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To refund or not to refund? The sense in Government's intent to pay back external exam fees to successful students

Published:Sunday | February 14, 2010 | 12:00 AM

Peter-John Gordon, Contributor

Sixth-form students at Herbert Morrison Technical High School in Montego Bay, trying to meet their deadline, use their lunch hour to complete their assignment. - File

It has been reported in the media that Jamaica's letter of intent to the International Monetary Fund indicates a policy shift with regard to the payment of external examination fees for secondary students. The old policy entailed the payment of fees for select subjects for all students registered; the new policy will be a reimbursement of examination fees for select subjects, conditional on satisfactory performance in the examination.

In order to determine whether economic or social policy is good or bad, two criteria are used. The first is effectiveness, i.e., does the policy achieve the goals? The second is efficiency, i.e., does the policy achieve the goals at the least possible cost? Included in the second criterion is not only monetary cost but unintended consequences, i.e., has the policy altered behaviour not only in the intended sphere but otherwise?

The effectiveness of a policy cannot be ascertained without a clear indication of the intent of the policy, because effectiveness is a measure of how close the actual outcome is to the desired. The objective of the prior policy of paying fees for all students was to ensure that poor students who could not afford the examination fees in the prescribed subjects would not be denied the opportunity of sitting those examinations. On grounds of effectiveness, the policy scored very highly, as no student would be denied the opportunity to take particular examinations on the basis that he or she was not able to afford the examination fees. On grounds of efficiency, the policy was a complete disaster. The policy was costing much more than was required to meet the objective and was inducing undesired behaviour on the part of students.

The Government's policy of paying the examination fees of all students in order to ensure that the fees of the poor are paid, is wasteful. The cost is far more than it should be, because the Government is paying the fees of the affluent, as well as those who have little interest in the prescribed subjects - rich or poor. There are thousands of students whose families are capable and willing to pay their examination fees. Government paying the fees of these students is an unnecessary (wasteful) expense. Without the Government's assistance, these students would have taken these examinations, so the policy here changes nothing. This policy induces a distortion in behaviour (which should be included in the cost). It affects the course selection of students and the effort which students apply in preparation for the examinations.

There are students who have little interest in the particular subjects and would not, therefore, opt to sit them in external examinations if they were required to pay. They register for these subjects because the payment of fees by the Government is not a cost to them. The effort required by students to pass these examinations is not applied by many, because there is no cost to them upon being unsuccessful in these examinations.

It is difficult to assess the new policy because no clear objectives have been stated and, in order to determine whether a policy is good or bad, its outcomes must be measured against the desired results. If we assume that the objectives of the old policy are the ones being applied to the new one, then we are able to comment.

faulty assumptions

Reimbursement of examination fees after the results of the examinations are published presupposes that the students were able to pay the fees. But this assumes away the problem which led to the policy initiative in the first place. Unless the underlying assumption is that there is a credit market where poor students can borrow examination fees. The imperfection of the capital market in Jamaica precludes such borrowing on a large scale. This policy shift will not assist the poor in being able to sit external examinations, i.e., it is an ineffective policy. If the policy fails to meet the desired outcome, it makes little sense to examine the cost involved. Efficiency is concerned with picking from among the various alternatives which are able to deliver the desired outcome, the one that is least costly. Policies which cannot achieve the desired outcome should be excluded from consideration.

are there any real benefits?

What the reimbursement policy ensures is that persons who do well on external examinations will be refunded the cost of the examinations, whether they are rich or poor. One could argue that this policy incentivises good performance among those who can afford to take the examinations. However the benefits, over a lifetime, of doing well on external examinations far exceed the cost of taking them, and so, any additional financial benefit given in the form of a fee reimbursement is unlikely to solicit any additional effort among students, i.e., the policy will not change the outcomes. One could also ask: if a student is able to pay his or her examination fees, and receives the benefits which accrue from doing well on these examinations, why should he or she be reimbursed by the taxpayers?

The Government's policy advisers were correct in identifying that the old policy was a bad policy and should therefore be altered or abandoned. They have, however, failed to distinguish themselves in the alternative proposed. If the intent is to help those who cannot pay for examination fees without taking on excessive cost and distorting behaviour, the more sensible thing to do would be to marry a means test with a screen test.

Many schools have a screen test for students preparing to take external examination. In fact, this screen test is used by some schools to determine which students should be allowed to enter for which subjects. Students who show promise from the screen test and who, according to a means test, are in need of financial assistance to afford examination fees, should be assisted by the Government. Such a policy would ensure that only those students who are in financial need and who have a reasonable chance of being successful in the examinations of the prescribed subjects would receive financial assistance from the taxpayers in paying their examination fees.

Peter-John Gordon is from the Sir Arthur Lewis Institute of Social and Economic Studies at the University of the West Indies, Mona.