Efficiency in Education

Inputs, Outcomes and the Transformation Process and Implications for Policy
Efficiency in Education presupposes a transformation of some kind. One can think in terms of
what was in hand before the transformation, what was in hand after the transformation, and one
can also think about the transformation process itself. The before elements are commonly referred
to as inputs, or resources while the after elements are called results, outputs, or outcomes. The
transformation process is sometimes less obvious. For example, in an educational setting, a teacher
can be thought of as an input while teaching is an important part of the actual transformation
process.

The concept of efficiency is often connected to a moral imperative to obtain more desired results
from fewer resources. Efficiency needs to be thought of as a matter of degree. Efficiency is not a
"yes/no" kind of phenomenon. It is instead better thought of in relative or comparative terms. One
operation may be more efficient than another. This said, the more efficient of the two operations
could become even more efficient. The quest for greater efficiency is never over, and this sense of
a perennially unfinished agenda is one source of the generalized sense of anxiety that tends to
surround the efficiency concept.

The Choice of Outcomes

If the goal is to obtain more desired results from fewer resources, then it is important to be clear
about what is being sought. Society might have a very efficient system because a large amount of
outcome is being obtained relative to the resources being spent or invested, but if the outcomes are
out of sync with what is truly desired, there is a real sense in which the system is not very efficient.
Of course, this invites important questions about who gets to decide what counts as a desirable
outcome, and in education there are longstanding and ongoing debates over what the educational
system ought to be accomplishing.

Suppose a school wants to provide a high degree of personalized attention as part of its program.
Is this an input or an outcome? Let us suppose that this is a costly thing to do. The school that
pursues this strategy is going to consume more ingredients and if only the standard outcomes are
looked at, this school is going to look like costs are high relative to the outcomes that are realized.
Hence, the school could look inefficient for the simple reason that it has chosen to pursue a
different set of educational goals. There is also the possibility that a locally selected goal can
interfere with or undermine one of the state selected goals.

In addition to reaching agreement about the mix of outcomes to pursue, there are important
measurement issues to consider. An interest in efficiency is frequently accompanied by an interest
in measuring magnitudes. If one is seeking more out of less, one frequently wants to know "how
much more," and the result has been a boom in the efforts by educational psychologists and others
to develop valid and reliable measures of the learning gains of students. Critics of efficiency
analysis in education worry that ease of measurement can unduly influence the selection of the
outcomes that the system will be structured to achieve. In other words, the worry is that the drive
for efficiency will lead, perhaps inadvertently, toward the use of educational outcomes that are
chosen more because they are easy to measure than because of their intrinsic long-term value for
either individual students or the larger society. Standardized tests of various kinds have been relied
upon as measures of the outcomes of schooling and have been criticized on these grounds.

Sometimes there is interest in the economic consequences of schooling, and this interest has
prompted analysts to use earnings as a measure of schooling outcomes. A rich literature has
developed in the economics of education where efforts have been made to estimate the economic
rate of return to different levels and types of schooling. This is a challenging area of research
because earnings are influenced by many factors and it is difficult to isolate the effects of
schooling. The goal of this research is to capture the value added by schooling activities.

The relevance of the value-added concept is not limited to economists' studies of rates of return.
Even in cases where the focus is on learning outcomes as measured by tests or other psychometric
instruments, there are questions to answer about the effects of schooling activities relative to the
effects of other potentially quite significant influences on gains in students' capabilities. Serious
studies of the efficiency of educational systems measure educational outcomes in value-added
terms.

Measurement issues also arise from the collective nature of schooling. The results gained from
schooling experiences are likely to vary among individual students and this prompts questions
about how best to examine the result for the group in contrast to an individual student. Is one
primarily interested in, say, the average performance level, or is there a parallel and perhaps even
more important concern with what is happening to the level of variation that exists across all of
the students within the unit, be it a classroom, grade level within a school, a school, a district, a
state, or a nation? The early research on educational efficiency in the 1960s placed a heavy
emphasis on average test score results for relatively large units like school districts. More recent
work demonstrates greater interest in measures of inequality among students. The standards-driven
reform movement includes a considerable amount of rhetoric about all students reaching high
standards; the analysis of efficiency presupposes an ability to move beyond the easy rhetoric to
make clear decisions about how uniform performance expectations are for students.

