Diluting the role of the IIT JEE

The JEE used to serve India well

Many years ago, high school education in India worked in a twin track system: There were those who studied for the IIT JEE and there was everyone else who didn't. The former studied good books like Resnick/Halliday, which is a college level book elsewhere in the world, solved physics problems from Irodov, etc.



In contrast, studying for the 12th standard ("board examination") tended to emphasise rote memorisation, focusing on trivial questions where you had to plug numbers into a formula, emphasised accuracy of calculation and good handwriting. I vividly remember a textbook for 11th class physics used in Maharashtra, which said that Newton's second law did not apply for living things and powered vehicles. The thoughtful author must have wondered how a stationary cat started walking without the action of an external unbalanced force, and resolved the problem by limiting the footprint of Newton's second law. The less time that kids spend in studying for board examinations, the better.



I used to be optimistic that the footprint of the enhanced curriculum, and complexity of examination questions, lay far beyond the tiny number of people who entered IIT. Even if only 2,000 kids entered IIT, if 40,000 of them studied for the JEE, it gave them world class capabilities at high school. In each cohort, we got 40,000 people who were very good by world standards. In a country with pervasively low capabilities, it was very useful having this slice of high inequality of knowledge, for it gave a group of people who were able to learn modern technology, connect to globalisation, and create firms which generate a lot of high-paying jobs. It is fashionable to complain about inequality of knowledge, but given that you are in a LDC with a very low mean, would you really rather have very low variance??



With this old configuration, we also got a nice tool for inter-generational class mobility. The middle class got their kids into IIT, and almost all these graduated into upper class by the time they were 30.



More generally, a lot of countries have found that high stakes examinations are a good thing. High stakes examinations push the work ethic, grow the ability of young people to work hard in a sustained manner with high concentration, ensure foundations of mathematics and science, and encourage a meritocracy. They create a self-selected elite of young people who are not immersed in and defined by mass culture. All these are good things.

Problems of the JEE

I used to think like this for a long time. I have reluctantly been persuaded, over recent years, that the JEE isn't working so well.



Too many young people are studying for the examination and not the subject. The obsessive focus upon coaching classes is producing a one-dimensional personality which isn't so well suited to entering college. In the 1980s, the most interesting students in IIT were thinking people who read books, knew a lot about the world, and could also solve monkeys on pulleys. With brutal competition, and the coaching classes phenomenon, too often, all that's left today is the monkeys on pulleys. There is a certain kind of parent who is willing to have a child go live in Kota at age 15. This screened out many families from the race.



Economists know about this phenomenon in agency theory. High-powered incentives are a problem because the agent only focuses on the incentive and tends to cut corners (or worse) on everything that's not mentioned in the incentive contract. Andrade and Castro bring this generic idea in agency theory into the question of examinations, and find similar effects.



In the 1980s, there was substantial diversity of background, experiences and class amongst the students. This was a good thing, since students would then pick up the culture of people unlike them. In recent years, it appears that there is much greater homogeneity of background, experiences and class. The extent to which the person gets transformed in the four years has, as a consequence, gone down. When very few children of the elite go to IIT, this reduces access to the knowledge and networks of the elite for everyone who goes to IIT. This has reduced the ability of IIT to generate inter-generational class mobility.



Jishnu Das and Tristan Zajonc have found a nice bump in the upper tail of the distribution of skills in India. The pessimist sees this as being about class or caste: certain families bring up kids who know more. The optimist in me used to think this was the bunch studying for the IIT entrance. Also see Geniuses and economic development on the importance of the upper tail of the skills distribution.



It is increasingly difficult to be optimistic about how this is going. Narendra Karmarkar graduated from IITB in 1978, and went on to do truly important work in 1984. My optimism about the IITs peaked in 1984. Phenomena like Narendra Karmarkar should have scaled up manifold in the following years. This has not happened. In the 1980s, I used to think that by 2010, we'd have atleast one Nobel laureate from the IITs. That has not happened. This tells us that the IITs are not delivering on their early promise; things haven't worked out well in the following years. While the IITs suffer from many problems, I think the JEE is also a part of the problem.



