Testing times

Colin Crouch identifies an unexpected link between meltdown in the financial system and the school testing regime.

It was a coincidence that the government decided to abolish Key Stage 3 tests just as the crisis in the financial markets was heating up. But it need not have been, as the philosophy behind SATs has much to do with that which underpins the operation of the financial system. The philosophy of the latter is so much admired that it has encouraged many attempts to imitate it in public policy in this country and elsewhere.

True, the ending of KS3 tests may have been more closely linked to ongoing expressions of dissatisfaction by mathematicians and scientists that teachers are teaching children how to pass tests and not how to understand, let alone love, their subjects. This is hardly a surprise.

In its determination to improve standards, the government sets up a system of testing children's performance. It results in published league tables that are supposed to help determine parents' choice of school as well as shape Ofsted judgements. Both in turn affect the fate of a school and its teachers. And what do the teachers do? They concentrate on ensuring that their pupils achieve high test scores. What cads they are.

However, it is when we remember why a testing regime accompanied by league tables was established that we start to see the links to the financial crisis.

Governments had ceased to believe in the professional skill and integrity of teachers (as well as medical personnel and the rest of the public service). Never mind, economists told them, it is not good to trust in unreliable things like professional ethos and competence. The only reliable incentives for good behaviour are provided by the market. Why do firms operate efficiently? If they do not, their profit returns will go down, their share prices will fall, and shareholders will demand that managerial heads should roll. That keeps managers on their toes.

So government set about finding analogues of share prices and markets that would have the same disciplinary impact on public employees. In the case of schools, the test score league tables provide signals of performance equivalent to the share price and the school's managers have an incentive to keep these high.

From the outset many observers claimed that market analogues of that kind did not fit and therefore would not work in the same way as in the real market. How wrong they were. One of the lessons of the recent financial turmoil has been that major aspects of the market do not even work in its heartland. In other words, the failures of the analogue in education are the same failures we have seen recently in the market.

Professional judgement

Indicators of things that are hard to assess in themselves - whether they be share prices used to measure the quality of a company or test scores to measure the performance of a school - are extremely useful. To describe a school's teaching quality directly, substantively and in detail requires an Ofsted report. The same would be true of companies, if they had such things as Ofsted.

But such reports have many disadvantages. They are long and complex. It is difficult to know how to compare different elements. (So, a school is good at creating a fascination for chemistry among its pupils, but its GCSE maths results were poor: which of these offsets the other, and to what extent?)

In particular, if one wants to create a market that will determine parental choice, it is difficult to get a simple comparison between schools from such reports, even if parents were to read them. Ofsted reports and the inspections that precede them are time-consuming and expensive, and cannot provide up-to-the-minute information of the kind that market processes need.

Finally, Ofsted reports depend heavily on the professional judgement and competence of the inspectors - and the whole search for markets in public service started with the government's loss of trust in the professions.

In contrast, an indicator like a league table based on test scores provides some simple numbers. These are all that need to be perused; any relative weighting among different elements has already been carried out in the construction of the indicators and need not trouble the choosing customer. Comparisons between schools are perfectly achieved through the league table placings. The system is still expensive, but it can provide evidence on every school every year and it is not subject to the vagaries of inspectors' biases and skills.

True, a large amount of political, as well as professional, judgement has gone into the construction of the system, and that is the basis of much of the criticism. However, our central concern is with the incentives given to the users of indicators, whatever position they are in. This is where the problems of the financial markets and the English education system have some similarities.

Although an indicator is supposed to measure something else, something substantive, within a market the indicator replaces that substantive thing. All trading concerns the indicator and it acquires a life of its own. One can start to work with the indicator, ignoring its original link to the thing it was supposed to be measuring, try to change it without reference to that thing, and to play games with it.

Chain of beliefs

In business, the indicator would be the company share price. Share prices have a life of their own and can, by clever moves, be made to move up and down without any reference to what is going on in the firms whose value they are supposed to measure. Similarly, children's test scores can be improved by concentrating on the task of taking tests with only limited relationship to the knowledge that the test questions are supposed to access.

In the financial market this eventually spun out of control. In a process that fortunately has no analogies in education, the indicators that were supposed to measure the quality of bundles of assets became worth what market players believed other market players would believe they were worth and so on.

What was being traded was not just the indicators but a whole chain of beliefs about what others might believe about the indicators. It became unnecessary to check what was in the bundles of assets at all, and a very large number of very dodgy unsecured loans were being passed along the chain.

One reason why the market eventually collapsed was that banks started to realise that none of them was carrying out necessary checks. They ceased to trust each other, we have been told, and therefore will no longer lend to each other.

What they had ceased to trust was each other's professional competence. This should have led the banks to ensure, in their own interests, that they had some knowledge of the likely long-term quality of the assets they were holding. But the enormous short-term gains that could be made - both by the individual traders and by the banks for whom they were working - were so vast that it ceased to be rational to have such professional long-term concerns.

The rewards for teachers in abandoning a professional obligation to inspire a love of learning in order to boost test scores cannot be compared with those of stock market traders, but the process is the same. Indicator chasing and professional integrity are difficult bedfellows, and when the former becomes large enough, it pushes the latter out of bed altogether.

The market and its associated indicators, we have learned, depend after all on professional competence to function correctly. But they were sold to the public services as a device for making it unnecessary to rely on this variable human quality.

Colin Crouch is professor of governance and public management at the University of Warwick Business School. A version of this article was first written for the National Education Trust. See www.nationaleducationtrust.net