NEPC Review: The Efficiency Index

A new report that scores and ranks national education systems based on their efficiency has been receiving considerable media attention on both sides of the Atlantic. Efficiency is measured based on test scores, and resource use is analyzed in terms of teacher wages and pupil-teacher ratios. Looking across the 30 countries, the model predicts that, in order to get a 5% increase in PISA scores, teacher wages would have to go up by 14% or class sizes would have to go down by 13 students per class. But the optimal wages and class sizes for any given country may sometimes demand an increase or decrease in one or the other factor. For Switzerland, for example, the optimal teacher salary would require wages to be cut by almost half; for Indonesia, wages would have to be increased more than three-fold. For four countries, the optimal class size is estimated at fewer than two students per teacher. These extreme findings are due, in large part, to weaknesses in each of the study’s three key elements: the output measure is questionable, the input measures are unclear, and the econometric method by which they are correlated does not have a straightforward economic interpretation. The report may satisfy an apparent keenness for reports that rank countries— and especially for reports that castigate low-rank countries. But it does not advance our understanding of how to make the provision of education more efficient.

Document Reviewed:

The Efficiency Index

Peter Dolton, Olivier Marcenaro-Gutiérrez, and Adam Still
GEMS Education Solutions