1. Quality-adjusted Output Measure for the Scottish Education System Richard Murray Economic Adviser Scottish Executive

2. Structure of Presentation Section 1: Background – Structure of the Scottish Education System – Context for the work Section 2: Quality-adjusted Output Index Section 3: Concluding Remarks – Limitations of the New Measure – Summary

3. Section 1: Background

4. Structure of Scottish Education System Different education system in Scotland compared with the rest of the UK Primary education: – 7 years of education (P1 to P7) – 2,184 schools & 382,783 pupils Secondary education: – 6 years of education (S1 to S6) – Compulsory to S4 – 381 schools & 312,979 pupils

5. Structure of Scottish Education System Comprehensive system Examinations sat in final three years of secondary education (S4, S5 & S6) No national testing before S4

6. Context to this Work Atkinson Review – Specific recommendations for education Improve the way we record inputs Move towards an output-based approach Develop measures to track changes in quality of output Extend coverage across whole of UK

7. Section 2: Quality-adjusted Output Index for Education

8. Rationale for Adjusting for Quality Why adjust for quality? – To capture improvements in the education pupils receive How do you measure quality? – Ideally, the quality of teaching pupils receive – Difficult to measure this, though attainment provides a useful proxy

9. Differentiating Output by Attainment Aim to capture wide spectrum of attainment a pupil receives by end of secondary education 3 categories which capture all levels of attainment at school Category 1ISCED 3 Category 2Between ISCED 2 & 3 Category 3ISCED 2

10. Proportion of Pupils Gaining Qualifications

11. Weighting the Different Levels of Attainment Each category of attainment needs to be given a weight, relative to its contribution to total output Inappropriate to use cost weights Expected future earnings provides a proxy for the benefit pupils receive from education

12. Expected Future Earnings by Highest Qualification Results show that higher qualifications lead to higher expected future earnings Weightings of 48: 32: 20 for Categories 1: 2: 3 Expected future earnings = Average earnings by highest qualification Employment rate by highest qualification X

13. Quality-adjusted Output Index Methodology Step 1: Differentiate S6 pupils by attainment Step 2: Apply a weight (based on expected future earnings) to the attainment categories Step 3: Calculate the weighted total & convert to index

14. Quality-adjusted Output Index for Final Year of Secondary Education Number of Pupils 20002001200220032004 Category 118,48618,58318,47918,49418,315 Category 210,19111,00511,10011,41411,666 Category 328,20328,02428,07928,87028,531 Total Pupils in Cohort 59,25060,13859,99861,03560,447 Weighted Total 1,777,5001,804,6211,803,7801,830,3181,823,082 Output Index98.5100.0 101.4101.0

15. Quality-adjusted Output for Education Only measures the output of one year group (i.e. S6) Apply the differentiated output across all pupils in primary & secondary education This assumes quality will be the same for each year group

16. Quality-adjusted Output for Scottish Education System Number of Pupils 20002001200220032004 Category 1213,402210,277207,859204,239201,522 Category 2117,645124,533124,850126,048128,362 Category 3325,575317,116315,838318,829313,922 Total Pupils in Cohort 683,980680,507674,867674,056665,090 Weighted Total (000s) 20,51920,42120,28920,21420,059 Output Index100.5100.099.499.098.2

17. What is driving the New Quality Adjusted Output Index?

18. Pupils Gaining No Qualifications Believe this group should not have a positive impact on the quality dimension of output Still captured in the quantity dimension of the quality-adjusted output

19. Sensitivity Analysis Examined different combinations of qualifications Applied different weights by attributing part of the future earnings associated with those who go on to university Overall, little impact on quality-adjusted output index

20. Section 3: Concluding Remarks

21. Limitations of New Measure Unable to track changes in quality across each year group Will take a number of years before investment influences the measure Wider benefits of education are excluded Possibly not giving enough weight to high attainment category

22. Summary New Quality-adjusted output measure for Scottish Education system Output is differentiated by attainment and weighted by expected future earnings Output index has declined in recent years, driven by fall in pupil numbers