PDGS 6102

Educational Planning

Lecturer: DR. Angelo Cruz Maduli, PhD

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 Educational Planning
Approaches

(1) Rate of Return

(2) Costs-Benefits
(3) Costs-Effectiveness
(4) Other Approaches

by: Ainun Badriah

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PGA 080114
Does the calculation really reflect the
economic value - to the community -
of education?

How much has education contributed

to the economic growth?

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Introduction Woodhall (2004)

Fund Allocating
for
Educational Planning

CONSUMPTION INVESTMENT

Affecting the way in which decisions are made

about allocation of resources

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Consumption

• Consumed in the present.

• Incurred now for the benefits it will
provide in the present

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Investment
• A way of increasing productive
capacity or wealth in the future.
• Incurred bow for the benefits it will
provide in the future.

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 EDUCATIONAL
PLANNING

CONSUMPTION INVESTMENT

BOTH
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Rate of return
approach

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Rate of return approach
The objective of planning is to
maximize the relation between
economic benefits and costs.

(Schultz, 1967 in Woodhall, 1974)

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Three basic ways of presenting
the rate of return on investment
in education
1. By means of a benefit-costs ratio
2. By calculation of the present net
value of the project
3. By calculating the internal rate of
return of the investment

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A benefit-costs ratio

Simply measures the ratio of

discounted future benefits to
discounted costs at a particular rate
of interest.

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The present net value
of the project
The value of discounted benefits
minus discounted costs.

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Rate of return analysis
Simply the rate of interest that
equates the discounted present value
of expected benefits and the
present value of the costs of the
project.

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 Presenting
the rate of return

(1) (2) (3)

A benefit-costs The present net value Rate of return
ratio of the project analysis

Measures of investment yield

have been used to carry out Evaluate investment
cost-benefit analysis of education
of education

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Two calculation types of
rate of return Forojalla (1995)

(1) Private rate of return

To calculate the returns to an individual’s
investment in his/her education by comparing
the costs incurred and the returns or benefits
received by him/her, as a result of his/her
education.
(3) Social rate of return
By considering expenditure on education as a
social investment and to calculate the costs and
the subsequent returns accruing to society.
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Calculation of Rate of Return
(Woodhall, 2004)

(1) Collecting earnings data and

constructing age-earnings profiles.
(2) Adjustments to earnings and cost
data.
(3) Calculating social and private rates
of return.

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Collecting earnings data and
constructing age-earnings profiles
The following list represents data requirements in
ideal circumstances:
(b) Data on earnings of a representative sample of
workers classified by age, educational level
completed or qualifications obtained including
type of course as well as length of schooling,
occupation, sex, social background, location of
employment and some measure of natural ability
such as scores in an intelligence test.

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Collecting earnings data………………………….cont’d

(a) Data on current expenditure of educational

institutions.
(b) Estimates of the capital value of educational
buildings and equipment.
(c) Estimates of private expenditure on fees,
books, stationary, etc.
(d) Public expenditure on scholarships.
(e) Average income tax rates.
(f) Data on labour market conditions, including
rates of unemployment and labour force
participation by age, sex and educational level.

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Adjustments to earnings
and cost data

Made for:
- The proportion of earnings
attributable to natural ability.
- The probability of unemployment.
- The expected growth of incomes.

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Limitations/Weakness of
rate of returns approach
• Benefits: not all can be calculated.
other form of benefits are immeasurable.
(Woodhall, 2004)
• Interpretations of planning: problem to summarize
the state of resources into the economic
contribution of education. (Woodhall, 1974)
• The basic cost data are flimsy and critics take
particular issue. (Combs, 1970)
• Can be somewhat lessened with improved data but
never eliminated, concern the calculation of future
benefits. (Combs, 1970)

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Calculating social and
private rates of return

Steps:

(3) The calculation of a net returns stream

(benefits minus costs).
(4) The calculation of the present value of these
net returns at alternative discount rates.
(5) Identifying the discount rate at which the
present value of the net returns is zero.

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Cost-Benefits
Approach

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 Cost-Benefits Approach
CBA principle is what a rational individual
roughly applies when deciding how best to
spend their money when their desires exceed
their means.
Combs (1970)

The use of CBA is more valuable in deciding

how to allocate resources within education.
Woodhall (1974)

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Cost-Benefits Approach ………. cont’d
Forojalla (1995)

CBA consists of the identification,

measurement and comparison of the
economic cost and benefits of investment
programmes and projects.

