Quality, Efficiency and Social Returns

Abstract

We have thus far established that, within the rigid Japanese hierarchy, the top-ranking institutions (in terms of consumer choice, hence selectivity) are likely to be public, those at the bottom will be private and there is a mixture in between. We now look in Table 7.1 at data on social costs in these two sectors from 1950 to 1980. While private tuition is much higher in the private sector, expenditure per student has consistently been lower there, ranging between 50 and 90 per cent of public expenditures at the secondary level, 30 and 40 per cent at higher levels. In terms of international comparisons, costs per student in Japanese public universities are comparable to those in American or German universities, but private university costs are lower than in other OECD countries.¹ A key question is: should the Japanese public-private differential be interpreted as evidence of lower quality in the private sector (consistent with consumer rankings) or higher efficiency? Much of the debate about the future of private education that raged in Japan in the late 1960s and early 1970s presumed the former. Analysis of this issue, however, is complicated by differences among schools in their student inputs, as well as ambiguities concerning the appropriate measure of output.