|Educational Cost-benefit Analysis - Education Research Paper No. 02 (DFID, 1993, 27 p.)|
Cost-benefit analysis is not the only technique used in connection with educational planning. The two principal alternatives that have been used in many countries are manpower planning and the social demand approach, each of which has been the subject of a great deal of criticism. Whilst these approaches can not be discussed in detail here, the relevant main points from each need to be outlined.
Manpower planning, which has been used in some form or other in the majority of UNESCO member countries (Blaug, 1970), is based on the attempt to forecast the future demand for educated manpower. Given the length of time taken to produce educated professional people, such forecasts may have to be made for some years hence, perhaps fifteen years in the case of scientists, engineers, or medical doctors. This is one of the major problems inherent in the manpower planning approach, since in the meantime economic or labour market conditions may have changed significantly.
There have been a number of different approaches to manpower planning. Each entails producing detailed forecasts of the number of workers, in each skill and at each level of education, that will be required in each industry by the time of the future target year. Professor Parnes suggested that to be able to specify these precisely, implies:
(i) a degree of rigidity in the occupational composition of the workforce that is unrealistic,
(ii) having data relating to withdrawals from each occupation that is rarely available,
(iii) having data relating to patterns of occupational mobility that is never available,
(iv) one unique relationship between educational background and occupational affiliation, whereas in practice the position is often more flexible,
(v) concentrating on the formal educational structure, whereas in practice much vocational preparation takes place outside that structure,
(vi) clear differentiation of jobs, whereas in practice there is usually much transferability of jobs as far as educational qualification is concerned.
In summary, manpower planning methods:
"involve numerous dangers, not the least of which is that they provide no basis for evaluating the realism of the specific forecast in light of the total structure of employment" (Parnes, 1962).
Professor Blaug's conclusion was even more pessimistic:
"There seems to be little point in continuing to waste resources on long-term single-valued forecasts whose results are suspected even by the forecasters themselves (Blaug, 1970).
More recently, Little (1986) was critical of manpower planning in developing countries for largely ignoring rural and village needs, the very areas where the greater part of the population are likely to live.
A recent World Bank publication has come to conclusions expressed in equally adverse terms. It argued that manpower planning had clearly failed, for a number of reasons: the technique has largely been applied at the level of persons with higher education and has tended to ignore those with lower levels of education, i.e. the great majority of workers; limits itself to headcounts and ignores the effects of movements in wages and other prices; largely makes use of employment data relating to the public sector and/or to large private firms, whereas in developing countries the majority of workers are liable to be in small firms and/or in the informal sector; is based on the historical relationship between output and labour, which is then extrapolated forward decades ahead; assumes a one-to-one correspondence between, for example, a mechanical engineer and a graduate of the mechanical engineering faculty of the university, which is unrealistic; ignores that middle-level technician engineers may come from a variety of backgrounds, including on-the-job training; ignores the problem of how to plan for executive and administrative workers, who may have diverse educational qualifications; ignores cost implications; tacitly assumes that relative wages are fixed; typically recommends, due to the nature of the exercise, increasing the supply of labour with vocational/technical qualifications, whereas general training may often be more cost-effective; ignores that skills may be produced outside the formal school system, such as in specialised training or private institutions; typically adopts a long horizon, whereas to forecast for a shorter time-span may be more realistic; and is typically "lumpsum, jumpy and discontinuous" (Psacharopoulos, 1991).
It should be recalled that even in those countries where manpower planning has been most criticised, it is still in use in some form or another. The numbers of newly trained teachers to be produced by teacher training courses, for example, is planned in some sense in all countries; it is difficult to see how it could not be, given that, in all countries, most or all of the supply and the greater part of the demand for newly trained teachers are in the hands of the public authorities and depend on public funding. Similarly, to plan and build a new medical school requires some view regarding the number of new medical doctors that will be required at the date when the new school's first output of new doctors become qualified, which will probably be in around 15 years time. Again, most medical schools in most countries are within the public sector. Therefore, whether explicitly or implicitly, some element of manpower planning seems inescapable.
The social demand approach, by contrast, essentially focuses on forecasts of future student choices to determine the level of education provision, without any apparent direct reference to national economic or social needs. Given that much of the cost of the education is borne by the state, it can be argued that there is a presumption of some hidden or underlying mechanism whereby students and their families arrive at their educational decisions in the light of market signals or mechanisms which correspond to those that would be used with other approaches. If not, the social demand approach sounds like a free-for-all.
The social demand approach has been particularly used in connection with the planning of higher education, a good example being that in the UK in the post-Robbing era. The Robbins Report (Cmnd 2154, 1963), in its much-publicised conclusion, urged that:
"all young persons qualified by ability and attainment to pursue a full-time course in higher education should have the opportunity to do so".
The subsequent expansion of higher education in the UK has largely followed from that recommendation.
Another, much less-publicised, recommendation in Robbins was that there should be some degree of shift in higher education towards the study of the physical sciences, which was in the event largely ignored. Much of the remainder of the Robbins Report was devoted to how to estimate, and how to stimulate, future demand for places. The committee had no doubt that:
"fears that expansion would lead to a lowering of the average ability of students have proved unfounded".
The post-Robbins years were to prove extremely difficult to plan, largely due to uncertainty as to what would be the rate of expansion in student numbers and what were the factors leading potential students and their families to make such decisions (Layard and King, 1968).
Subsequently, Williams showed that various economic factors, especially implied prices, may well have played an important part, in which case the outcome of concentrating on social demand, by young people and their families, might not be so very different from that from rate-of-return analysis:
"It is not of course being claimed that they do estimate rates of return, merely that a statistical estimate of rates of return is quite a good summary of many of the factors, some of which have been discussed in this article, that make higher education seem worthwhile to young people deciding what they are going to try to do with their lives" (Williams, 1974).
Layard and King (1968) had reached essentially the same conclusion.
Currently, in 1991, higher education in the UK is again undergoing rapid expansion of student numbers, at a time when the DES had forecast a decline. This expansion is seen by the government as being well suited to the country's needs for future educated manpower. In this instance at least, it seems likely that all three approaches, manpower planning, social demand, and rate-of-return, although they would start from contrasting assumptions and methodologies, would point to broadly similar conclusions.