Policy Analysis No. 585

The Cato Education Market Index

Executive Summary

The index presented in this report attempts to measure how closely existing school systems resemble free markets and rates education policy proposals on how conducive they are to the rise of competitive marketplaces. We define an education market as a system that provides the freedom for producers and consumers to voluntarily associate with one another, as well as the incentives that encourage families to be diligent consumers and educators to innovate, control costs, and expand their services. It is a system in which schools can offer instruction in any subject, using any method, for which families are willing to pay.

One of the least surprising findings of the Cato Education Market Index is that no U.S. state currently has anything resembling a free education marketplace. Perhaps more surprising, few of the prevailing “school choice” reforms, which are often described as “market-based,” “marketinspired,” or even “free-market” proposals, actually embody true markets. It is our hope that this index will spur debate about the necessary and sufficient conditions for a lasting and vigorously competitive education industry, and hence serve as a guide to policymakers interested in harnessing market forces for the betterment of children’s educational opportunities.

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with advisers
James Gwartney, Neal McCluskey, John Merrifield, David Salisbury, and Richard Vedder

Andrew J. Coulson is director of the Center for Educational Freedom at the Cato Institute and author of Market Education: The Unknown History