One of the most disappointing features of the recent OECD PISA evidence was the absence of this bump in the upper tail. This new evidence shows a scary world of low inequality of skill, of a country with a terrible mean and no upper tail of an elite that can power the country out of mass poverty. I would conjecture two potential explanations for what has been found. One, it could be the case that this testing was done at age 15, at which time not much of the IIT JEE studying has as yet taken place; we're only picking up the victims of board examinations. Alternatively, it could be the case that studying for the IIT JEE is distorted by the coaching class phenomenon, and is not producing good knowledge.

But the solution being offered doesn't seem to be the right one

There are two views on how these problems can be solved. The first alternative is to shift away from admissions based on a high stakes examination. Universities in the US screen applicants on many parameters, so this is generally thought to be better. But when we look back in history, universities in the US used to focus primarily on academic performance only, until a glut of Jews showed up in Harvard. The shift to asking for `well rounded personalities' was a tool by the dominant anti-semetic elite to screen out Jewish kids who did not play football. So we should be cautious in respecting the undergraduate admissions process in the US. It is also important to remember that the quality of kids starting college in the US is quite weak by world standards. There are other countries (e.g. Japan) where large scale high-stakes examinations are used for university admissions, with much success.



I feel that the core problem that we have in India is just too few seats, which has generated a ridiculous extent of competition and distorted behaviour on the part of the kids. The solution lies in solving the policy problems in higher education, so that a large number of kids are taken into world class institutions every year. E.g. adding undergraduate programs at I I Sc, with recruitment through the JEE, was a move in the right direction. We need to grow the size of the entrant class in universities in India, that figure in the Times Higher Education Supplement ranking, by 25-fold. At present, we have only one university in that list - IIT Bombay.

Kapil Sibal is offering neither of the two solutions above: we are not being offered a modified admissions process based on looking at a fuller picture of the child, and we are not being offered a Japanese scale world of high stakes examinations with a lot of seats in world class universities. What we're being offered is a scaling down of the role of the IIT JEE. A greater role for the 12th standard examination is just a recipe to emphasise rote memorisation, focusing on trivial questions where you had to plug numbers into a formula, emphasising accuracy of calculation and good handwriting. This seems wrong to me.





You may like to also see: Education in India: A compact reading kit.

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Girish Sant

Girish Sant, at New Rajendra Nagar in New Delhi, 10 January 2002

Girish Sant died of a heart attack in a hotel in Delhi yesterday.



`Bandya', as he was known to friends, could have chosen any career when he stepped out of IIT in 1986. He chose the less travelled path of taking interest in the public policy, and applying himself to a combination of technical mastery and the dogged persistence that is essential to making a difference. He founded a think tank, Prayas, which has come together as a pretty unique organisation in the Indian landscape. The Indian development project desperately requires more people who combine his intellect with his commitment to fixing up the world.



I always thought of Bandya as a gentle giant. He combined a soft and understated personality with depth of knowledge. When I spoke with him, I was always running at 100% CPU utilisation.



On a more personal note, Bandya was a lead climber in the first ascent of Konkan Kada, and I was part of that team. That was a peak experience. We will miss him.

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Battlefronts

Freedom of speech is high on our minds in India today, with the
problem rooted in laws about three fronts: obscenity, defamation and
hate speech. While freedom of speech is an essential foundation of
democracy, it is closely connected with other dimensions of freedom.
Here are some fascinating episodes, in the liberal project of
getting to personal freedom.

United States, 1644

Faramerz
Dabholwala in the Guardian:

When the Massachusetts settler James Britton fell ill in the
winter of 1644, he became gripped by a "fearful horror of
conscience" that this was God's punishment on him for his past
sins. So he publicly confessed that once, after a night of heavy
drinking, he had tried (but failed) to have sex with a young
bride, Mary Latham. Though she now lived far away, in Plymouth
colony, the magistrates there were alerted. She was found,
arrested and brought back, across the icy landscape, to stand
trial in Boston. When, despite her denial that they had actually
had sex, she was convicted of adultery, she broke down, confessed
it was true, "proved very penitent, and had deep apprehension of
the foulness of her sin ... and was willing to die in satisfaction
to justice". On 21 March, a fortnight after her sentence, she was
taken to the public scaffold. Britton was executed alongside her;
he, too, "died very penitently". In the shadow of the gallows,
Latham addressed the assembled crowds, exhorting other young women
to be warned by her example, and again proclaiming her abhorrence
and penitence for her terrible crime against God and society. Then
she was hanged. She was 18 years old.

