Undercover Economist

Why millions of the world’s poor still choose to go private

Imagine that your daily earnings were less than the price of this newspaper. Would you consider buying private education and private healthcare?

Before you make up your mind, here are a few considerations: government healthcare and primary education are free; the private-sector doctors are ignorant quacks and the teachers are poorly qualified; the private schools are cramped and often illegal. It doesn’t sound like a tough decision. Yet millions of very poor people around the world are taking the private-sector option. And, when you look a little closer at the choice, it’s not so hard to see why.

Take the doctors of Delhi, who were studied carefully by two World Bank researchers, Jishnu Das and Jeffrey Hammer. These doctors are busy people – the average household visits a doctor every two weeks, and the poor are particularly likely to visit. And, surprisingly, three-quarters of those visits are to private practitioners – despite the fact that public-sector doctors are better qualified. Why?

Das and Hammer tested the competence and the practices of a sample of doctors by sending observers to sit in their surgeries. They discovered that “under-qualified private-sector doctors, although they know less, provide better care on average than their better-qualified counterparts in the public sector”. This is not particularly mysterious, because private-sector doctors don’t get paid unless they can convince their patients that they’re doing a decent job. Public-sector doctors draw salaries and, if they are held accountable at all, it is through indirect channels.

There is a similar story to be told about education – and it is well told in a new book, The Beautiful Tree, by James Tooley. A professor of education at the University of Newcastle, Tooley first encountered private schooling for the poor while exploring the slums of Hyderabad, again in India. It took little more than Tooley’s curiosity to unearth a network of 500 private schools, typically charging less than $3 a month, and providing an education of sorts to thousands of children from very poor families. Many of the poorest children were on scholarships, educated for free by school owners with an eye on their standing in the local community.

Tooley has since gone on to catalogue cheap private schools for the poor across the world, and has also tested their quality. His research team discovered more committed teachers, and better provision of facilities such as toilets, drinking water, desks, libraries and electric fans. Most importantly of all, the children were learning more.

It is hard to be sure quite how widespread these cheap private schools are, but Tooley and his colleagues have found them in west Africa, east Africa, China and India. In the areas Tooley has studied, private schools are educating at least as many children as government-run schools – and sometimes up to three times as many.

Again, the outperformance of the private schools – in spite of low budgets and teachers with sometimes doubtful qualifications – is not a surprise when one looks at the weaknesses of state-run schools in some developing countries. Tooley toured Lagos, in Nigeria, with a BBC film crew and found teachers sleeping in lessons in the public schools – even though the film crew had given notice of their visit.

The lesson here is that a little accountability goes a long way – and fee-paying customers are in an excellent position to hold schools and clinics to account. By all means let’s work out how to make government facilities more accountable, in order to provide better education for the world’s poor. But we should also investigate how low-cost private services could be nurtured.

Also published at ft.com.