Leaving Cert offers us lessons in economics

With the Leaving Cert results out, and students awaiting CAO offers, we might wish to consider again some of the problems of the second-level system, and in particular how basic economic principles can help us towards a solution.

We have a well-educated population. The OECD education statistics tell us that 37.7% of the population have tertiary education, compared with 31% for the OECD on average.

For secondary education, this is reversed, with Ireland at 35%, but rising consistently vs the OECD average of 44%. We have, in effect, a two-tier labour market — a younger population with a higher education attainment than an older. This is clear if we look at the age cohorts — educational attainment drops as we move into older age cohorts and we drop behind the average.

However, the high level of educational skills should not be taken for granted. Looking at the data, we see that in 2010, we reached a peak. The percentage dropped in 2011. With a three-year lag, that gets us to the Leaving Cert of 2008, and a two-three year lag back from the Leaving Cert class of 2008 gets us to the height of the bubble.

Looking at these 2003 and 2004 school-entry cohorts, we see a drop in the percentage of male students sitting even the Junior Cert. This is the first economics lesson — students can be incentivised to leave school and forgo long-term benefits for the sake of short-term cash. We have bonus points for Leaving Cert subjects — how about bonus cash for school completion for some cohorts?

Then we have the bonus points. To the surprise of exactly nobody, the decision to revert to a CAO points bonus for Leaving Certificate higher mathematics has induced more students to take it. Economics 101 would however make some other predictions.

Incentives have to be calibrated to the effort required to achieve them. As things stand, we have a single bonus — 25 points for D or above. Not surprisingly, the percentage of those sitting higher maths and failing it has increased — it is “worth a try” for the marginal student as a 25-point boost can be enormous.

There is, or should be, an enormous difference in effort required to go from a D to an A in any subject, particularly honours-level mathematics. So why do we not recognise that and give a calibrated reward to recognise the calibrated effort. A second economics lesson would be to have higher bonuses for higher grades to reflect this.

This raises the other vexed issue of effort. Students are not stupid. They place effort where it is most likely to be rewarded — basic economic logic. Given a choice, why would anyone take Art (1% of 2013 higher-level students get an A1) over Russian (66%)? Why would one take Business (3.9%) over Accounting (9.2%)? Such anomalies abound.

An interesting experiment was carried in Wellesley College in Massachusetts, where a grade anchoring system was put in place. This in effect mandated that the average grades across all introductory courses be equalised. The effect was to change choice, as we would expect. It reduced the prevalence of higher grades in “generous” courses and more importantly, switched student enrolment away from these to other courses.

We see in the higher Leaving Cert that the median grade hovers around C1/B3 for most courses but for some it can be the A1 and for others C2. These translate to significant differences in points. So the third economic lesson is to reduce perverse incentives if they already exist in course choice. The Leaving Cert results discussion was dominated by the maths discussion. That in turn was dominated by the effect that it would have on both CAO higher education points and the benefits to the economy. This is utterly perverse.

In 1976, the CAO points system was introduced as a clean, transparent, incorruptible way of assigning courses to students for university. In 1976, we had less than 3% of the total education cohort in universities, and so the impact of the CAO points system was on a very small number and proportion of persons.

We now have 15% of the total cohort in the CAO ‘space’, so it is much more impactful. The CAO points system is like the ECB. It does its job magnificently well. The problem is that like the ECB, its mandate is limited. Points are a price. The more people want a course, the more expensive it is. The ESRI has shown in stark terms, the effects of the points race on the secondary school experience, and it is very negative.

So, the fourth and fifth economics lessons for the Leaving Cert are as follows: The fourth is to increase the supply at university. This does not mean that we increase the number of places. University now, whether we like it or not, is a generalised education. So we should move towards the Melbourne model with a few, large entry courses in the lower years and allow students to specialise later.

The fifth is to increase the “purchasing power” of students, to engage in “quantitative CAO point easing” as it were. Right now, we reward only one domain of intelligence. What we should do is expand the range of skills for which points can be awarded, and so long as this is done at the same time as we expand the base of entry, we won’t see a problem with point inflation.


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