Principal investigator: Angelo Cruz do Nascimento Varella
Article title: POVERTY AND THE POLITICAL ECONOMY OF PUBLIC EDUCATION SPENDING: EVIDENCE FROM BRAZIL
Article authors: Leonardo Bursztyn
Location of the intervention: Federal District, Brazil
Sample size: 2.003 individuals and 80 heads of low-income families
Main theme: Education
Type of Intervention: Experiment to assess preferences regarding public spending on education and income transfer programs.
Primary variable of interest: Preferences regarding public spending
Evaluation method: Experimental Evaluation (RTC)
Policy Problem
Despite evidence pointing to high rates of return on investment in public education for the poorest segments of the population in emerging countries, many of these nations have relatively low rates of this type of public spending. Some academic literature suggests that this phenomenon stems from the actions of the wealthiest segments of the population, who act as an obstacle to educational investment because they dominate the power structures and, among other hypotheses, prefer spending in other sectors, in addition to having economic interests in maintaining low levels of schooling, which would result in a cheaper workforce and a greater possibility of social control.
However, data from emerging countries, in different contexts, point to a distinct reality. When evaluating countries with more consolidated democratic institutions, it becomes clear that these nations do not show higher levels of investment in public education. In fact, evidence points to a negative relationship between levels of democracy and public spending on education. That is, while not excluding the possibility of control by the wealthier classes, it is difficult to imply that this is the only reason why emerging countries show lower educational investments.
To investigate these findings, the authors propose an alternative hypothesis: is it possible that poor countries invest less in education due to the preference of the lower socioeconomic strata of the population to allocate resources in other ways? More specifically, is it possible that low-income citizens opt for income transfer programs instead of educational investments, due to the need for more urgent spending?
Evaluation Context
Despite unsatisfactory results in the Programme for International Student Assessment (PISA), investments in education tend to yield high returns in Brazil. The country, which ranked 53rd out of 65 participants, had 98% of children aged 7 to 14 enrolled in school, with the vast majority (77% of students) belonging to the public education system, according to the 2011 National Household Sample Survey (PNAD) conducted by the Brazilian Institute of Geography and Statistics (IBGE).
It is also worth noting that in the 25% of the population with the lowest income, enrollment of young people in the public education system was 97%, while in the 25% of the population with the highest income, this percentage was reduced to 38%. In other words, it is precisely the poorest Brazilian households that benefit most from investments in public education.
Policy Details
By analyzing data from the Basic Education Development Index (IDEB), the Superior Electoral Court (TSE), the Ministry of Economy, and the IBGE, researchers state that higher levels of public spending on education in low-income municipalities decreased the likelihood of mayoral reelection, while this likelihood increased in cities with higher income levels.
To validate these findings, the authors conducted a survey and an experiment in the Federal District. In the survey, carried out in August 2009, an electoral research company interviewed 2.003 individuals, with an average age of 37 years and approximately 9,5 years of schooling. The aim was to measure the impact of public investments on citizens' voting intentions.
In the experiment, conducted in November 2012 in the Varjão Administrative Region, 80 relatives of 4th and 5th grade students from a large public school in the low-income region were interviewed. The interviewees were approximately 34 years old, with an average of six to seven years of education. The intention was to quantify the preference of the students' guardians for additional private tutoring compared to an income transfer program.
Exclusive
In the first survey, individuals were informed about local government public spending and asked to rate it from 0 to 10. Then, respondents were divided into four groups. Three groups were presented with different spending scenarios on education or income transfer programs, and one group served as a control. Thus, based on the overall scores of each group, it was possible to measure the preferences of the surveyed public in terms of the terms of the research.
In the experiment, respondents were divided into three groups and invited to participate in an income transfer program for two months. Participants in the first group would receive 10 reais per month, those in the second group would receive 210 reais per month, and the third group, the control group, would not receive this initial allowance. Then, the researchers asked the respondents if they preferred to receive an additional allowance on top of the initial allowance offered, in a range that progressively varied between 10 and 90 reais, or if they preferred to receive an additional 10 reais plus three hours of weekly tutoring for their children.
Results
Both studies supported the theory that low-income individuals prefer the allocation of public resources to immediate income transfer programs, rather than long-term spending on education.
In the first survey, low-income participants, compared to high-income participants, gave worse ratings to government officials when they were informed that public spending on education had been proportional to or greater than the resources allocated to income transfer programs.
In the experiment comparing extra income with free classes, the relatives interviewed who received the initial unconditional allowance preferred that their dependents receive the free supplementary classes. In the group that received 10 reais per month, the equivalent value of the classes was 24 reais per month, while in the group that received 210 reais per month, the amount that made them give up the classes was, on average, 39 reais per month.
Lessons in Public Policy
The research findings indicate that the poorest segments of the Brazilian population tend to prefer public spending on income transfer programs over investments in education, when compared to the wealthiest segments. The result does not indicate that poor individuals undervalue education, but it demonstrates an immediate need for it within this segment of society.
This study concludes that poverty reduction is an indispensable condition for the country's sustainable development. Another relevant development stemming from this conclusion is the opportunity to link income transfer programs with educational initiatives, such as conditional cash transfer programs. In this way, the urgent needs of the population are met while investing in long-term educational initiatives.
Reference
Bursztyn, Leonardo. “Poverty and the political economy of public education spending: Evidence from Brazil.” Journal of the European Economic Association 14.5 (2016): 1101-1128.
