There Is No Free Lunch. There Should Be!

Hello and welcome to another macro post. This week we could talk about many things like the Central Bank decision, or the situation in the banking sector and how they are handling the recent macroprudential policies introduced by the CBRT and the banking regulator, or how the central bank FX reserves have been changing over the last couple of weeks, but a piece of news came to our attention and we decided to talk about something that we think is much more important than all of the things above, when it comes to the possible effects it will have regarding the long run trajectory of the economy. [We will of course talk about all those things in due time. What a blessing it is to write about the Turkish economy as you always have a thing to write about and one’s problem is the paradox of choice, rather than writer’s block.] And that piece of news is that apparently, the government is working on the feasibility study of providing free school lunches. [Actually, we missed the initial news when it happened, but were made aware thanks to an opposition MP’s question to the Minister of National Education last week.]

This article will be on why implementing such a policy is a structural reform for the Turkish economy, and what were the results of similar policies implemented elsewhere on earth. Thanks to our readers, we think we have a platform on which we can speak about such issues, and we think it is our responsibility to do so.

One of the things free school lunch programs reliably do all over the world is that they increase the probability of kids from lower socioeconomic backgrounds attaining school, especially in rural regions. Rural parents with little to no economic means are often in a dilemma: You can put your kid in school where s/he “might” get a chance to make his/her own future but s/he will be a huge financial black hole for 12 years or s/he might start working or helping with things in the house and lose that chance but not be an economic burden either, and for a lot of people, the state bearing the cost of the meals might be the difference between their kids going to school or not. Now Turkey legally requires sending one’s kids to school for primary education and there are exorbitant fines in place for incompliance, and according to the OECD statistics, it has a 100 percent enrollment rate for the first 8 years of schooling. The problem is, although anecdotal, we know that there is a huge issue of kids missing some parts of the school year in rural regions as those parts coincide with the sowing and reaping seasons. So, we think, as in other countries where free school lunch is implemented, Turkey would benefit from a higher educational attainment level in lower-income parts of the nation.

Let's get one thing out of the way: we don't think education is a crucial piece of the developmental puzzle, we don't think it is one of the primary causes of economic growth despite what many economists and lay people think, and we would strongly argue that it is a result of growth more than a cause. In no country we know, we can observe a higher level of overall educational attainment preceding a higher level of per capita income and wealth. In fact, we think higher spending on education than what is warranted by the living standards in a country before a country has the sufficient industrial capacity that can benefit from a high level of educational attainment is not that dissimilar to being a doomsday prepper producing your own food while not owning a gun because as Bill Burr puts it, the only thing you're doing by that is gathering supplies for the toughest guy in the block, and you’re effectively subsidizing the workforces of Europe and the US with taxpayer money.

[We do realize this sounds a bit harsh, but it is what it is. Unless you’re China and a hundred thousand people going to the US after graduation every year is not that big of a deal because if even thirty thousand of those people come back home after getting their master’s degrees or PhDs, you’re fine, that is.]  

And while books worth of things can be said about the ways to create such industrial capacity, and we plan on saying those things in future Galata Chronicles articles, let's just say mass education is not one of the key ingredients. One of our favorite papers on this issue puts it succinctly, albeit wonkishly:

“While there is undeniably ample intuition and theoretical support for the importance of human capital in growth specifications, we fail to find robust empirical support for the inclusion of human capital as proxied by mean years of schooling in our baseline growth regression specification. […] We fail to find adequate empirical support for the statistical significance of mean years of schooling. Rather, we find that, in general, estimates of the impact of mean years of schooling bear little statistical significance in terms of the estimated partial effects and a formal nonparametric test of variable relevance.”

That said, economic growth is not an end-all-be-all goal, and there are many other things that should be in the objective function of a government like the health and safety of its citizens, people's overall level of happiness, and their ability to lead meaningful lives. We are not saying that the government should be a nanny and cater to every single one of its citizens’ needs. We are just saying the government should be trying to create a level playing field that would enable its citizens to achieve their own goals and dreams. And in this regard, kids from low-income households not missing school for months on end should be an unequivocal win.

Despite this little “Pursuit of Happiness-esque” disclaimer, there are very real, tangible, and likely material economic benefits that will probably accrue as a result of a free school lunch program.

There is a large and growing literature about the impact of cognitive abilities on economic development. Another one of our favorite papers is quite clear on the subject:

“This paper […] concludes that there is strong evidence that the cognitive skills of the population—rather than mere school attainment—are powerfully related to individual earnings, to the distribution of income, and to economic growth. International comparisons incorporating expanded data on cognitive skills reveal much larger skill deficits in developing countries than generally derived from just school enrollment and attainment.”

Now there are way too many factors that go into the formation of cognitive abilities, but one factor that is definitely in there is nutrition. Children in developing countries more often than not have a diet that is not conducive to cognitive growth, their diet is usually low on protein and fruits and includes way too much junk food. Turkey is no exception in this regard and somewhat puzzlingly even well-off kids have a bad diet. (In fact, rich kids apparently consume more junk food than their low-income household peers, which actually helps our argument because this means a non-means-tested, universal free school lunch would get us a lot of bang for our buck. A significant number of rich kids would effectively self-select out of the program as they go to private schools anyway.) And childhood obesity seems to be a raging problem. So, providing a lunch that is healthy, rich in protein and essential micronutrients would go a long way in increasing the cognitive abilities of Turkish kids, and it would once again level the playing field as research indicates such programs help poor kids’ nutrition quality more and allow them to achieve better outcomes. [Ideally, the program should extend to preschools where children's brain development is at a much more critical stage and while we’re at it, the number of preschools should be increased rapidly.] Lower future healthcare costs associated with better health outcomes that would ensue as a result of this program would only add to the material economic results. And research indicates that not only the child who will be consuming the actual food, but also his/her kids and grandkids benefit from this intervention, which further supports our argument that free school meals are not palliative, but structural reforms.

Not only would this program would help with physical health and cognitive development, but some studies indicate that it might help with behavioral development as well, by reducing anti-social behavior, which is associated with better outcomes in the labor market.

To make sure policymakers reading this piece have a higher likelihood of supporting this scheme: It would be WILDLY politically popular. This government decided to give schoolbooks for free around 20 years ago and people are still talking about it. Imagine what would happen if you give kids free food, fellas.

Anyway, in conclusion, we think there is ample evidence out there as to the efficacy of free school meals in various critical regards and we think it is definitely one of those “structural reforms” people love to talk about all the time but fail to come up with something concrete when questioned. We are sure that it will survive the cost/benefit analysis currently in progress, but we would love for you to share this piece to make more people aware of the importance of its implementation.