India, 2007

Vinod
K. Jose in Caravan magazine:

...on the morning the poll was published, an angry mob of about 50 people
attacked the Dinakaran office in Madurai, Azhagiri's home base. They
threw petrol bombs and set the newsroom on fire; two journalists and a
security guard were burned alive.

Pakistan, 2012

Declan
Walsh in the New York Times:

One morning last week, television viewers in Pakistan were treated
to a darkly comic sight: a posse of middle-class women roaming through
a public park in Karachi, on the hunt for dating couples engaged in
`immoral' behavior.

Panting breathlessly and trailed by a cameraman, the group of about
15 women chased after - sometimes at jogging pace - girls and boys
sitting quietly on benches overlooking the Arabian Sea or strolling
under the trees. The women peppered them with questions: What were
they doing? Did their parents know? Were they engaged?

Some couples reacted with alarm, and tried to scuttle away. A few gave
awkward answers. One couple claimed to be married. The show's host,
Maya Khan, 31, demanded to see proof. ``So where is your marriage
certificate'' she asked sternly.

India, 2012

Reportage in
the Hindustan
Times:

Over 50 Shiv Sena activists attacked the The Times of India building
at south Mumbai on Saturday and damaged plants and furniture at the
reception.

The men, who claimed to be supporters of former Sena MLA Anandrao
Adsul, were protesting against a news report that appeared in
Maharashtra Times, a Marathi daily. The report speculated that Adsul
was on his way to join the Nationalist Congress Party.
Adsul, who addressed the media later, has threatened to file a Rs
100-crore defamation suit in addition to a complaint with the State
Election Commission and Press Council of India. "Such baseless
allegations made without hearing my version won't be accepted," Adsul
said. The Sena man was unapologetic about the incident. "My supporters
went with a letter, but they were not allowed inside. So they reacted
in anger."

India, 2012

Johnson T. A. in the Indian Express:

While she was being beaten up, Suvarna insisted that she would only
marry Govindaraju and that it was she who wanted to meet him that day,
Govindaraju told the police in a statement last week when he briefly
emerged out of hiding. An enraged Davalana, according to the police
complaint, directed his relatives to `hang this girl who is insistent
on marrying a Madiga'.

Police investigators say they believe Suvarna probably died after
the thrashing from her father at her relative's house but her body was
dragged to Govindaraju's house and strung up on a rope to make it seem
like a suicide in the lover's home.

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Inflation targeting has come to the US

Reportage by Robin Harding and Michael Mackenzie in the Financial Times:

The rate-setting Federal Open Market Committee predicted low interest rates until late 2014 and set a formal inflation objective of 2 per cent, reflecting chairman Ben Bernanke’s long-held goal of providing greater transparency.   

The FOMC downgraded its estimate of growth in the coming quarters from “moderate” to “modest” and Mr Bernanke indicated that another monetary boost for the economy – most likely another round of quantitative easing, or QE3 – remained an option.

“We are prepared to take further steps in that direction if we see that the recovery is faltering or if inflation is not moving toward target,” Mr Bernanke said.

The Fed also published its first detailed forecasts of future interest rates. 

... 

Adopting the 2 per cent objective is a historic move that binds the whole FOMC to a defined goal that will endure after Mr Bernanke leaves. It means the FOMC can easily justify more easing if it wants to because its inflation forecast for 2014, of between 1.6 and 2 per cent, is below target.

The FOMC voted for Wednesday’s decision by 9-1. The only dissenter was Jeffrey Lacker, president of the Richmond Fed, who wanted to leave the late 2014 date out of the policy statement.

