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The tangible and intangible: income, culture and education outcomes

Income and test results: a virtuous circle or common offspring?
Two correlations from the quantitative analysis indicate a link between a country’s income and its educational outcomes: higher GDP is associated with better overall PISA scores, and the UNDP’s Income Index is a predictor of national secondary school graduation rates. Similarly, PISA results correlate with national GDP and Income Index scores in the years following the tests being administered. In both cases, however, the causation is not clear. In relation to the second link, for example, those who were age 15 in 2009 and 2006 have had so little time in the labour force that the contribution of their skills is unlikely to have had much effect yet on national income. That said, Professor Schleicher reports that PISA’s extensive longitudinal data on test-takers indicates that the test’s predictive power of ease of transition to work and initial income is high.
On the surface, this suggests a virtuous circle – money buys good education, which instils higher earning power. This seems to parallel an often observed link between socio-economic status and academic results within countries. If anything, this association is growing in the United States,[2] but it is far from an American phenomenon. It is present in European countries, such as the United Kingdom and Italy, as well as, according to a 1999 study by a World Bank researcher, in 43 largely developing nations.[3]
Money, for both countries and individuals, does brings obvious advantages. As Ms Parthasarathi notes for families, “wealth gives you access to schools where you assume there are better teachers, etc, [and] ... people who don’t have the means miss out on a lot of opportunities.” The wider link to educational results, however, is far from straightforward. Ms Parthasarathi points out that, at the individual level, even something as basic as student motivation can be greatly affected by economic background.
More generally, a recent OECD report indicates that a commitment to equity within an education system can greatly diminish the correlation between family income and educational outcomes. It points to Finland, Canada and South Korea, among others, as examples of success in this area.[4] This is consistent with research conducted by the Canadian Council on Learning, says Mr Cappon. “Our composite learning index showed no direct correlation between the wealth of a community and its learning environment. It is not a given that you simply get a higher result with higher income levels.”
Similarly, the tie between GDP per capita and PISA results is far from linear. For countries with incomes under $20,000 per person, economic growth appears to bring rapidly improving educational results. After that point, however, the gains become much less obvious.[5] This type of result is common in economics, appearing in areas such as the impact of national income on life expectancy: up to a certain point, the need is so great that almost any spending brings gains; thereafter the way that the money is spent becomes much more significant. Eric Hanushek, the Paul and Jean Hanna Senior Fellow at Stanford University, explains: “It is more important how resources are used than how much. In some places school systems and countries seem to know how to spend wisely, in others they don’t.”
Chart 3: PISA results and GDP growth per head, selected countries
Chart 3: PISA results and GDP growth per head, selected countries
Note: The overall PISA score is an aggregate of the test scores in reading, mathematics and science literacy. It is calculated by the EIU, utilising OECD data.
Sources: Economist Intelligence Unit and OECD.
For most experts, however, talking of GDP’s effects on outcomes reverses causality. Professor Hanushek states that “it is not quite a chicken-and-egg thing. It doesn’t look like faster growth leads to higher PISA scores, but there is substantial evidence to suggest that if you can find a way to get higher PISA scores you will get higher growth.” In other words, both current GDP and high levels of cognitive skills in students are results of the same education-policy decisions made sometimes many years earlier. Professor Schleicher agrees, citing the experiences of South Korea and China which decades ago, with lower GDPs than many countries, made strategic decisions to focus investment on education. They have seen both national incomes and test scores surpass many others as a result. “It is not a question of if you are rich, you can afford a good education system,” he concludes. “You may need to build a 40-year time gap between investment and economic outcomes, but the causality of the link is established.”
Culture: An unquantifiable essential
Money as a driver of education outcomes has the advantage of being measurable. Many experts interviewed for this study, however, identify something far less concrete as far more important. Robert Schwartz – Francis Keppel Professor of Practice of Educational Policy and Administration at the Harvard Graduate School of Education – underscores a difficulty in analyses of educational inputs and outputs: “How do you disentangle deeply embedded cultural values from social and educational policies?”           
The issue of culture is relevant across the world. Dr Finn says of the US: “The typical young American, upon turning 18, will have spent 9% of his or her life in school [assuming perfect attendance]. That can accomplish a lot, but is relatively weak in terms of overall effect. If the 91% is cooperating with the 9%, then you have a good recipe. If there is no positive re-enforcement of educational achievement taking place outside the school – if, for example, the larger culture glorifies celebrities who can barely read – you will have huge trouble.”
In parts of Africa, culture can bring significant challenges, says Mamadou Ndoye, former Minister of Basic Education in Senegal. “School as it exists is not a product of the internal development of Africa,” he explains. “It was imposed from outside. In many countries, the community [still] think of school as a foreign object, which is a problem for local ownership.” In Asia, on the other hand, the success of schools “has more to do with society and culture than the school system,” says Professor Yong Zhao, Associate Dean for Global Education at the University of Oregon. “In Asian countries, even if you can’t succeed, you have to hang in there.” Anthony Mackay, Chair of the Australian Institute for Teaching and School Leadership, adds: “In East Asian countries, where learning is held to be both a moral duty and social duty, you would not even have the conversation about the need for high expectations about young people’s learning.” Nor are national cultures monolithic. Mr Cappon notes that “in North America, you see that depending on the culture of origin, there are massive discrepancies. If they [students’ families] come from Hong Kong or Singapore, they do well; if from Latin America or Haiti, they don’t.”
If culture is seen as somehow inherent and immutable, such insights might seem of little value to education policymakers. Indeed, they would suggest that educational success is almost predetermined. Culture, however, is changeable if addressed properly. Respect for teachers, for example, is ingrained in certain cultures such as those in Finland and South Korea. However, it can also be built in a society through policy choices. Professor Sing Kong Lee, Director of Singapore’s National Institute of Education, recalls that when the government wished to attract better teaching candidates, it realised that the recognition of value of the profession in the country needed to be strengthened. This was done through introducing policies such as setting the salaries of beginning teachers equal to those of beginning engineers and accountants entering the civil service, thereby sending out a clear message that the importance of the teaching profession is equal to that of other professions.
Another way of addressing the situation, says Professor Lee, was that “the government recognised the contribution of teachers by defining their mission: to mould the future of the nation. What can be more noble than that?” It also established 1st September as National Teachers’ Day, on which the President invites teachers to the Istana (Presidential Office) to recognise those who do good work with awards. Students usually get a day off as well. Professor Lee credits such steps with raising the profile of the profession greatly.
These steps might not work in every country, but they do show that existing cultures can be changed in a way that assists educational outcomes. In this the education system itself has an important role. As Professor Stecher notes: “Schools are both recipients and creators of cultural patterns: over the long term they help to shape norms for the next generations.”