CBA is a rational approach to important

decision making.

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 Cost-Benefits Approach ………. cont’d

Prest and Turvey, 1965 in Forojalla, 1995

CBA is a practical way of assessing the desirability

of projects, where it is important to take long view
(in the sense of looking at the repercussions in the
farther, as well as the nearer, future) and a wide
view (in sense of allowing for side effects of many
kinds on many persons, industries, regions, etc.), it
implies the enumeration and evaluation of all the
relevant costs and benefits.

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The purposes of CBA

Investment in human capital in order to

assess it’s economic profitability.

Shultz (1961), Becker (1964), Bowman (1966)

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IS THE EDUCATION CONTRIBUTE
TO ECONOMIC GROWTH
Are all forms of education
Do pupils and students or their equally productive
families take this into account
Is education a profitable
when making educational and
form of investment for
occupational choices
the individual as well as
Which makes the greater society
contribution to future How does education compare
economic growth: investment in with other forms of national
human capital or investment in investment
physical capital
The relationship between the costs and
the benefits in education, viewed as a
form of social or private investment
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Main benefits of CBA
• Provides vital information about the
links between education and the
labour market.
• Gives an idea about the economic
consequence of alternative
educational policies

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The measurement of cost
Social costs
Direct
• Teachers salaries
• Other current expenditure
on goods and services
• Expenditure on books, etc
• Imputed rent
Indirect (opportunity costs)
Earnings foregone
Private costs
• Fees, minus average value
of scholarships
• Books, uniforms, travel,
sports, housing, living costs,
etc
Earnings foregone
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The measurement of benefits
External Productivity
Link: education and training –
economic productivity
(their contribution to the
production of goods and
services to the economy)
Internal to the
education system
Internal efficiency (enables
system to produce more
education) and is measured
in terms of the reduction in
the unit costs per graduate
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The measurement of
discounted cash flow
Woodhall, 2004

All costs-benefit calculations involve the discounting of

future flows of income, as the purpose of the calculation is
to compare the present value of expected future benefits
with the costs of the investment, which must be incurred
in the present. If the costs of the project are spread over
a period of years, these must also discounted, so that all
money values, whether negative (costs) or positive
(benefits), are expressed in terms of their present value.

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CBA Objections
1. Earnings differentials reflect differences in the
natural ability, motivation, social background,
sex, occupation, non-formal education, etc. of
workers as well as differences of education, so
that earning differentials cannot be used as a
measure of the pure benefits of education.
2. Education does not make workers more
productive but simply acts as a ‘filter’ or
‘screening device’ that enables employers to
identify those with superior natural ability.
Earning differentials therefore reflect this
screening or certification function of education
and employers tend to demand higher and higher
educational qualifications, which leads to waste
of resources.
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CBA Objections …………………………….cont’d
1. Earnings differentials do not adequately
measure differences in the productivity of
workers due to imperfections in the labour
market, so that differences in earnings do not
provide a measure of the direct economic
benefits to education.
2. Education generates indirect or ‘spill over’
benefits, that is to say education may raise the
productivity of people other than the educated
worker and these benefits are not shown up in
earnings differentials.
3. Rate of return calculations assume full
employment of educated workers whereas many
developing countries are experiencing
unemployment of graduates and secondary
school leavers.
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CBA Objections …………………………….cont’d
1. Age-earnings profiles drawn from cross-section
data that provide the oasis for rate-return
calculations reflect present and past demand-
and supply conditions, whereas it is future
demand and supply that concern the planner.
Thus, rate of return provide a poor tool for
educational planning.
2. Private rates of return are meaningless as
individuals do not make educational choices as
though they were making a purely financial
investment decision.

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Cost-Effectiveness
Approach

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 Cost-Effectiveness
Approach
CEA is a technique that compares
alternatives such as different types of
school, different combinations of inputs or
different educational programmes in term
of their effectiveness, measured by
variables such as examination results, test
scores, retention and completion rates.

