New Irish Government

Details of the new Irish government is here with Michael Noonan being the Minister for Finance and Brendan Howlin taking the role of public sector reform minister. Joan Burton takes the Social Protection role. People calling that a demotion of sorts obviously understand a lot more about politics than I do and a lot less about economics. This is an extremely key role and she will oversee major changes in how unemployment is dealt with in Ireland. Richard Bruton will take the other main economic portfolio of Jobs, Enterprise and Innovation. Frances Fitzgerald takes a full cabinet position for Children. Ruadhri Quinn will be education and skills minister. James Reilly, a medical doctor, will take on the role of Minister for Health. Willie Penrose will have responsibility for housing and planning. A lot of other departments have been merged. To the extent that politics can impact on the wider world, this really is a historic Dail and there is certainly an opportunity to correct a lot of the failures of the Irish economic development model, while also a very stormy financial climate that creates all manner of threats known and unknown. Without any cynicism or political partisanship, I wish the new Taoiseach and his cabinet well. If I had one thought that comes from partially obsessive study of the economics literature over the last fifteen years or so, it would be "invest in people stupid". One of the key questions for this government will be whether an economic collapse must translate into human welfare failures. There is abundant evidence that this need not be the case and even a glance of the Irish mortality distributions will show that some of the major breakthroughs in Irish history occurred independently of national income levels.

The Hunt Report: Key Recommendations

Key recommendations from the Hunt Report (or National Strategy for Higher Education) have been announced today in the Irish Independent. The Hunt Report has been discussed by Kevin and myself before on this blog. On a previous occasion, I also flagged a report entitled: "Policy Options for New Student Contributions in Higher Education", which dates from July 2009. There is no sign of the Hunt Report on the websites of the Higher Education Authority or the Department for Education and Skills. However, the Education and Skills website does have a link to "Strategy for Higher Education" on its homepage; but this link does not appear to be working. The key recommendations from the Hunt Report, as announced in today's Irish Independent, are as follows:

* Means test for families of students applying for higher education grants to be extended to include assets.
* Mergers of institutes of technology and of smaller colleges.
* Lower fees in key subject areas where there are skill shortages.
* Performance-related pay for college staff but much greater transparency of their workload.
* Increase investment in research and development to 3pc of national income, nearly double the present level.
* No university status for the Waterford and Dublin institutes of technology.

Addendum: The above set of recommendations do not say anything about a student contribution, something that many observers had been expecting. of course, the recommendations listed above may not reflect the entirety of the full report. Also, the other report mentioned above - Policy Options for New Student Contributions in Higher Education - covers the issue of a student contribution comprehensively, for those who are interested. Update: According to another article in today's Irish Independent: "For years, an argument has raged as to whether tuition fees should be brought back or student loans introduced. Controversially, it (the Hunt Report) recommends both." According to a third article in today's Irish Independent, students would have the option of paying part or all of their fees up-front or taking out a loan. The third article also mentions that the report recommends a stronger Higher Education Authority - which would monitor performance by colleges and keep back some funding until they improved their performance. I discussed the potential pitfalls of such an approach before on the blog here.

In relation to the recommendation on means-testing, this issue was previously investigated by an expert group led by Dr Donal De Buitleir in 1993. That group made recommendations to improve the fairness of maintenance grant awards. It was proposed that family assets, including businesses and large farms, be taken into account as well as declared taxable income when eligibility for maintenance grants is being calculated. In addition, an OECD panel of international experts looked at the De Buitleir recommendation in 2005 and strongly urged that it be implemented. So it can be argued that the implementation of this recommendation is long overdue in Irish higher education. Myself and Kevin discuss the above, and other aspects of Irish policy relating to higher education in this blog-post: How Education Policy is Made.

Mandatory Minimum Sentencing, Drug Purity and Overdose Rates

This is the title of an article in the current edition of the Economic and Social Review by Ronald Davies (UCD). Link here. Abstract below.

Abstract: As of 1987, the US’s Anti-Drug Abuse Act (ADAA) has imposed mandatory minimum sentences for drug traffickers based on the quantity of the drug involved irrespective of purity. Using the STRIDE dataset and a differences-in-differences approach, I find that this led to increases in cocaine and heroin purity of 52 per cent and 27 per cent respectively. It also affected the distribution of purity around its mean. Using data on emergency room visits, I show that changes in the distribution of purity had significant impacts on such visits. These results provide insights useful when considering Ireland’s drug policies which include the use of mandatory minimum sentences.

Brian Hayes on Irish Education Policy

Today on his blog, Ferdinand von-Prondzynski mentions that Fine Gael (FG) has just published a policy document entitled 'Reinventing government: protecting services and getting the economy back on track'. Ferdinand notes some references in the document to universities and higher education, but suggests that these references are somewhat in passing, as primary and secondary education get far more attention in the document.

Brian Hayes, former FG spokesperson on Education and Science (2007-10) and current FG deputy spokesperson on Finance, gave attention to salient issues in higher education in his article in last Tuesday's Education section in the Irish Times: 'No more Republic of average'. Besides higher education, the article also addresses primary and second-level education, with the emphasis firmly placed on ideas to reform the overall education system for the better.

