Rappler’s thought leader JC Punongbayan recently published an article claiming that the law recently passed by the Duterte administration granting free tuition in State Universities and Colleges (SUCs) will only benefit the rich. He argues that although the law is well meaning, it was not well thought off and will only make the inequality in our country even worse. So is JC Punongbayan, a Rappler thought leader and a PhD candidate of the University of the Philippines School of Economics right? He is NOT and let me tell you why.
To support his point, JC proposes a very cute thought experiment. He presents us with a graph showing the income distribution of students in SUC’s compared to students in Private colleges. He said he got his data from the Philippine Statistics Authority’s 2014 Annual Poverty Indicators Survey.
JC’s graph shows that the rich is overly represented in both SUC’s and Private institutions and because of this, giving free tuition in SUC’s will only benefit the rich even more. Here is his analysis:
So what is the problem with his analysis? He actually mentioned it when he said “further assume that the income distribution of students remains unchanged by the law.” What JC wants us to assume is that even with free tuition in SUC’s the proportion of poor people going to SUC compared to rich people will not change. This is a big assumption and any reasonable analysis needs to question why this assumption is valid in the first place? I argue that his assumption is not valid and that if tuition in SUC’s is free, the distribution will change. In fact if you read JC’s article further, he actually goes against his assumption and that distribution actually changes when he said:
So JC on the one hand wants you to assume that the distribution won’t change to emphasize his argument that the rich will get more of the tuition subsidy while on the other hand he wants you to believe that if the distribution changes it will only change one way (more rich kids going to SUCs and not more poor kids enrolling in SUCs). That sounds like a weird and convenient contradiction to me.
Here is what I think. Let us assume that JC’s graph is accurate (I cannot attest to its accuracy because he does not bother to explain how he calculated it – the graph caption just says “Based on Author’s calculations from APIS 2014) and that there are more students from the top two income decile enrolled in SUCs than students from the bottom two income decile. The next question should be why is this so? Why are poor people not going to SUCs? It is very important to answer this question as it is key in evaluating whether or not removing tuition fee will change this. According to JC in a separate article (Free tuition alone won’t make college any more accessible), the poor is underrepresented in SUCs not because of tuition fees but due to other more important factors such as having the unfortunate fate of being born to a poor household. JC’s argument is that even if we remove tuition fee as a barrier, the poor will still not decide to go to college because of other more important factors – poor kids do not have the privilege of a lifetime of preparation supported by their parents. Is this true? JC is only making an assumption here and it is weird because there is data that tells us what people think is a barrier to them pursuing an education. The 2014 APIS data actually shows this – the same data set he said he analyzed to come up with his fancy bar graph.
According to this data, the number one reason why people in the lowest 30{560c5a826b9d0f79d9056f2e452d35fface599afff45834a592fa1a3f7fd1a74} of the income distribution do not go to school is High cost of education/ Financial concern (30{560c5a826b9d0f79d9056f2e452d35fface599afff45834a592fa1a3f7fd1a74}). For people in the highest 70{560c5a826b9d0f79d9056f2e452d35fface599afff45834a592fa1a3f7fd1a74} of the income distribution, cost of education is only 3rd (18{560c5a826b9d0f79d9056f2e452d35fface599afff45834a592fa1a3f7fd1a74}) in their reason for not going to school. According to people in poor household the main reason why they do not go to school is the cost of education. What is tuition fee? It is a cost of education.
So if the cost of education in the form of tuition fee is removed, it is only fair for us to assume that more people will enrol in SUCs. JC should understand this concept since he is an economist. It is called the price elasticity of demand – demand for education within the poor is highly elastic so that when price changes the change in demand is significant. Based on JC’s argument he seems to think that the poor’s demand for education is not price elastic and that even if tuition fee is removed – the single most important reason the poor gave for not going to school – the poor will still not go to school. On the other hand, JC argues that if tuition is removed from SUCs more rich kids will actually enrol in SUCs – in short the rich kid’s demand for SUC education is highly elastic to price. How he can argue this is beyond me when cost of education is only ranked 3rd as a reason for not going to school within the top 70{560c5a826b9d0f79d9056f2e452d35fface599afff45834a592fa1a3f7fd1a74} of the income distribution. Simple logic will tell us that this is just not the case.
The biggest problem I have with JC’s article is the fact that he does not even ask the simplest question when he came up with his graph. Why is the distribution this way? He assumes that the distribution is normal and should hold true no matter what the government intervention is. This is just not the case because the distribution he saw was a result of a barrier that the government legislation sought to remove. If the main barrier that caused the distribution is removed, how can he assume that the distribution will remain the same? Also his graph itself shows that rich kids are highly skewed to be enrolled in Private institutions. Knowing that cost of education is not a top concern for these people, how can JC argue that if SUCs become free, these rich kids will suddenly switch to SUCs from private schools? That’s ridiculous.
This article is just another example of Rappler’s poor quality pool of writers. To call themselves as thought leaders is disgusting.
One other thing that JC fails to mention is the fact that his graph also shows a very important point that supports the law. The shape of the graph is a slight bell curve with most of the distribution in the middle. This tells us that the biggest gainers of this law is the middle class. This is very important because for an economy to continue to grow and for a democracy to continue to thrive, it needs to have a thriving middle class. JC’s focus on the extreme decile takes his focus away from this very important point. If there is going to be any transfer from private institutions to SUC’s this is where it will most likely come from – from the middle income decile. Middle income families who are struggling to keep their children in private institutions have highly price elastic demand for SUC education. Is this bad? Definitely not.
Finally the main reason JC does not believe this government policy is beneficial is the fact that he does not see education as a public good. To JC, education is still a privilege that has to be given only to those deserving enough – either poor enough, smart enough or lucky enough to be born to rich families. I see education as a public good and as such should be available to all – no matter the income level. Yes the program may subsidize some kids in rich households, there is nothing wrong with that. JC defends his position by making up some weird analysis that rich people (who said cost of education is not a top priority) will give up their cozy Ateneo and De LaSalle education to go to a State college just because it is free and that poor people (who have said that cost of tuition is the main reason they are not in school) will still not attend State college after tuition is made free? If you believe that argument then you should believe in spaghetti eating aliens coming to take over our planet too.
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