[2]See Greg J. Duncan and Richard Murnane, eds. Whither Opportunity? Rising Inequality, Schools, and Children’s Life Chances, 2011.
[3]Deon Filmer, “Inequalities in Education: International Experience”, in Ismail Sirageldin, Human Development in the Twenty First Century.
[4]Equity and Quality in Education: Supporting disadvantaged students and schools, 2012.
[5]“Does money buy strong performance in PISA”, PISA in Focus, February 2012.

Getting teachers who make a difference

Teachers matter …
One point of broad agreement in education is that teachers matter greatly. Students of certain teachers simply do better in a way that has a marked effect on social and economic outcomes. For example, a recent study drawing on data covering about 2.5 million US children found that, after correcting for other factors, pupils assigned to teachers identified as delivering better educational results “are more likely to attend college, attend higher-ranked colleges, earn higher salaries, live in higher [socio-economic status] neighbourhoods, and save more for retirement. They are also less likely to have children as teenagers.”[6] Professor Schwartz believes that “the single most important input variable [in education] is the quality of teaching.” However, teacher quality, notes William Ratteree – until recently, education sector specialist at the International Labour Organisation – "is a mix of factors which are difficult to pin down.”
Much of the research in this area has focused on what education systems can do to ensure that they find teachers who add value. Even here, though, says Professor Hanushek, “the rules tend to be country-specific.” McKinsey’s 2010 report, How the World’s Most Improved School Systems Keep Getting Better, argues that the best interventions even depend on the current state of the school system. In McKinsey’s view, systems currently marked by “fair” levels of performance should focus on teacher accountability, while “good” systems are likely to benefit more from enhancing the status of the teaching profession.
… But what matters for getting good teachers?
Despite such variation, a number of insights are broadly applicable. The first is that teacher pay has surprisingly little relevance to education results. In LCDB data, minimum and maximum instructor salaries at all education levels – measured as a percentage of average national income – have no long-term link to the inculcation of cognitive skills, as measured by standard international tests. Indeed, the only statistical correlation between pay and educational outcomes is a tendency of higher maximum salaries – as a percentage of the national average – at a number of teaching levels to lead to lower secondary school graduation results. A closer look at this counter-intuitive result reveals that – within the data set available – higher GDP countries do not pay teachers as high a percentage of the average wage as lower GDP ones. In other words, as economies grow, teacher salaries do so at a slower rate. Thus, the implicit correlation actually reveals again the link between higher GDP and certain better educational results.
Chart 4: Ratio of average teacher salary at primary, lower and upper secondary levels over the average gross wage, selected countries, 2010
Chart 4: Ratio of average teacher salary at primary, lower and upper secondary levels over the average gross wage, selected countries, 2010

