Wonderful Study on School Competition, but…

I like a clever two-stage least squares instrumental variable regression as much as the next wonk, and the very clever Martin West and Ludger Woessman have just given us one. In “School Choice International” (an econometric study and not a motivational tune) they show that increased competition from private schools improves overall student achievement – including public school achievement – in 29 OECD countries, while lowering overall per pupil spending.

The design of this study seems intended to address the concern that however wonderful private sector education might be, children remaining in public schools might suffer if the private sector were allowed to expand. Those ideologically or financially attached to the existing public school monopoly often like to raise this concern in arguing against greater parental choice and competition in education. The West & Woessman result suggests that the monopolists need not be concerned, because even students remaining in the monopoly schools benefit from an expansion of the private education sector.

This is all well and good. It is also somewhat beside the point, because the concern itself presupposes behavior on the part of parents that is largely fictional. The monopolists’ presupposition is that, no matter how much worse the public sector is, no matter how easily accessible the private sector becomes, some large number of families will decide to languish in atrocious state schools. This is nonsense.

In what field do significant numbers of people cling to earlier services or technologies that are universally recognized as inferior, when those services or technologies compete on a level playing field (i.e., when neither receives preferential treatment from the state)? Do vast throngs of people still cling to vinyl LPs? Do you often see kids today trucking around portable CD players, now that .mp3 players can hold hundreds or thousands of times more music at a similar cost? Do you see a lot of horse-drawn vehicles in your neighborhood?

The only thing that keeps large numbers of families in bad government schools is the positively fantastic level of government funding discrimination that exists in virtually all nations. Most governments fund their own schools but not private schools. Or, if they fund private schools, they do so at noticeably lower levels than they do government schools. In the rare cases where that funding discrimination is eliminated or even substantially reduced, the government sector shrinks dramatically. And, not surprisingly, the public schools that do survive after many years of such shrinkage tend to be the better performers within that sector.

The Netherlands, which funds public and private schools more or less equally, is a case in point. Today, three quarters of Dutch high school students are enrolled in private schools. And while research does show that private Catholic schools in the Netherlands continue to outperform the public schools in that country, even though the Catholic school students have a weaker average socio-economic background, the remaining public schools really aren’t doing that much worse. If they were greatly inferior to the private schools, they would have already lost their students to the private sector.

My point is that the effect on public schools of easing access to the private sector in education is virtually irrelevant. If the public schools improve, great, they’ll survive. If they don’t, it’ll be because families have left them for private schools that do a better job of serving them. In either case, the public is benefiting. The idea that great masses of humanity will choose to linger in low quality government schools when higher quality schools become available at a comparable or lower cost shows a bizarre lack of understanding of human nature, and a gross detachment from reality.