shop around for the lowest price or seek alternative solutions when faced with rising costs.

Cosmetic surgeries are financed differently–almost all costs are paid out of pocket by consumers. As such, there is a higher level of transparency as well as price sensitivity, and the services are cheaper.

A similar dynamic exists in the U.S. higher education system, where a large share of the cost is covered by third parties, such as private loan companies, government-backed debt, and taxpayer dollars. Again, time prices (i.e., nominal tuition prices divided by nominal blue-collar hourly compensation rate) show that Americans are working far longer to afford college attendance today than in the past. 

Source: US News, Human Progress.org

Some of the price increases can be attributed to universities providing additional services, such as excellent athletic facilities, better food and lodgings, etc. However, some of the price increases can also be attributed to the incentives that govern the higher education sector. Much like healthcare, a large portion of college funding comes from third parties, not consumers themselves. According to a 2016 paper published by the nonpartisan National Bureau of Economic Research,

“We measure how much changes in underlying costs, reforms to the Federal Student Loan Program (FSLP), and changes in the college earnings premium have caused tuition to increase. All these changes combined generate a 106% rise in net tuition between 1987 and 2010, which more than accounts for the 78% increase seen in the data.”

Furthermore, a 2016 paper published by Mahyar Kargar of the University of Illinois and William Mann of Emory University, which examined the effect of tightened lending standards for federal student loans, found that more restrictive policies resulted in net decreases in college tuition. That further supports the notion that the government, as a highly influential third-party lender, is largely responsible for driving up the cost of tuition because it creates artificial demand through excessive funding. Instead of being forced to compete for consumers with low out-of-pocket prices and high-quality education, university administrators face similar incentives to the healthcare providers (i.e., a large part of their revenue comes from third-party lenders such as the government, who are less sensitive to price increases). The authors conclude,

“Finally, the large average markup that we estimate suggests that a simple subsidy to consumers may not necessarily be the ideal financial aid design, and that policymakers should instead target barriers to competition in the form of large fixed costs.”

Policymakers should heed the above lessons. The market forces of competition and price sensitivity, combined with increasing productivity that leads to higher wages, allow living standards to rise. However, government policies and perverse incentives can shield service providers from market forces, undermining competition and eroding U.S. standards of living.

Blog Post | Education & Literacy

Improving Africa's Education System

Liberia's education system is both increasingly effective and affordable.

Improving educational standards in Africa

Great strides have been made on many fronts when it comes to global education. In 2000 the average child went to school for 7 years. By 2010 it was over 8 years. Literacy rates have gone up from 76 percent to 81 percent over the same period. Millions of children are in school and learning. But, clearly, more progress is needed. Over 617 million children and adolescents are not achieving minimum proficiency levels in reading and mathematics. Globally, 330 million children are in school, but they are not learning. Some 263 million children are not in school at all.

Sub-Saharan Africa is particularly deficient when it comes to provision of quality education. But innovative policies are spreading throughout the continent, with dramatic effect. Liberia, for example, is the fourth poorest country in the world and has a literacy rate of less than 50 percent. The majority of children are out of school, with a 43 percent net attendance ratio according to UNICEF, indicating the percentage of those eligible to attend primary school, and who actually do so within that group.

So, rather than settle for incremental improvements, the country is trying to leapfrog forward. A few years ago, a public private partnership between the Ministry of Education and non state operators saw the establishment of seven independent school providers, who are running a small number of state elementary schools. These partners are a mix of non-profit and for-profit outfits.

One of the seven school operators helping Liberia is Bridge. Bridge equips local teachers with quality lesson plans via a digital e-reader device. These are given to every teacher working in a school run by Bridge. Teachers are following the digital lesson guides and systematically working their way through the local Liberian national curriculum. The technology enables Bridge staff in Monrovia to monitor the progress of children’s learning, check student and teacher attendance, and give highly accurate reports of what’s happening in the classroom to the Ministry of Education. Parents and teachers up and down the country have been embracing this new approach and are seeing dramatic changes in the speed, quantity and quality of learning.

A gold standard independent evaluation of the program by the Centre for Global Development and Innovations Poverty Action showed that schools being used to trial the new policies had seen learning improvements of 60 percent in a single academic year. That’s the average across all seven school operators. At Bridge public schools, the study showed, students learnt twice as fast as their peers in neighborhood schools. The focus on learning outcomes rather than access as a success benchmark is a notable shift taking place in the global education eco-system and one that resonates in Liberia.

These schools have experienced such an acceleration in learning that the newly elected government has given the go-ahead for the pilot program to continue into the next academic year with a few modifications. As the education minister Professor Ansu D.Sonii says, it will ensure that “the significant learning gains delivered under the program could be maintained.”

More than that, the Liberian Ministry for Education is already starting to roll-out across the whole education system some of the policies that have been tested successfully in the pilot program, like a longer school day. At present, normal government elementary schools only run until noon. But from next academic year they will continue until 3pm, as in the schools run by the program partners. The pilot program has shown that this extended day really is having a positive impact.

So far these improvements to basic education have cost the Liberian government very little – generally having relied on the commitment of generous donors for financing. For example, Bridge’s work in Liberia has cost the government $0 U.S. dollars over the last two years. The Government has an aspiration of providing quality education to every child for $100 a year by 2020 – currently they spend $50 – although not all providers receive this subsidy.

My view is that this innovative approach, integrating the private sector and others, has enabled the rapid improvement to Liberia’s education system and is both increasingly effective and affordable.

Even in the most remote corner of Liberia, children who are refugees from Ivory Coast are getting the same free, high quality learning as those in the capital Monrovia. Because Bridge gives every teacher an e-reader, they are all able to download the lesson guides and they are all supported by local teacher trainers. The remoteness of the school has no impact of the quality of the teaching or the materials. This is good news for Liberia and the rest of sub-Saharan Africa as it shows that it is possible for governments with very small education budgets to make huge learning gains quickly that directly impact children. The combination of brave new education policies plus high quality support through a PPP approach shows that the tide is against the learning crisis in Liberia.

The public in the USA agrees that this novel approach is a great way to quickly improve education in parts of the world that struggle to run enough quality schools. According to the public survey organization ONE Poll, three-quarters of the American public surveyed believe there should be more education public-private partnerships in developing countries. The same proportion of Americans also agree that Bridge International Academies are good for children. 

The current and previous Liberian governments both deserve high praise for their leadership in working to deliver transformative education opportunities for children using non state actors and innovative policies. Other governments across the continent should take note of Liberia’s success story and such a fast, effective and low-cost way to improve education for children who have the potential to change the world.