Sources: Economist Intelligence Unit and OECD.
The lack of correlations in this area is consistent with much detailed research on the link between pay and results, which is typically found to be weak or non-existent.[7]  Performance-based pay is an exception: it does tend to lead toward better outcomes.[8]  On the other hand, in some cases high salaries without quality differentiation create problems. Mamadou Ndoye recalls that, when he was Minister of Basic Education in Senegal, the level of pay made it impossible to hire more teachers, so he had to engage in difficult negotiations to be allowed to bring in volunteers to help. Overall, in the words of Mr Cappon, “Teachers must be reasonably well paid, but this pales in comparison with other factors.”
Experts interviewed for this study repeatedly point to several of these other factors which are essential in promoting teacher quality:
  • Attracting the best people to the profession: Getting good teachers begins with recruiting talented individuals. Finland and South Korea – two perennially cited examples of education success and the top countries in our Index – obtain their annual teacher intake from the top 10% and 5% of graduating students respectively. The key to such success is the status in which teaching is held culturally. Here money can have some effect, not just as a simple inducement but as a signal of status. The South Korean government uses high levels of teacher pay in this way both to compensate for large class sizes and to indicate the importance it accords to the profession.
  • Providing the right training: The training of these new recruits has to be appropriate to the conditions in which they will work. This varies by country. The Finnish system, for example, benefits from teachers having graduate degrees. On the other hand, Nahas Angula, Prime Minister of Namibia, points out that his country’s policy of requiring all teachers to have an undergraduate degree may be driving up the cost of education when other training would suffice for primary grades. Teacher training also needs to be ongoing. This has a very practical reason – that no teacher’s college course will maintain complete relevance across decades of work – but also a demonstrative one. As Mr Cappon notes, “teachers need to be lifelong learners themselves. You can’t inculcate a love of learning unless you live it.” Effective professional development needs to address not just upgrading the knowledge of teachers – providing, for example, a better understanding of new technology and teaching strategies – but also allow them to advance along their career path into more senior positions where relevant.
  • Treating teachers like professionals: Consistent with the need to promote the status of teaching is its treatment as a profession. Mr Ratteree notes that “things like continual professional development and professional autonomy can be powerful incentives for better learning outcomes.” Mr Cappon agrees: “Teachers must be seen as professionals who exercise judgement, not just technicians.”
  • Implementing clear goals and effective oversight, and then letting teachers get on with it: Professors Hanushek and Woessmann both point to this combination of accountability and independence as consistently correlated with improved outcomes. Says the latter: “Education economists emphasise the need to think about incentives for people in the system to use resources efficiently. These are mostly framed by the surroundings of the education system, the accountability system and whether schools can act autonomously. There is clear evidence of strong relations between these and improved outputs.” Professor Schleicher agrees. High-performing school systems, he says, combine demanding standards, low tolerance of failure, and clear articulation of expectations with “a lot of professional responsibility within a collaborative work organization at the front line,” for both teachers and schools.
None of these on their own is enough. Instead, they form an overlapping, and mutually supporting, set of strategies to provide the high-quality teachers that are so important for education and to use them in the most effective ways.[9]

[6]Raj Chetty, John N. Friedman, Jonah E. Rockoff, The Long-term Impacts of Teachers: Teacher Value-added and Student Outcomes in Adulthood, National Bureau of Economic Research Working Paper 17699, December 2011,
[7]One notable exception is P. Dolton and O. D. Marcenaro-Gutierrez, “If you pay peanuts do you get monkeys? A cross-country analysis of teacher pay and pupil performance”, Economic Policy (2011) 26: 5–55.
[8]David N. Figlio and Lawrence Kenny, Individual Teacher Incentives and Student Performance, National Bureau of Economic Research Working Paper 12627, October 2006,; Ludger Woessmann, “Cross-Country Evidence on Teacher Performance Pay”, Forschungsinstitut zur Zukunft der Arbeit Discussion Paper 5101, July 2010.
[9]For a similar discussion of the key success factors in teacher development see Michael Barber and Mona Mourshed, How the World’s Best Performing School Systems Come Out on Top, McKinsey and Co., 2007, pp 15-23.


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