DRIVING VALUE FOR STUDENTS
Reflecting on the work of three leading economists, James MacDonald looks at the values and incentives that drive successful schools.
Successful societies
One of the most interesting ideas in economics today is that societies don’t succeed or fail simply because of geography, natural resources, or even culture. They succeed because of the institutions they build. Three researchers (Daron Acemoğlu, Simon Johnson, and James A. Robinson) convincingly argue that societies flourish when institutions are inclusive and designed both to create opportunity and broad participation. Societies struggle when institutions become extractive, allowing one group to appropriate resources at the expense of the broader society. It isn’t just an ordinary theory: they won the Nobel Prize in 2024.
Successful schools
That got me thinking about whether the same lens can help us think about international schools. We spend a great deal of time debating for-profit versus not-for-profit; but perhaps the better question isn’t about profit at all, but rather who the institution is designed to benefit.
Ultimately, the answer should be the students and their learning.
Of course, every school has multiple stakeholders. Owners deserve a return on their investment. Employees deserve fair compensation and good working conditions. Boards have legitimate responsibilities. The challenge is deciding where to draw the line.
Investing for learning
I believe some level of profit is entirely reasonable. Without the opportunity to earn a return, many outstanding schools would never have been founded or expanded. Equally, strong employment protections can improve education by helping schools attract and retain outstanding educators.
The basic logic is simple: every dollar, euro, or yen diverted away from improving learning is a resource that can no longer be invested in students. I’ve seen owners extract too much from schools. I’ve also seen employment structures and labour protections used in ways that primarily benefit adults rather than students or even their colleagues. Neither is healthy.
The real question is whether the school, as a system, has consistent incentives to direct resources toward their primary purpose: delivering the very best education possible for young people.
And, let’s be honest, almost everyone claims to be “student-centred”, so don’t take people’s word for it. Look at the actions, outcomes, and, critically, the incentives.
Incentivising value for learning
So, I think the conversation we should be having is not whether for-profits should exist, but when taking profits becomes extraction. It is not whether employees should be protected, but at what point protection becomes entitlement at the expense of students. Schools rarely succeed or fail because of a single factor. But, I believe, if you understand the incentives, you will understand the system. More often than not, schools become what their incentives encourage them to become.
Schools, like societies, also struggle when they exist to be extractive, allowing one entitled group to appropriate resources at the expense of the broader community and the purpose of learning.
James MacDonald is Head of College Designate at UWCSEA in Singapore and a Senior Consultant at Consilium Education. His work focuses on helping leaders create sustainable, high-performing schools by balancing multiple bottom lines: student learning, financial results, and mission/value related metrics.
Bibliography:
Why Nations Fail (2012) by Daron Acemoğlu and James Robinson
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