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This report uses the case of Ponam Island to show the sorts of social and economic factors that have influenced one village's response to schooling. These factors appear to have been important in affecting the relative success of educational programs in Ponam. Findings suggest that researchers and policy makers concerned with education need to pay attention to the ways villagers respond to formal education. The first section constitutes a discussion of the changes in the economic position of Ponam Island, and Manus more generally, brought about by colonization and the current economic position of Ponam itself. It is shown that important influences on Ponam's relationship to schooling are broad social and economic forces. In the second section, the author looks at the beliefs, practices, and values of Ponam society and the ways these shape and reflect islanders' response to education. Islanders see no conflict of importance between the reasons for success in school and the reasons for success in village life. Ponam's use of the sorts of practical knowledge and skills which might be taught in a more vocationally oriented curriculum shows that in attempts at village improvement or development through education, consideration needs to be given not just to the sorts of skills that villagers would have to acquire to improve their lives, but also to the social factors affecting the use of those skills. A 69-item bibliography is included. (JB)