Why the free mar­ket does not ap­ply in ed­u­ca­tion

Austin American-Statesman - - VIEW POINTS -

The school-re­form move­ment stands at a cross­roads. One camp wants un­fet­tered free mar­kets, while char­ter school lead­ers and oth­ers want to of­fer fam­i­lies choice and pre­serve mean­ing­ful over­sight and ac­count­abil­ity. This de­bate is play­ing out in Texas on Se­nate Bill 3, which would cre­ate two forms of school vouch­ers. Though pack­aged as sav­ings ac­counts and tax cred­its, Se­nate Bill 3 is es­sen­tially a voucher bill that takes a raw free mar­ket ap­proach.

As a free mar­ket econ­o­mist who has stud­ied school re­form for two decades, I find this de­bate im­por­tant. Eco­nomics 101 tells us mar­kets are typ­i­cally the most ef­fi­cient way to al­lo­cate re­sources — that sup­ply and de­mand is best for con­sumers. With good in­for­ma­tion and op­tions to choose from, when the de­ci­sions of one con­sumer don’t af­fect oth­ers and cer­tain other con­di­tions hold, ef­fi­ciency is ex­actly what we get.

For most of life’s ac­tiv­i­ties — from the gro­cery store check­out line to find­ing a job — mar­kets are in­deed the best ap­proach.

But free mar­kets don’t make sense for schools. Fam­i­lies ex­pect schools to do a lot of things for their chil­dren — teach aca­demic skills, so­cial man­ners and good val­ues — most of which fam­i­lies don’t have good in­for­ma­tion about.

The de­ci­sions made by each fam­ily also af­fect other fam­i­lies. Par­ents don’t need a Ph.D. to fig­ure out that class­mates and friends af­fect their chil­dren as much as teach­ers do. Re­search shows that fam­i­lies pay a lot of at­ten­tion to who is in the schools they are choos­ing from. This makes schools a bit like coun­try clubs, though exclusivity is un­help­ful to mak­ing the mar­ket work.

Even if free mar­kets did work well, it would be rea­son­able for pol­i­cy­mak­ers to ask for some mea­sur­able re­sults. It’s hard to think of an­other case where gov­ern­ment writes checks to pri­vate or­ga­ni­za­tions with­out check­ing whether taxpayers are get­ting any­thing for their money.

Re­port­ing test scores is a start — but it’s not enough. To en­sure high-qual­ity choices for stu­dents and fam­i­lies, there must also be a mech­a­nism to weed out con­sis­tently low-per­form­ing schools. For the rea­sons above and oth­ers, mar­kets alone do this poorly.

Even if a free mar­ket for school­ing were ef­fi­cient, it’s hard to ar­gue it would be fair. In the av­er­age free mar­ket, wealth­ier peo­ple get higher qual­ity items while low-in­come fam­i­lies get the low­est. That might be tol­er­ated when we are talk­ing about buy­ing break­fast ce­real at the gro­cery store — but not when we are talk­ing about schools.

Ba­sic eco­nomics tell us that a gov­ern­ment sub­sidy like a voucher will set a floor for pri­vate school tu­ition. But re­mem­ber that pri­vate schools with the best rep­u­ta­tions are also try­ing to be ex­clu­sive.

Sur­veys of pri­vate schools sug­gest that the best ones are not in­ter­ested in al­ter­ing their ad­mis­sion stan­dards to ac­cept vouch­ers from pub­lic school stu­dents.

The re­search lines up with what ba­sic eco­nomics pre­dicts. Across many stud­ies, stu­dents us­ing vouch­ers end up with lower achieve­ment lev­els than those in tra­di­tional pub­lic schools. The ef­fects have been es­pe­cially bad in states like Louisiana and Ohio, where voucher pro­grams are most sim­i­lar to Se­nate Bill 3. The re­sults seem bet­ter for vouch­ers when we look at high school grad­u­a­tion rates and col­lege-go­ing, but there are only a few stud­ies of those mea­sures — and only in ur­ban ar­eas. The most con­vinc­ing study shows no ef­fect on col­lege-go­ing.

These re­sults shouldn’t sur­prise us. In­tu­itively, we all un­der­stand that school­ing is quite dif­fer­ent than go­ing to the gro­cery store.

To en­sure qual­ity, ac­count­abil­ity and fair­ness, the gov­ern­ment still needs to play a sig­nif­i­cant role. It might not be the role we have to­day. Hav­ing all schools run by school dis­tricts works in many places. In oth­ers, we can do bet­ter — and we must. But there is lit­tle rea­son to think a broad-scale, un­fet­tered mar­ket with vouch­ers is the best so­lu­tion. Ba­sic eco­nomics, and ev­i­dence, tell us so.

Blind faith in mar­kets is no bet­ter than blind faith in gov­ern­ment. We need them to work to­gether.


Austin school dis­trict Su­per­in­ten­dent Dr. Paul Cruz speaks at a Jan. 24 rally held to cel­e­brate the va­ri­ety of pro­grams avail­able in pub­lic schools. Dou­glas N. Har­ris writes that free mar­kets do not make sense for schools.


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