The US suffers from legacy legislation, which predates modern monetary economics, which places the burden upon the Fed of pursuing both price stability and low unemployment. The evolution of the US Fed has been led by human energy within the Fed. Starting from Paul Volcker, who took charge in August 1979, the US Fed has run a Taylor rule with a nice strong above-1 inflation coefficient. In a recent column in the Indian Express, Ila Patnaik tells us about Paul Volcker's story and how it matters to us. In effect, from Volcker's chairmanship onwards, the behaviour of the US Fed has been that of an inflation targeting central bank. This was the de facto reality. Everyone knew that the US Fed targets inflation at 2%. What is new now is that the Fed has put greater credibility behind this, by going closer to de jure inflation targeting.



A key dharma of good central banking is to say what you will do, and then do what you just said. By saying that there is an inflation target, there is now full alignment between the words and deeds of the US Fed.



The day will come when India will enact high quality legislation which puts monetary policy on a sound institutional foundation. But we should not accept mal-performance by RBI until that day. It is possible for RBI to do much better, when compared with the present, even though the present legislation is really badly written. The US Fed is a good example of how technical capabilities within the Fed, and not an external legislative mandate, have driven improvements in the functioning of the Fed. This sort of progression is what RBI can and should aspire to, and this does not require waiting for a high quality RBI Act.

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Education in India: A compact reading kit

With the first release of OECD PISA results for India, and with the
release of one more year of Pratham data, there has been an upsurge in
interest in education in India. The following set of materials are a
useful reading kit to get a grip of the field.

Elementary education

• At the crossroads, in Pragati, 16 February 2012.


• Education
  in India at the crossroads, 24 January 2012.
  


• Ila
  Patnaik in the Indian Express, 20 January 2012.
  


• ASER
  2011 report by Pratham. Article in the Indian Express on
  this
  by Rukmini Banerji.
  


• Accountability
  in education by Jeff Hammer, 18 January 2012.
  


• The
  first PISA results for India: The end of the beginning by
  Lant Pritchett, 5 January 2012.
  


• The
  Right to Education Act: A critique by Parth Shah, 1 April
  2010. Also see Raghuram
  Rajan and Abhijit Banerjee 20 February 2010.
  


• Getting
  results on education and health expenditures of government, by
  Lant Pritchett and Jeff Hammer, 16 July 2009.
  


• Ila
  Patnaik on the then draft Right to Education Bill, 13 January
  2008.
  
  


• The
  mess in education by me in the Business Standard, 28
  February 2006.
  
  


• The World Bank's WDR
  2004: Making
  services work for poor people.
  
  


• Rethinking
  elementary education by me in the Business Standard,
  1 July 1998.
  

Higher education

• The
  THES ranking of the top 400 universities of the world. The only
  win for India in this list is IIT Bombay (ranked in the 301-350 range).
  
  


• The
  six ingredients for a great university, 5 January 2010. And,
  read Larry
  Summers in the New York Times on the key ingredients of
  the university of the future.
  
  


• Andre
  Beteille on private and public education, 27 August 2008.
  
  


• Pratap
  Bhanu Mehta in the Indian Express, 26 August 2008.
  
  


• Don't
  play Arjun Singh's game by me in the Business
  Standard, 7 June 2006.
  
  
  

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Education in India at the crossroads

The debate

Roughly one decade ago, there was a strong debate in India about
how we should tackle the problem of education. There were two
views:

Intensification

On one side were those who felt that
nothing was fundamentally wrong; all that was needed was more
money. So we should just continue building more government schools
and hiring more civil servants to act as school teachers, and we'll
be fine.

Reform

On the other side were the reformers, who argued
that the basic incentives in Indian education were wrong. Putting
more money down a dysfunctional system was pointless.

The Intensifiers won this debate. An informal coalition of
educationists (i.e. the incumbent education system) and leftists came
together, supported by the World Bank, which pushed for mere
enlargement of Indian education, without questioning the
foundations.



All of us are involved in this story at many levels. At the
simplest, we are the customers of the education establishment. We pay
income tax and VAT and a few other taxes. On top of this, we pay the
2% education cess. In return for this, we get certain educational
services. These influence our kids, and they influence all the young
people that we encounter in this young country. Trillions of rupees
have been spent, and more than a decade has gone by. It is time to
assess the performance of this strategy.



Three blocks of evidence are now visible, which tell us that the
Intensifiers were wrong. The old strategy, which was invigorated by a
vast rise in spending, was the wrong one.

