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I’ve been learning about some new data visualisation tools in R. My three favourite so far are GoogleVis, rCharts and Shiny. Here is a Shiny app I made showing the monthly employment flows of the Australian labour force.


Attacking educational disadvantage through school funding

Nicholas Biddle asked me to contribute to a piece written for The Conversation about the funding allocated to tackling educational disadvantage under the National Plan for School Improvement. The piece on The Conversation is yet to be published and will be significantly shorter than this.

“…all students must have access to an acceptable international standard of education, regardless of where they live or the school they attend. …[equity means] differences in educational outcomes are not the result of differences in wealth, income, power or possessions” (pg 105, review of funding for schooling)

Education can be cause or cure for disadvantage within and across societies. The extent to which education reduces rather than exacerbates inequality, however, is largely determined by the quality of education. In Australia, all levels of government and the major political parties recognise the role of the public sector in funding the delivery of education. With regards to school funding, there is debate around three main questions:

  1. What should be the total level of government funding available to school education?
  2. To what extent should governments subsidise the choices made by families to send their children to non-government schools?
  3. How should the characteristics of students and schools impact on the amount of funding received?

The National Plan for School Improvement

The responses to each of these questions are different in the eight Australian States and Territories. While the Federal Government has a minimal direct role in school education, they do provide significant funds to the States and Territories. The National Plan for School Improvement (NPSI) and the Australian Education Bill 2012 represent the Federal Labor Government’s response to the three questions posed above and is an attempts to make funding more standardised across Australia.

Read more…

We can run deficits forever – Australian edition

As Evan Soltas neatly puts, a government can run deficits forever and at the same time reduce their liabilities relative to GDP. All that is needed is for GDP growth to be larger than the growth in government debt (in percentage terms). If we can get this point across to the general public we might avoid some of the misguided backlash caused by governments running deficits. Governments should be running deficits through the troughs of business cycles and funding this by running surpluses through the good times. Consider it the same as dipping into your savings if you’ve been made unemployed while you look for another job. With Australian GDP ≈ $1.4tn and a conservative GDP growth estimate of 2% we can currently run budgets deficits around $25bn without suffering any deterioration in our debt/GDP. Of course our nominal position will be worse but with inflation at 2-3% our real deficit will actually be shrinking as well.

On balance, I see the media engaging the issue of budget deficits as a positive as it increases political accountability, though I think the main point of focus of the media is wide of the mark. Spending too much of the windfall (thereby running smaller surpluses) in the boom years is the biggest crime here. The incentives are such that presiding governments will spend extra money that flows into their coffers during the boom time as showering the public with cash is a fast track to popularity. If the government instead saved the money it reduces their likelihood for re-election (relative to showering the public with cash) and tops up the coffers for the winner of the next election which may well be an opposing political party.

Soltas claims that the US has run deficits in 70 of its last 84 budgets. Even looking at the US Govt debt/GDP line on the chart below it is still surprising to think that 83% (!) of their budgets since 1929 were in deficit.

Fortunately for us, govt debt relative to GDP is much lower in Australia than the US and most other developed countries as the chart below shows*.

Debt-GDP Aus vs US

While the underlying Australian Govt cash position isn’t the current  ‘budget position’ measure it is similar, and there is a bit of historical data on it unlike the current measure which hasn’t been back-cast very far after recent changes. While it would be good to compare like for like, I can’t find data for the last 84 Australian budgets so data from 1970 will have to do. On page 6, this budget summary shows that Australia has run cash deficits for 23 of its last 42 budgets. From 1992 to 2012, only 10 of 21 budgets were in surplus however our debt/GDP ratio was 27% in 1992 and is at 27% now. The deficits were on average, larger than the surpluses. The fact that GDP was constantly expanding is the reason the debt position didn’t deteriorate.

Underlying Cash Position

With positive GDP growth Australia can run small budget deficits for a very long time (theoretically forever). If needed, we have room (especially relative to other developed countries) to allow larger deficits. Australia needs to focus on running surpluses and paying down debt in the during times of economic prosperity.

*Data sources for Debt/GDP are all over the place. US Treasury data on the US budget position is very different to the IMF data. Any pointers on which figures are most trustworthy/comparable across countries would be appreciated.

MOOC dropout rates – Don’t focus on the headline

I listened to this podcast on education and the internet on Econtalk a few weeks ago. The guest speaker Arnold Kling used the high dropout rate in Massive Open Online Courses (MOOCs) as evidence against their effectiveness.

By design, most MOOCs will have a huge dropout rate. This is mainly due to the low-stakes nature of signing up to a course, but also because some courses hide a lot of information behind the ‘sign-up’ button. That enrollment is so easy is great. Why make things harder than they should be? On coursera, an account takes about 30 seconds to set up and to sign up for any individual course takes the click of two buttons.

The fact information is hidden behind the ‘sign-up’ button isn’t ideal. For instance, to see the syllabus on this Combinatorial Game Theory course, you have to sign up to it. There is no reason to hide this information as it helps students with their enrollment decision. While students dropping out of MOOC courses isn’t of great consequence, the more information students have access to before enrolling, the better the data on ‘real’ dropout rates will be. When I say ‘real’ dropouts, I mean students who initially have some non-negligible level of commitment to a course and its content yet don’t complete a course due to its structure, resources, time demands or the like. By figuring out why these students  drop out, courses can be refined to deal with these problems.

I have un-enrolled from courses on coursera and have received little follow up. I suggest that MOOC providers send out an email with a short survey not only at the end of every course but also on each un-enrollment. I’d be happy to say that for one course I was never planning to take it, another that I realised I didn’t meet the prerequisites (limited C++ programming), and another I’d say that I got all I wanted out of the course in the first three weeks.

By setting the sites up a bit better and gathering better data on non-completion rates it should be easier to see what a more ‘real’ MOOC dropout is. Until then, don’t focus on the headline dropout rate.