In addition, there is an important distinction to maintain between the level at which a system
operates and the rate at which inputs are being transformed into outcomes. One can "get the outputs
right" so that the desired items are being taught/learned in the correct proportion to one another.
In such a case, gains in the understanding of mathematics are occurring in the correct proportion
to, say, gains in language capabilities. But this says nothing about the absolute level at which the
system is operating. The naive view might be that the system should operate at 100 percent of its
capacity, but this overlooks the fact that scarce resources are needed to operate at this level and
that education is not the only worthy use of these precious resources. Policy-makers must make
often difficult trade-off decisions about the level at which the educational system will operate
relative to the level of other competing social services. The early twenty-first century is witnessing
a considerable amount of debate over the proper level at which to set the educational system, often
as part of an effort to define what counts as an "adequate" education.

With respect to outcomes, the goal is to reach agreement about (1) the relative mix of performance
outcomes to realize; (2) the degree of uniformity of performance across students; and (3) the level
of capacity at which the system should operate. In addition, there needs to be an ability to measure
what is being accomplished.

The Choice of Inputs

The outcomes that are selected drive the entire system. Input issues, in contrast, are more
straightforward and almost mechanical in nature. Once what is to be accomplished is known, at
what level, and for whom, society can then turn to the challenge of doing so in as economical a
way that is possible. In other words the goal is to accomplish the desired results for as little cost
as possible, and this involves making the best possible use of whatever ingredients or resources
that are available.

Although this seems straightforward, there are a number of complexities that need to be
considered. First, there is the dynamic nature of the process. As time passes, more is learned about
how to make better and better use of the available resources and new resources may also become
available. A good example of a new resource lies in the area of telecommunication and computing
technology. These advances have great potential to affect the day-to-day life of educational
practice. It is also important to keep in mind that the nature of how technology develops is not
external to the system. Technology does not develop in a vacuum. Instead, there are sometimes
powerful forces that shape the nature of how technology develops. For example, many existing
instructional computing technologies are designed to supplement rather than to supplant existing
classroom activities. This tendency for computing to be treated as the handmaiden of the traditional
classroom structure may not be in the best long-term interest of the larger society.

Second, there is the technical versus cost dimension to consider. A particular resource or input
might be highly productive in the sense that a small amount could make a significant difference,
but this same highly productive resource might be extraordinarily costly. For example, suppose
having one hour per week of a Nobel prize winning physicist's time turns out to be an
extraordinarily productive input for high school students who are learning physics. Suppose further
that such a resource is quite costly. In contrast, an hour per week of a local Ph.D. in physics might
be less costly but let us also say that it is less productive. From an efficiency perspective, the
question is: How do the ratios of benefit relative to cost compare? It is quite conceivable that the
benefit/cost ratio for the Nobel prize winner is smaller than the comparable ratio for the local
Ph.D., even though the absolute measure of the Nobel prize winner's effectiveness (i.e., the result
per unit of input) is higher.

Third, in addition to making sense of benefits relative to costs, there is also the challenge of making
the best possible use of whatever resource is being employed. For example, just because a Nobel
prize winner has the potential to be a very productive input does not preclude the possibility of
that resource being squandered in a particular setting, and the same can be said of the local Ph.D.
in physics, or an artist who is hired to spend some time in a school. The quest for greater efficiency
requires the parties to make the best possible use of whatever resources come into their possession.

Finally, there is the potential for the costs of inputs to influence the selection of outcomes. Some
outcomes are more costly to produce than others. For example, a student who finds it difficult to
learn will, by definition, be relatively costly to educate, and these extra costs could influence
decisions that are made about how uniform to make the learning outcome standards. And thus, the
distinction between outcomes and inputs begins to break down.

The Transformation Process and Implications for Policy

Policymakers are very interested in assessing the degree of efficiency in educational systems. One
difficulty arises when indicators are used that fail to provide accurate information. For example, a
widely available statistic is the level of spending on education expressed on a per pupil basis. At
first glance, this looks like an efficiency indicator since it provides insight into the commitment of
resources (the expenditure figure) and the result (the number of students being served by the
system). Critics note that this statistic has been rising over time and conclude that the system is
becoming less efficient. There are many reasons to be wary of using an expenditure per pupil
statistic and its changes over time to reach such a conclusion. Even with a control for the effects
of inflation, there remains a fundamental problem on the outcome side of the analysis since there
is no direct measure of what the schools are accomplishing and how this might have changed over
the period.

