The following is Part 1 of a 2-part feature. You can read Part 2 here.

By Christopher Gee

Robert Frank in his 2007 book Falling Behind: How Inequality Harms the Middle Class points out that investment in children by parents is a positional good, with such expenditures taking on many of the characteristics of an arms race where it is the relative amounts spent compared to the other contestants that determines ranking.  A positional good is a product or service whose value (and hence its consumption) is primarily a function of its relative desirability or scarcity in a social context. Examples of such positional goods are luxury consumption goods such as Ferraris or country club memberships, and also extend to services that signal social status or rank, such as education.

In Singapore and in many other parts of the developed world, one of the most significant investments that parents can make for the benefit of their children is to buy a house proximate to a good school. Academic studies have found a measurable “good school” premium on housing prices in the neighbourhood. Successive generations of parents seeking to send their children to good schools can trigger bidding wars for property within the one- and two-kilometre radius of the schools, and crowd out less wealthy families from staying in the area.  These house pricing and income differentials are sources of inequality and can dampen social mobility over generations, as enclaves of wealthy residents cluster near the schools and around specific locations and neighbourhoods.

Educational qualifications are very visible measures of academic merit.  With the emergence of academic credentialism (defined as the excessive reliance on academic qualifications in employment or in ascertaining social status), these measures can become the primary (and oftentimes only) reason of determining merit, and thus in securing places in the most prestigious and elite higher education institutions.  Graduation from these elite higher education institutions may in turn become a powerful signal of ability that can draw the attention of employers offering the best-paying jobs.  Because of this, educational qualifications can become a positional good.

Education and inequality – is our education system a leveller?

The tendency for education to adopt positional characteristics has significant implications for public policy in a society such as Singapore’s, based as it is on meritocratic ideals and the determination of merit-worthiness dependent in large part on academic performance.  More, better and earlier education is a mantra that is commonly offered as the panacea to class divides and widening income inequality.  Education policies carry a disproportionate weight in the country’s efforts to level the playing field, and to give children from all social classes equal opportunities.

Table 1: Government recurrent expenditure on education per enrolled student, 2001 and 2011

Source: Yearbook of Statistics Singapore, 2012, Department of Statistics, Singapore

Table 1 shows the regressive nature of the government’s recurrent expenditure on education on a per capita basis, with more being spent per student enrolled at the tertiary level than at the secondary schooling level, which in turn is higher than that for primary schooling.  The ratio of the Singapore government’s per capita expenditure on tertiary education to primary education is 3.41x (2009), which compares to Finland, where this same ratio stood at 1.70x in 2009 [1].  The inference is that Singapore’s education system is more regressive than that of Finland.  Finland’s education system is frequently compared with that of Singapore’s, given similar rankings in the OECD’s Programme for International Student Assessment (PISA) studies but with significantly different education philosophies, especially in early childhood and primary level education.

Figure 2. Ratio of public expenditure on tertiary education to primary school expenditure (per student), 2009.

Source: Calculated based on data from Yearbook of Statistics Singapore, 2012, Department of Statistics, Singapore, Table 19.16; ratios for Finland, Germany, Japan and Korea calculated by author from the OECD.StatExtracts on-line database at http://stats.oecd.org/Index.aspx; data collected on 13 September 2012.

The longer a Singaporean student stays in the state-funded education system, the greater the public expenditure on his or her education, such that a university graduate with 12 years of secondary and primary schooling and a 3-year degree in Singapore would receive 3.2 times more public funding for their education than someone with only a primary school education.

Singapore’s public expenditure on education per student thus scales up very quickly towards the upper rungs of the education ladder.  Addressing this regressive structure of expenditure can be achieved either by reducing the quantum spent on tertiary education, increasing that spent on primary and secondary education, or both.  The demands of today’s knowledge-based economy would make the first option counter-productive in many senses of the words.  Universities and polytechnics are traditionally seen as very important catalytic forces of human and social capital, and many of the positive externalities resulting from having a well-educated population are channelled through these institutions.

Raising the amounts spent on primary and secondary schooling without reducing the amounts spent on tertiary education would increase the country’s fiscal burden.  However our calculations show that for Singapore to get to similar levels of proportionate spending on the different education levels as Finland on a per student basis whilst keeping its current expenditure on tertiary education unchanged, it would only have to increase expenditure on primary schools by S$1.34billion and that on secondary schools by S$932million.  The combined additional spending (S$2.722billion) would amount to 0.7% of 2011 Gross Domestic Product (GDP), and would represent an increase of 25% on the government’s recurrent expenditure on education in 2011.

To get to the same levels of proportionate spending as Germany, the increase in expenditure on primary and secondary schools would be S$1.339billion, equivalent to 0.4% of 2011 GDP and 15% of the government’s recurrent expenditure on education in 2011.  As a comparison, the 2008 Marriage and Parenthood Package had a stated budget impact of $1.6billion.

The additional expenditure could be used to level the playing field in the primary and secondary schooling system, with greater allocation towards less desirable schools, and on expenditure focused on addressing those schools’ weaknesses and building on their strengths.   In this way, the playing field can more properly be levelled, and social scarcity at the primary and secondary schooling levels would be minimised.

Read Part 2 of this article here.

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Notes:

[1]:   Singapore ratio calculated by author based on data from the Yearbook of Statistics Singapore, 2012, Table 19.16.  Finland ratio calculated by author from the OECD.StatExtracts on-line database at http://stats.oecd.org/Index.aspx; data collected on 13 September 2012.

The writer is a Research Associate in the Demography and Family cluster at the Institute of Policy Studies.  He is the father of three children, two of whom are in primary school.