Ten points of action are outlined in the article under the following headings: (i) Change the points system and abolish the CAO; (ii) Publish school reports; (iii) Introduce a graduate tax; (iv) Abolish compulsory Irish; (v) Boost teacher quality; (vi) Invest in school leadership; (vii) Schools know best – give them real power; (viii) Let the money follow the student; (ix) Improve the teaching – and learning – of maths; (x) Give parents a greater role on school boards. While I do not agree with all of the detail in some of these policy-suggestions, there is much that will seem intuitive to economists in Hayes' article. Some thoughts are as follows.

The Points-System and the CAO. I agree with Hayes that rote learning does not prepare young people for the challenges they face in today’s world. However, I do not think it is necessary to abolish the CAO. Rather than let universities decide their own entrance system, why not change the CAO system to make it fairer? The system could include more continuous assessment (CA). However, this CA should be marked anonymously, just as the exams are. This would serve to take away the pressure of the Big Day, steer students away from rote-learning, and would still be a fair and transparent assessment method. I also think that having four (instead of three) compulsory subject-choices would be fairer, in that it would be a more level playing-field. I discussed all of this before here.

Publish school reports. I agree that this would be a step in the right direction. Kevin D has commented before on this in detail and mentioned that "when league tables are discussed in an education context it usually refers to comparisons of schools based on exam results... but such tables (real ones) would at least refer to outputs and could, with a little work, be made into a Value Added measure." Why keep parents in the dark about one of the most important decisions they will ever make?

Introduce a graduate tax. I agree that there is a need for a student contribution to resolve the higher education funding crisis in Ireland; and concerns about the fairness of 'free fees' have been discussed before on this blog. Certainly, I think it is undesirable to see the current increase that is planned for the student "registration fee". However, I do not think that a graduate tax is the answer. I would instead recommend an income contingent student loan scheme: the consensus solution offered by economists - which Kevin D has discussed before on the blog.

A good reference in this area is an article in the Guardian from last year, in which Nicholas Barr, LSE economist, argues coherently as to why students are better off under an income contingent loan scheme. In such as scheme, a graduate with low earnings makes low or no repayments, and anything not repaid after 25 years is forgiven. "Thus loans - deliberately and rightly - have inbuilt insurance against inability to repay, protecting graduates who do not do well financially out of their degree." Also, a student loan scheme is more transparent - graduates know what they are being asked to repay. It is ironic that the U.K.'s National Union of Students argue in favour of a graduate tax; they stand to avail of a fairer system now that U.K. Business Secretary Vince Cable has scrapped his plans for a graduate tax.

There are some immediate concerns in the Irish case about whether student loans would provide the upfront-finance needed to resolve the higher education funding crisis. Without a securitisation-strategy (to securitise the value of future loan re-payments), the taxpayer would still have to provide funds upfront so that universities could finance current expenditure. Furthermore, if the loan scheme is interest-free (as it is in the UK) then there is a subsidy (in relation to the time value of money) which is paid for by taxpayers. Securitisation seems to me to be the optimal solution; though of course, someone would have to buy the securities. The only alternative (in current conditions) would seem to be the increase in the "registration fee"; though Irish students should also be aware that they may apply for UK college loans from 2012. The only other possibility that I can imagine is to invite the UK Student Loans Company to set up shop in Ireland.

Finally, in relation to income contingent student loans, it should also be mentioned that the Australian student loan scheme has been evaluated in a very positive light in relation to its impact on equality of access; Bruce Chapman and Chris Ryan report the following: "The social composition of participants was different in 1999 from that of 1988: the distribution was more equal. That outcome reflected strong relative growth in participation in the middle of the wealth distribution. ...We find no evidence that participation fell among 'marginal decision makers'—those who, while at school, did not intend to study at university. We conclude that HECS did not discourage university participation in general or among individuals from low wealth groups."

Abolish compulsory Irish. I agree that it should be optional to study Irish for the Leaving Cert. While the Irish language is important for heritage (and knock-on effects on tourism), do we not get enough of that benefit by schooling students in the Irish language up until Junior Cert.? Those who want to study Irish at third-level (and I can see the need for this) could enter third-level courses that pick up where Junior Cert. Irish left off. I made this suggestion before here.

Boost teacher quality. While I agree that teacher evaluation and indeed teacher incentives, should be considered in more detail, there are pitfalls to be avoided in this area. There is research by Pedro Martins from the University of London (based on robust quantitative methods) which shows that an increased focus on individual teacher performance caused a significant decline in student achievement. It is possible that the mechanism behind this relationship is teacher-motivation.

Schools know best – give them real power. More school-level autonomy could reduce the risk that capital works related to school building projects do not go ahead. One model of enhanced autonomy (and accountability) is the charter school in the United States.

Let the money follow the student. Hayes does not use the term "school voucher" but that seems to be what he is referring to by "pupil premium". There is evidence from robust quantitative research in Colombia that a school-vouchers program "increased test scores by two-tenths of a standard deviation in the distribution of potential test scores. Boys, who have lower scores than girls in this population, show larger test score gains, especially in math."

Improve the teaching – and learning – of maths. I agree that "while the debate on bonus points is important, the teaching of the subject is the real issue". My reservations about the bonus points scheme for maths are documented here.

Give parents a greater role on school boards. Some charter schools are founded by teachers, parents, or activists who feel restricted by traditional public schools. A string of high quality studies have found that students benefit academically from attending a charter school rather than a traditional public school (in the United States).