Even if accurate, noncontroversial measures of efficiency and its changes over time can be
obtained, it is difficult to obtain clear insight into what policies should be developed to ensure
gains in efficiency without undermining other key social goals like fairness and freedom of choice.
Much of the challenge here depends on the fundamental nature of the transformation process that
is presupposed as part of the efficiency concept. The efficiency concept derives from the field of
economics where it was initially applied to industrial production processes such as the manufacture
of automobiles. These industrial manufacturing processes involve the combination of numerous
nonhuman ingredients such as lengths of steel, aluminum, glass, chrome, and so forth. These
ingredients are transformed thanks to various physical and chemical processes whose scientific
properties are relatively well understood, making the results quite predictable.

For a manager whose goal is to improve efficiency, this kind of information is invaluable. With
this information the manager can compare higher performing units with lower performing units
and make a diagnosis about the source of the inefficiency in the underperforming units. There may
be problems with a unit's ability to get the most out of the inputs it is using; there may be a less
than optimal mix of inputs being used; and/or the mix of outputs being produced may be
misaligned. The "efficiency expert" in such a situation is able to pinpoint the source of the
difficulty and can prescribe steps for improvements.
In contrast, the educational process is heavily committed to the use of human resources and the
various inputs are brought together and transformed in ways that are sometimes difficult to predict.
Without denying the significance of the human dimension within industrial manufacturing
processes, it stands to reason that the production or transformation process that lies at the center
of educational systems is fundamentally more complex and less well-understood than production
in the industrial sector. A better comparison comes from studies of efficiency in crop production
in the field of agricultural economics. But even here, the production process for growing a
particular plant is better understood than is the process through which human minds mature and
acquire knowledge and understanding. Indeed, it is possible to question whether the educational
process really lends itself to the input-output, mechanical formulation that lies at the heart of the
efficiency concept. According to this view, educational growth is inherently unpredictable, and the
teacher is better thought of as a creative artist than as a productive input whose impact can be
measured and predicted in a rigorous and scientific way.

While it is clear that knowledge of the technical properties of the educational process is more
limited than what exists, say, in the area of automobile manufacturing, it does not follow that the
educational process is inherently unknowable in this sense. In other words, the lack of progress to
date in coming to grips with the technical properties of the education transformation process does
not mean the process is inherently unpredictable and unmanageable. A more prudent conclusion
is that care needs to be exercised in efforts to assess the efficiency of educational systems. It also
follows that care needs to be exercised in the use of the efficiency assessment data that are
gathered.

Consider the following example of how the results of an efficiency analysis in education can be
misapplied. Suppose an analysis goes forward that suggests that a particular school or school
district is less efficient than most others. Suppose the response is to penalize the less efficient unit
by reducing the flow of state or federal resources. A byproduct of such a policy is a reduction in
the funding of the education being provided to students who through no fault of their own find
themselves located within an inefficient educational system. Those who work to improve the
efficiency of educational systems must guard against this potential to "blame the ultimate victim"
of the situation. Similarly, the use of incentives to encourage greater efficiency runs the risk of
rewarding those who are already enjoying considerable success. If the problem lies with the
unknown nature of the production process, it is perverse to be implicitly penalizing the
underperforming districts because they do not have knowledge that is lacking elsewhere.
Penalizing underperformers makes sense only if the knowledge is available and the penalties are
meant to provide greater incentive to find it. States sometimes handle this by providing technical
assistance but technical assistance really works only when it is based on bona fide knowledge,
something which is not always possible, given the continued limited understanding of the
properties of educational production under a wide range of circumstances.

At this stage of development in efforts to apply the efficiency concept to the field of education
several conclusions can be reached.
 1. It is important to make sure that the comparative information suggesting that one
educational unit is more or less efficient than another is accurate.
2. This accurate comparative information needs to be used as a set of guidelines/suggestions
and needs to stop short of becoming overly rigid and prescriptive.
3. Efforts need to be made to monitor very carefully the results of attempts to improve the
efficiency of educational systems that are perceived to be below expectations.
4. Additional research efforts need to be made to better understand the technical properties of
the transformation process that gives rise to desired educational results.
The results of this continuing research will be instrumental in future efforts to make further
efficiency improvements in education and can go far toward reducing the ambivalence that
historically has characterized educators' reaction to the efficiency concept and its application to
the field of education.