data collection (data | graphs | tables) project index quality assessment
English or languish - Probing the ramifications
of Hong Kong's language policy

Quality Assessment
Section five

Hong Kong's Bottom Line
The Opportunity Cost of English Language Study in Hong Kong
Table 45 - Hourly, adjusted monthly and yearly opportunity cost of classroom study per Hong Kong child (Base year 2004).
graph 78 | table 43 | table 44 | table 46 | tables 47a, 47b, and 47c | table 48 | table 49 | table 50 | table 51 | tables 52a, 52b, and 52c | data collection (tables) | if only there were a market (columns 2, 3, and 5)
Year
 Key Stage
 Grade
Level
 Long Term
Rate of Interest1
(%)
 Growth Value
Adjustment Factor2
 Opportunity Cost
of Classroom Study Time
(HK dollars)
Hourly3
 Monthly4
(Unadjusted)
 Monthly5
(Adjusted)
 Yearly6
(Adjusted)




(1)
 (2)
 (3)
 (4)
 (5)
1991
K1
 4.83
13.8
 3,092
 117
 929
1992
K2
 4.39
 1.0605
 14.6
 3.279
 124
 985
1993
K3
 3.08
 1.1247
 15.5
 3,477
 132
 1,045
1994
 KS1
 P1
 6.46
 1.1927
 16.5
 3,687
 288
 2,278
1995
P2
 7.76
 1.2649
 17.5
 3,910
 305
 2,416
1996
P3
 7.54
 1.3414
 18.5
 4,147
 324
 2,562
1997
 KS2
 P4
 7.29
 1.4225
 19.6
 4,398
 362
 2,864
1998
P5
 8.36
 1.5086
 20.8
 4,664
 384
 3,038
1999
P6
 6.66
 1.5999
 22.1
 4,946
 407
 3,222
2000
 KS3
 S1
 7.20
 1.6967
 23.4
 5,245
 488
 3,867
2001
S2
 5.87
 1.7993
 24.8
 5,563
 518
 4,101
2002
S3
 5.47
 1.9082
 26.3
 5,899
 549
 4,439
2003
 KS4
 S4
 3.74
 2.0236
 27.9
 6,256
 647
 5,124
2004
S5
2.1460
 29.6
 6,635
 686
 5,434
2005
 KS5
 S6
2.2759
 31.4
 7,036
 764
 6,051
2006
S7
2.4136
 33.3
 7,462
 811
 6,417
Number of years =  16
Average long term best note and bill yields7 = 6.05%
Base wage rate = HK$29.6

Note 1: The long term rate of interest for each year was obtained by selecting the highest yield from among 7-year, 5-year, 3-year, and 2-year notes and 364-day bills for the month of April in each of the respective years.  The interest rate for 1991 was estimated as the average of the highest yields for the years 1992 to 1996. Source: Hong Kong Monetary Authority. Information Centre. Yield of exchange fund bills and notes - 10 years. [online document - EXCEL format] (17 April 2004) Also, see Statistics (new window) /Economic and financial data for Hong Kong/Interest rates/. EARTH's copy is available on request. (table)
Note 2: Multiplying the future value adjustment factor times an initial investment in period t0 obtains the value of that investment in some later  period tk.  The adjustment factor given by
FVadj =  (1 + 0.0605)k

where 0.0605 is the average long term rate of interest (time value of money or nominal growth rate of the economy).
where k is equal to the number of periods distant from the intial period t0.
Source: Any standard financial economics textbook. See also notes 1 and 6, (tables 45 | 46)
Note 3: This is the value of one child-hour's worth of study at secondary form V market rates. It was obtained by discounting the average wage rate for entry level positions of secondary form five graduates in April 2004. In effect, the initial hourly rate (year 1991) was obtained through experimentation. As the value of one hour of work in 2004 and the average best long-term rate of interests for all years are known, it was simply a matter of substituting different values for the 1991 hourly rate until its future value in 2004 was equal to HK$29.6 -- i.e., the average wage rate for 40 entry-level jobs offered on 17 April 2004 (see table 44).

This procedure assumes that the market value of knowledge below secondary form five is both hidden and cumulative until it becomes marketable upon graduation. The rate of accumulation is equal to the economy's expected long term nominal rate of growth.

Credits: Years of lecture, counsel, and great textbook selection on the part of my economics professors at Wayne State University (USA), The University of Oklahoma, The University of Washington, Vanderbilt University (USA), and Keio University (Japan).

table | if only there were a market (the child)
Note 4: These values are based on a 51.5 hour work week -- the average time worked (lunch and tea time included) by Hong Kong secondary form five graduates upon assuming their first full time job in April 2004.  Obviously the amount of time spent in the study of the English language is far less at all levels and proportionately different according to each. (table)
Note 5: These values are obtained by multiplying the hourly rate found in column (2) times the number of hours that a student spends in the classroom studying English each month. The number of hours spent each month are obtained by dividing the number of hours spent each year at each grade level by the number of student months. There are 7.92 student months in a scholastic year.

A student month is obtained as follows:
  1. Divide the number of classroom school days (172 days for primary and junior secondary students) by the number of days that a student attends class per week (5 days) in order to determine the total number of student weeks.
  2. Multiply the number of student weeks by 7 days in order to obtain the number of calendar days that contain those weeks.
  3. Calculate the average number of calendar days in a month by dividing 12 into 365 days.
  4. Divide the number of calendar days obtained in step 2 by the average number of days per month found in step 3. This yields the number of calendar months during which students attend class. (table)
Note 6: Although calculated using the number of classroom hours per year, multiplying the values found in column (4) by 7.92 student months yield approximately the same. (table)
Note 7: This is the average of the values entered for the years 1991 to 2003. It is a rough estimate of the opportunity cost of time for this period. In the absence of more extensive data with regard to entry level hourly rates more precision would likely contribute little to the accuracy of the estimate. (table)
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