April 27, 2008 8:15PM

Robert Frank Inadvertently Makes the Case for School Choice

Matt Yglesias points to an article in Sunday’s Washington Post by economist Robert Frank that makes a strong case for school choice. Well, OK, he doesn’t explicitly talk about school choice, but he certainly does a good job explaining the problems caused by the absence of choice:

In the 1950s, as now, families tried to buy houses in the best school districts they could afford. But strict credit limits held the bidding in check. Lenders typically required down payments of 20 percent or more and would not issue loans for more than three times a borrower’s annual income.

In a well‐​intentioned but ultimately misguided move to help more families enter the housing market, borrowing restrictions were relaxed during the intervening decades. Down payment requirements fell steadily, and in recent years, many houses were bought with no money down. Adjustable‐​rate mortgages and balloon payments further boosted families’ ability to bid for housing.

The result was a painful dilemma for any family determined not to borrow beyond its means. No one would fault a middle‐​income family for aspiring to send its children to schools of at least average quality. (How could a family aspire to less?) But if a family stood by while others exploited more liberal credit terms, it would consign its children to below‐​average schools. Even financially conservative families might have reluctantly concluded that their best option was to borrow up.

This is an eloquent indictment of our perverse system of linking schools to real estate. We don’t generally limit access to hospitals, libraries, or colleges by geography, and there’s no good reason children’s schools should be determined that way either. People should be able to live wherever they want, and then they should be free to send their children to any school that meets their needs. There are a variety of ways to allocate space in the most sought‐​after schools—academic merit, aptitude in the school’s area of focus, demographic diversity, or by lottery—that would be more reasonable than our current policy of arbitrary geographic boundaries.

And yes, some schools would choose students based on their ability to pay. What Frank’s article nicely illustrates is that our current system of geographically‐​based school assignment already segregates children by their parents’ income, it just does so in an unnecessarily cumbersome manner. If we had a free market in education, parents who wanted to invest in sending their children to a better school would be able to do so directly, instead of having to buy more house than they might want just so they can get a spot at a better school.

The most important thing to note, though, is that the scarcity of good schools Frank identifies is not an inherent fact about the universe, but a consequence of the public school monopoly. In a competitive education market, a shortage of good schools in a given area would spur people to either start new schools or expand the best of the existing ones. But the public school system has few mechanisms for doing either of those things (charter schools are a very limited mechanism for starting innovative public schools). Which means that the supply of good public schools is artificially limited, leading parents to bid up their price. The way to alleviate the shortage of good schools is not to re‐​regulate the mortgage market, but to reform the education system so that it’s easier to start and expand high‐​quality schools. Few things would do that as effectively as a robust program of school choice.