Gresham’s Law in Education: How the Bad Drove Out the Good

Young adults in England have scored almost the lowest result in the developed world in international literacy and numeracy tests. A study by the Organisation for Economic Co-operation and Development (OECD) shows how England’s 16 to 24 year olds are falling behind their Asian and European counterparts. England is 22nd for literacy and 21st for numeracy out of 24 countries.

New Labour and the educational establishment harangued us for years about the stupendous success of the system, as record numbers of both passes and A-grades in GCSE and A-levels were registered year after year. The OECD study, by no means the first of its kind, confirms what many suspected. Grade inflation was rampant, and the statistics had as much meaning as the pronouncements about production levels made in the Soviet Union. Actually, that is unfair. When the Soviet Union said 10 million boots had been produced, they really had been. They might have been poor quality and all left-footed, but the boots did exist. It now turns out that many people with GCSE passes can barely read and are virtually unable to add up.

The usual excuses are being made by metropolitan liberal commentators. It is because of poverty or, even better, government austerity. These points were not made when the meaningless grades were being obtained, under Gordon Brown’s control of the domestic policy agenda from 1997. More importantly, poverty itself is not a barrier to educational achievement. The careful work of scholars such as the late EG West shows that functional adult literacy and numeracy in Britain in 1900, when most people really were poor, was almost 100 per cent.  It is lower now than it was over a hundred years ago.

Setting schools targets of grades to be achieved was the root cause of the problem. People react to incentives, the key insight of economics. So teachers, with an incentive to deliver good grades, began to steer pupils away from subjects like, physics and foreign languages to the Mickey Mouse topics where higher grades were easier to achieve. Some of the exam boards subtly signalled that the content of their courses was changing. No-one was crass enough to say openly that the exam was being made easier so that more schools would take their exam rather than those of their competitors, but the effect was the same.

A vicious spiral of declining standards was set in motion. A Gresham’s Law in education was observed, in which the bad drove out the good. The schools had to hit targets and created an implicit demand for easier subjects and easier exams. The suppliers, the exam boards, competed with each other for business, and were obliged to follow each other down to lower and lower levels of quality.

Setting effective incentives is often a very difficult task, especially in systems like education where feedback can magnify the initial effect many times over. Fortunately, Michael Gove understands that the problem can only be solved by a complete break with the past.

As Published in City AM on Wednesday 16th October

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