Pscacharopoulos (1985) and Levin (1995) and Woodhall (2004)

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CEA Steps
(a) The costs of the alternatives must be
carefully measured
(b) The outcomes or educational
effectiveness of the alternatives must
be measured.
(c) Costs and effectiveness measured are
combined to calculate a cost-
effectiveness ratio

The most cost-effective

alternative can then be identified
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Levin (1995)
The measures of educational
effectiveness can be those which a
decision maker would normally
consider, such as improvements in
students’ test scores, and that
costs-effectiveness evaluations
generally require less time and
other resources than costs-benefits
analysis.

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Hanushek (2003)
There is mounting evidence that
quality measured by test scores is
directly related to individual
earnings, productivity, and economic
growth.

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Sector-wide
Approaches
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Sector-wide Approaches
SWAPs is an approach to international development
that "brings together governments, donors, and
other stakeholders within any sector. It is
characterized by a set of operating principles
rather than a specific package of policies or
activities. The approach involves movement over
time under government leadership towards:
broadening policy dialogue; developing a single sector
policy (that addresses private and public sector
issues) and a common realistic expenditure program;
common monitoring arrangements; and more
coordinated procedures for funding and
procurement."
(WHO, World Health Report 2000).

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 SWAPs
cont’d
'All significant funding for the sector
supports a single sector policy and
expenditure programmes, under
government leadership, adopting
common approaches across the sector,
and progressing towards Government
procedures to disburse and account for
all funds.‘
Foster (2000)
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World Bank (2001)
Four main features:
(2) Partnership
(3) Comprehensive sector policy
framework
(4) Expenditure framework
(5) Management systems and
capacity building

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Component Programmes
• Programmes management
• School infrastructure
• Teacher development; deployment and compensation
• Equity and gender
• School health and nutrition
• Curriculum development
• Capacity building and decentralization
• Quality of education
• Access and gender
• Non formal education
• Technical education and vocational training
• Finance and management procedure
• Institutional development
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Non-conventional
Approaches

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 The aims
• To review and analyze the current situation and the
experiences of participants’ and other countries
relevant to developing alternative approaches to
primary level education.
• To develop a better understanding of the ways and
means of accelerating the process by adopting non
conventional methods and structures.
• To provide insights into the procedures of achieving
the desired quality of education trough alternative
learning systems.
• To examine the provisions and procedures that need
to be worked out to ensure functional linkage and
articulation between formal and non conventional
practices, including the use of resources.

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The Target Groups
• Children and young people who are not enrolled
in school
• Early school leavers who have not completed
the primary education cycle
• Special population groups identify by their
particular situation and environment

Adults who have been deprived of primary

education WERE NOT totally excluded

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Design framework
• The target population
• Alternative non-conventional
arrangements/structures to meet their
educational needs
• Need-based content/appropriate curriculum
• The learning teaching situation methods,
materials, use of media
• Monitoring and evaluation (achievement and
impact)
• Teachers/facilitators of learning and related
aspects

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None of those approaches provides
an adequate basis by itself for
educational planning
 a new synthesis of all approaches
is needed
 would leave important gaps to be
filled

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Educational planning now needs to get
down inside the system and change it
to make it more relevant and efficient
and productive
 the main way to raise the future
rate of return on educational
investments.

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References
Blaug, M (1967) A Cost-Benefit Approach to educational Planning in Developing
Countries. IBRD
Coombs, P.H (1970) What is Educational Planning?. Paris: UNESCO
Forojalla, S.B (1995) Educational Planning for Development. London: St. Martin’s
Press
Meeting of the IWGE (2001) Sector-wide Approaches in Education: Issues for
donor agencies arising from case studies of Zambia and Mozambique. Paris:
UNESCO
Ranaweera, A. M (1989) Non-conventional Approaches to Education at The
Primary Level. Hamburg: UNESCO
UNESCO (2003) Different Approaches for Achieving EFA: Indian Experience.
New Delhi: UNESCO
West, R. C (2004) Education and Sector-wide Approaches (SWAPs) in Namibia.
Paris: UNESCO
Woodhall, M (1974) The Fundamentals of Educational Planning: The investment
approach to educational planning. Paris: UNESCO
_________ (2004) Cost-Benefit Analysis in Educational Planning (4th ed). Paris:
UNESCO
Free article: Towards A New Approach To Cost-benefit Analysis. 51
 Thank you
Terima kasih Selamat Syukran

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