The Economics of Extra-Curricular Tuition

Jun 26, 2011

Is there really a correlation between extra tuition and better grades?

1039 What exactly are parents paying for here? (Photo:

Singapore has among other things, been called a “tuition nation” – and with good reason it seems. A Straits Times poll once determined that 97 out of a sample of 100 students received some form of coaching, classes, or tuition.[i]  Clearly there is a tendency among students (and their parents) to rely on such methods, but is there really a correlation between extra tuition and better grades?

Bryan Caplan (who wrote “Selfish Reasons to Have More Kids) says that researchers spent the last 40 years measuring the effect of parenting on every major outcome that parents care about. Their findings suggest that measurable outcomes like health, intelligence, happiness, success, character, values, and appreciationetc. are, with few exceptions, more to do with nature, rather than nurture, especially in the long run.  Studying the lives of twins who were separated at birth and thus controlling for the different upbringings of otherwise genetically similar humans suggests that perhaps more than half of a child’s ability has nothing to do with nurture. (Judith Rich Harris, “The Nurture Assumption”) In fact, economist Steven Levitt has put forth that data suggests that academic ability (or the lack thereof) has perhaps much more to do with the socio-economic, or IQ levels of the parents in the first instance. It seems that children aren’t in fact, like clay that parents mold for life; they’re more like flexible plastic that responds to pressure, but which can still return to its original shape when the pressure is released.

So, does extra tuition actually benefit children? More importantly, what is the opportunity cost to parents? In Singapore, some parents spend up to $3,000 extra per month on tuition (2008), with tuition centres declaring a turnover upwards of $100 million per annum (2005) — and that’s just for “legal” tuition, who knows how much the “underground tuition market” is actually worth? Maybe it goes too far to say that we might see more Ferraris on Singapore roads if had parents not invested so much on extra tuition, but certainly these are no small sums, and no isolated phenomenon.

Academic ability has perhaps much more to do with the socio-economic, or IQ levels of the parents…

In Asia especially, economists might perhaps describe it as trending towards anecessary good classification and highly inelastic to changes in price. In Japan, a survey found 24% of elementary pupils and 60% of secondary pupils attending juku (tutoring centres), with a further 4% receiving tutoring at home. Nearly 70% of all students had received tutoring by the time they had completed middle school. (Cited by Bray, 1999)More recently, China too has entered the fray. For instance, Think Tank Learning, a college admission consulting company from California offers a programme to ensure that Chinese students gain places in prestigious American universities. The company aids in designing extracurricular activities for the students, guides them in essay writing, tutors them for the SAT and connects them with meet-and-greet sessions with alumni. All of this at a cost: 100,000 yuan, but with a 100% money-back-guarantee in the event of non-admission. This is of course, on top of the unremitting preparation for the Chinese National Higher Education Entrance Examination (Gaokao) often at the expense of extracurricular activities important to a child’s holistic development.

How then do we make sense of this?If academic success is at least 50% genetically influenced, does money and substantial “additional help” actually have any bearing on success, and is extra-curricular education of any economic value in the end? Levitt himself concludes that a child’s upbringing, even if not the sole (or even majority) determinant of a child’s relative success, has an impact on their relative destinies that an analysis of IQ, or socio-economic status would not predict. In that sense, all that “extra help” perhaps is of some use. But at the same time, if 50% of a child’s ability is naturally derived, then perhaps it is also true that sometimes, all that “extra help” is quite unnecessary, even if well intentioned.


Andrea Leung is an Economics and Finance student at the Singapore Institute of Management University (SIM-UOL).