Evidence #1: OECD PISA results for India

This story is well told in a
recent blog post by Lant Pritchett. Bottom line: The first
internationally comparable measurement of what children learn has
been done. The sample correctly includes urban and rural children; it
correctly includes children going to private or public schools; there
are no first order mistakes in what was done. It tells us that Indian
education policy has failed miserably: the results have come out at
the bottom of the world.

Evidence #2: ASER 2011 results

Pratham has been running surveys which measure characteristics of
children and schools in rural India (only). Their latest survey
results, for 2011 show the following facts.



First, rural kids learn less at public school. Here's a simple
example of what the evidence shows. Surveyors ask kids in class III to
recognise numbers upto 100. Here are the numbers, for the proportion
of kids in class III who cannot recognise numbers upto 100:

In 2008, the failure rate with private schools was roughly 17 per
cent. Government schools were much worse at over 30 per cent. A short
three years later, conditions had deteriorated sharply in government
schools. The failure rate had gone up to 40 per cent. Private schools
had also worsened slightly, to a failure rate of 20 per cent. By 2011,
a big gap had opened up between the two: private schools are failing
to teach 20 per cent of the kids while government schools are failing
with a full 40 per cent of their kids.



Parents in India face the choice between sending their
children to a government school, which is free and serves a mid-day
meal, versus sending them to a private school where they pay
fees. Yet, an increasing fraction of parents choose to send
their children to a private school, paying tuition fees from their own
pockets, while government schools are free. The relationship between a
parent and a private school is a transaction between consenting
adults. The relationship between a parent and a government school
involves all of us, because we are paying for it.



Given the low income of parents in India, their use of private
schools is a striking indictment of what the Intensifiers have
wrought:

At class II, the fraction of rural children in private school went
up from 19 per cent (2007) to 23 per cent (2011). At class VII, this
rose more slowly to levels slightly above 20 per cent.

Evidence #3: CMIE household survey

CMIE has data for the year ended March 2011 about the behaviour of
169,492 households, about their expenditure on school/college fees and
tuition fees. Here's the
picture for the quarter ended September 2011; all values as
percent of overall expenditure:

Income class	School/college fees	Private tuition fees
Rich - I	4.79	0.66
Rich - II	3.79	0.51
High Middle Income - I	3.54	0.63
High Middle Income - II	3.12	0.65
High Middle Income - III	2.44	0.68
Middle Income - I	1.93	0.59
Middle Income - II	1.62	0.45
Lower Middle Income - I	1.38	0.49
Lower Middle Income - II	1.05	0.60
Poor - I	0.76	0.58
Poor - II	1.13	0.28
Overall	2.10	0.57

If parents chose to stay within public sector schools, their
expenditure on fees would have been zero. The table shows that across
all income groups of India, there is movement towards private
provision of education, both by paying fees at schools and by paying
for private tuition classes. These two elements add up to 2.67 per
cent of overall expenses of households. (The CMIE household survey
separately measures expenses on books, journals, stationary,
additional professional education, education overseas, hobby classes
and other education expenses. This helps us gain confidence in the
extent to which the two fields in the table above narrowly pin down the
feature of interest).



These decisions of well intentioned parents are the strongest
indictment of education policy in India. The product being given out
by the Intensifiers is such a terrible one, the parents of India are
walking away from it even though it is free and the alternative is
not and the parents are poor.

Implications

For more than a decade, the Intensifiers have controlled Indian
education policy. They have said: Leave education to the education
establishment, do nothing radical, just give us more money, we will
deliver results. Now we know that they were wrong. They took the
money, but failed to deliver the results.



Kapil Sibal has said that his ministry should not be held
responsible for the stream of bad news that is coming out. To me, this seems to be dodging accountability. His ministry is responsible for
Sarva Shiksha Abhiyaan, for the Right To Education Act, for blocking
OECD PISA from being done in India, etc. The bureaucratic consensus of
his ministry represents the education establishment.



The key phrase that needs to be emphasised today is accountability. If a contractor took money from
you, and failed to deliver on building your house, you would sack
him. (You would also take him to court, to recover the money that was
paid to him, for services not delivered). In similar fashion,
education is too important to be left to the educationists. We need to
start over.

