Innovation in Education: The Hidden Challenge

Even when the limitations of an education system are quite obvious, innovations are hard to come by. This is a lesson many well-meaning investors and hard-charging entrepreneurs have learnt at great cost, yours truly included, but why this is so has evaded them completely. 

Usually, one finds soul-comforting explanation in bureaucracy or in institutional politics. But this do not explain why there is so little demand for all these 'innovative' offerings and why, unlike other sectors, the customer preferences - employer demands and students' desires - do not overwhelm the traditional sectors and ease the path of innovation. And, even where swelling demography and broken education seem to be hurtling towards certain disaster - like in Asia and Africa - new ways of educating appears more, and not less, difficult. 

For example, India, faced with the task of educating a huge workforce at a time when automation and reversal of globalisation threaten most jobs and industries, took the unusual path of discouraging Distance Learning and investing in building more selective, state-sponsored, schools. This apparent contradiction - anti-innovation as it limits access and cuts down market-driven change (distance learning was growing exponentially in India before the Government stepped in) - is driven by, I shall argue, the hidden structure of value creation in education. 

It is common knowledge that the allure of degrees - of diplomas, rankings, institutional prestige etc - maintains the structure of education. This is what most education innovators struggle against, and they assume that this is an anomaly, a big mistake that the students and their parents make. Following on, they assume that this will change when a better education, creating better value - with greater employability, or skills, or expertise - is on offer, the allure of pointless degrees will disappear. Therefore, so many people commit themselves to disrupt education.

However, all this is based on a theory - Human Capital theory - so much in fashion among the policy-makers. This assumes that education enhances productivity of the students and therefore, add economic value. This theory is automatically accepted, and no one ever questions its merit. If they did, they would look to Signalling Theory, that education basically adds value as a proxy - since someone has completed a degree, we know that they have persisted through a demanding system and would therefore be capable of doing so again - and the actual gain in productivity through education may amount to little. The reason why Human Capital theory, coming from Economists such as Gary Becker, trumps Signalling Theories is because the latter remains mostly in domain of Sociology and also, from my reading of it, very French (my exposure to it comes through reading of Bourdieu). It's just not fashionable enough, outside the Academic circles.

Most works in Education Economics, Policy Making and Investment Modelling are based on the Human Capital approach. Even those who would accept the value of Signalling - it is empirically obvious - this would amount to very little. But it is not so, says Bryan Kaplan, and ascribe a large proportion of Graduate Premium (the amount a graduate would earn in her lifetime over and above the average lifetime earning of a High School Diploma-holder) to Signalling Effect. And, this certainly makes anecdotal sense - all of us know what people really value, the degree - as well as empirically, as the most successful education businesses are not disruptive ones, but those that market degrees and builds schools. 

Why do we not see it if it's so obvious? This is because Human Capital is the paradigm we live inside - we believe education raises productivity - and therefore, any contradictory evidence, even if it's obvious, is treated as an anomaly. And, I have a further argument to offer: That how Education creates value changes in line with the society it serves. Signalling Effect is greater in societies such as India, where Labour is abundant, jobs are relatively low-skill, society is stratified and access to Education is very limited. An expanding, rapidly evolving technological economy makes human capital potential of education greater - America is perhaps at that tipping point where the conversations about moving away from Signalling is real - though the ideas linger long after its validity is over. 

At some point in the past, I took the optimistic view that Google and Facebook of EdTech would come from India. This was based on simplistic assumptions that the dynamic and big consumer market, free access to Internet, technology skills and investment capital would come together here. However, I did not take into account the models of value creation through education and single-mindedly followed the assumptions of Human Capital theory. For reasons I explain here, innovations in Education in India would be more difficult, even if the need is urgent and the possibilities are bigger, not because the bureaucracy is more entrenched (it is not: rather, everything is possible) or the education sector is more evolved, but because the consumers of education, the middle class, would not want change. This is different from other sectors, where India may actually take lead in innovation, and this difference is due to the value of 'Signalling'.

If I strike a pessimistic note, I should make correction. I don't deny the possibilities of change, and I think the balance between Human Capital and Signalling effects are altered by changes in the society, primarily through technological change and changes in economic activities. I am actually optimistic that we are on a threshold of another great age of change, after the relative hibernation since the 70s, when technologies and new geopolitics would usher in new forms of production, consumption and collaboration. This will change education, perhaps with a lag of few years, and how it creates value, which would open up new possibilities of innovation. Well, good things come to those who wait, perhaps.


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