Why free education creates a market of non consumption?

In Finland we are proud of our free education system. However we should also be concerned. About 93-95% of the generation continue to a professional or university degree (for free) after they have finnished their obligatory education at the age of c 15. However we should also be concerned because only 86,8% get a degree. In other words we have a drop out rate of 6 to 8%. This is high and a should be a major concern.

One should note that, the fact that education in Finland is free, does not make Finland any better compared with others.When comparing Finland with other OECD countries, Finlands performance of 86,8% with a professional or University degree is only average (Helsingin Sanomat 12.9). Could it be that a free education system is also a barrier?

The consultancy company Innosight describes how you can create a business model that unlocks an unserved market. It is natural to think that developing countries can be underserved, but one should also consider if developed countries like Finland could be underserved because they have structures, barriers and cultural habbits, that prevent new ideas and new forms of business emerging. In particular in the context of education, one should ask can free education be a barrier?

Closer inspection would show that education in Finland is not totally free. For example high school students - in practice their parents - have to buy their school books (some stimates say this is about 1000 euro, when bought new). Nevertheless we have a culture of free. We are not used to paying for and investing into education. The high school students have this mental mindset when they enter University and I would hypothesise that the Finnish University student buys less books than his foreign counterpart. I would love somebody testing this or coming back with empirical evidence.

This culture of free is also affecting how students invest in IT technology, which is central to modern learning. Today each student buys his or her computer, but mainly because they need it for personal entertainment and social networking not beacuse they need it for school.

Students, however, do not invest in professional software, although as we all know  two thirds of IT costs are in software and not in the hardware. This is clearly a market of non consumption, as Clayton Christensen, the Harvard professor, would call it. Interestingly Universities are facing budget cuts, because of a low performing economy and they too would hesitate in investing more in IT.

The question is how do we build a market in which we teach students to invest in software and at the same time test out different software or etools as I would call them. I have some ideas. And hopefully I will get back to you with them, some time later on.

I started the blog entry by being concerned with the 6 to 8% drop out rate. I understand the figure is high, but it is not  my biggest concern. My biggest concern is the fact that in Finland we are not learning the e-tools that are needed to run a modern business.