What is to be done

• We need to start over in the field of education, with a fresh
  management team, one that is not a part of the status quo, one that is
  rooted in the worlds of incentives, public policy and public
  administration.
  
  


• In 2004, we were told that in return for a tax rate increase of 2%, in the form of an education cess, we would obtain improvements in education. We now know that those improvements did not come about. Hence, that tax rate increase should go. (Even if sharp improvements in educational outcomes had been obtained, the education cess was a mistake in terms of basic public finance, and needs to go. Public expenditures on education should simply come out of general tax revenues; there is no need to have a cess.)


• The flow of public money into the status quo needs to go down
  sharply. There is no reason to put money into something that fails to
  deliver the goods. First we must prove that a mechanism
  delivers results, and only after that should we put money into
  it. This is the common sense that a housewife would apply. She would
  not spent gigabucks on promises from people who have failed to
  deliver.
  
  


• OECD PISA measurement needs to take place every year at every
  district. The production of this data is a public good that the government can and should do. It can be fully contracted out to private firms so as to avoid the problems of public sector production. Datasets about student characteristics and school characteristics should be released, covering every district and every year, so as to enable research.


• Civil servant teachers, who have tenured (permanent) have no
  incentive to teach well, regardless of their qualifications or high
  income. We can't sack them, but what we need to do on a massive
  scale is to stop recruiting them. The existing stock can be
  reallocated to other civil servant functions where staff is in short
  supply. Through this, it would become possible to whittle away at
  the accumulated stock over the coming 20 years.
  
  

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A fueling fable: Consumer protection issues with payments

by Naman Pugalia and Viral Shah.



On 22nd December 2011, we purchased petrol worth Rs.100 from an Indian Oil fueling station in Bombay using an ICICI Bank debit card. The receipt suggested that we could have saved a fuel surcharge of 2.5% had we used an Indian Oil Citibank credit card. Upon seeing this message, we asked the cashier at the petrol pump if we would be charged 2.5% over and above the Rs.100 that we paid for the fuel. The cashier assured us that only Rs.100 would be debited from the account linked to the card. The chargeslip and the receipt were:

The chargeslip

The receipt

A couple of days later, we viewed the account statement online and found that the relevant transaction had been recorded. A full week later, we observed that an additional charge of Rs.11.03 had been

debited from the account for the same vendor. Not only was the entry unusual, the charge did not match the 2.5% figure which was mentioned on the transaction receipt:

The statement

We wrote to the bank asking them to explain the transaction. The bank explained that for fuel purchased at non-HPCL petrol pumps, a surcharge of 2.5% of the fuel cost or Rs.10 (whichever is higher) would be levied. A service tax would be levied additionally.



There is a consumer protection issue here. After the account had been debited, and up until we sought a clarification from the bank, we were not made aware of the surcharge. The chargeslip gave a false impression of the amount being paid.



Upon delving further, we find various websites where people have complained about this surcharge being confusing. Further investigation revealed an interesting combination of participants:

1. The surcharge on fuel is mentioned in the fine print in Terms and Conditions of a debit card.
   
   


2. The bank that deploys the POS machine (acquiring bank being Citibank in our example), at the end of day, surcharges the higher of 2.5% or Rs.10 and sends it to the customer's bank (issuer bank being ICICI Bank in this case).
   
   


3. The issuing bank then creates a separate debit in the customer's account for the surcharge
   
   


4. The acquiring bank shares much of this surcharge back to Oil Marketing Company (Indian Oil in this example).
   
   


5. Contrast this with typical debit card processing fees in India around 1.5%. In most cases, merchants will inform a customer before surcharging, and the value on the chargeslip is what the
   
   customer pays.
   
   


6. Many banks apply these surcharges weeks or months after the transaction actually occurs, which helps ensure that most customers do not understand what is going on.
   
   

When paying for fuel in India with a debit card, the customer pays the
surcharge by being misled, the Oil Marketing Company makes higher
profits, the charge is administered in a non-transparent way, and is
posted late when the customer may not even recall the
transaction. Thus, Government owned companies and banks have created a
perverse incentive, whereby customers prefer to use cash rather than
pay electronically.

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