Topic: Education and Child Policy

Should We Subsidize Schooling?

Public schooling monopolists such as the President of the American Federation of Teachers, Randi Weingarten, argue that private school choice programs undermine our democratic society. One of the frequently made fundamental arguments is that, if given the opportunity to do so, self-interested individual families would choose a “less-than-socially optimal” level of schooling since education may be a merit good.

In other words, if my children receive an education, the rest of society benefits from the transaction without having to pay for it directly. After all, other members of society will benefit if my children grow up to be well-informed voters and law-abiding citizens. The conclusion made by some economists is that the government ought to be able to force the rest of society – the free-riders – to subsidize schooling so that the collective could reach some “socially optimal” level of education.

However, such a conclusion assumes that having a more educated populace is the only externality associated with traditional schooling. In order to better understand the overall effect, I have created a list of possible positive and negative externalities associated with government schooling.

Positive Externalities:

  • A more educated citizenry – the rest of society benefits when they have educated people to interact with. Also, democracy might function more effectively with highly educated and informed voters.
  • Obedience – public schools were originally designed to create more obedient citizens. If a person is more obedient to the state, they may be less likely to break the law. As a result, third parties benefit from not having their property damaged or stolen.

Negative Externalities:

  • A less educated citizenry – third parties are harmed if the compulsory levels of schooling do not maximize children’s education levels. After all, schooling is but one channel to achieve an education, and government schools do not have an incentive to provide children with optimal educational experiences.
  • Obedience – if citizens are trained to be obedient, they may be less likely to invent technologies that benefit the rest of society. In addition, obedient employees may be less productive if their job requires them to think on their feet.
  • Legitimized coercion through voting – the voting booth allows advantaged groups to exercise coercion over less fortunate members of society. Politically powerful groups can mobilize and extract resources from third parties, producing, at best, a zero-sum game.
  • Opportunity costs of the political process – citizens must use excessive amounts of time and effort in order to become politically knowledgeable about various educational policies. These scarce resources could be more efficiently allocated towards generating an income or spending time strengthening bonds within the family.
  • Inefficiency – government schools do not have an incentive to spend taxpayer resources efficiently. Consequently, we have observed public school spending increase substantially without discernible effects on observed student outcomes.

Odds of Horace Mann Being Right? About 1 in a Million

Last night I was reading AEI president Arthur Brooks’ excellent Wall Street Journal op-ed on the lottery, that seemingly ubiquitous government revenue scheme targeted at the poor, and it brought to mind Horace Mann, the “father of the common schools.” Did Mann pop into my brain because he was also the father of the “Diamond Dollars” scratcher, or “Pick 6 XTRA”? In a way, yes.  

Mann actually hated the unproductive, greed-fueled lottery, which he wrote “cankers the morals of entire classes of the people.” As was the case for seemingly every social ill perceived by Mann, he had a cure for the canker: universal public schooling. Lotteries, he wrote, “await the dawning of that general enlightenment which common schools could so rapidly give, to be banished from the country forever.”

Fast forward to the present day, and what do we have? Roughly 90 percent of school-aged Americans attending public schools—and all children with access to them—while slickly advertised state lotteries pull in $70 billion annually, according to Brooks, with a disproportionate amount coming from low-income Americans who have little chance of breaking even, much less striking it rich.

Contra Mann’s promise, common schooling did not doom the lottery. Far, far from it. Today, perhaps the primary justification for the lottery is that it provides money for the public schools!

Frankly, Mann, who pronounced with assumed authority on everything from proper chewing to the number of “bodies” in the solar system, should have seen this coming. He certainly identified the supposed beneficiaries of lottery proceeds in his day: “the erection of public works,–to build a bridge, a canal, or a church [italics in original].” Mann was especially incensed by the latter, decrying, “When a church is built by a lottery, can there be any doubt which has the best side of the bargain, the Evil Spirit or the Good?”

Today, the “churches” conceived by Mann—the public schools—are themselves enriched by lotteries. Maybe that’s because they could never spread the universal enlightenment that Mann confidently promised. Maybe it is also because, like most of us, those employed by the public schools want as much money as they can reasonably get, and government schemes like the lottery enable them to bring in more.

Does School Choice Segregate?

When those in power make blatantly false claims that could lead to less freedom for the least advantaged members of society, it is imperative that they are corrected. The President of the American Federation of Teachers, Randi Weingarten, gave a speech last month where she stated that school “vouchers increase racial and economic segregation.”

What Does the Evidence Say?

As I pointed out last month in a Cato Policy Forum on School Choice and Democracy, out of the eight rigorous empirical studies existing on the subject, seven of them show that school voucher programs increase racial integration within the United States. As shown in table 1 below, none of these studies indicate that vouchers lead to racial segregation. Why is this the case?

When school choice programs give disadvantaged children the opportunity to exit their already-segregated neighborhood schools, their transitions unsurprisingly result in a more racially and socioeconomically integrated society.

Table 1: Impacts of Voucher Programs on Racial Integration

Note: A box highlighted in green indicates that the study found a statistically significant improvement in racial integration. A box highlighted in yellow indicates that the study did not find any significant differences in racial integration across sectors.

Charters—But Not Private Choice—Take A Spill

The annual Education Next gauge of public opinion on numerous education issues is out, and as always it offers lots to contemplate, including special questions this year on the “Trump effect.” I won’t hit everything, just what I see as the highlights.

School Choice

The poll’s headline grabber is a big drop in support for charter schools, public schools run by ostensibly private entities but subject to many public school controls, especially state standards and testing. When people with neutral opinions were removed, 52 percent of respondents approved of “formation” of charters—that word likely made some difference—down from a peak of 73 percent in 2012. With neutral answers included, only 39 percent of the general public supported charters.

The good news is that support for private school choice programs—superior to charters because they offer access to far wider options, including religious schools—saw upticks. Scholarship tax credits remain the choice champ, with support (absent neutral respondents) rising from 65 percent to 69 percent. With neutrals, support stood at 55 percent of the general public. For vouchers, a lot depends on question wording, but without a loaded emphasis on “government funds,” support (minus neutrals) stood at 55 percent, up from 50 percent the previous year. With neutrals, support was at 45 percent, with 37 percent opposing. Education savings accounts—basically, money parents can use not just for tuition, but other education expenses like tutoring or buying standalone courses—garnered only 37 support from the general public, but the concept is pretty new and people may just not have wrapped their heads around it yet.

Why the big drop in charter support but improved backing of private school choice? As always, wording, question order, and other artifacts of the poll itself matter, but assuming those aren’t the major causes of the results, perhaps the answer is that charters, as a compromise between empowering parents and maintaining government control, have traditionally tended to have the highest profile bipartisan support of the various choice mechanisms. As a result of Trump-driven polarization, perhaps they have also had the most visible schisms, maybe casting a more negative light on them. Or maybe people have started to perceive, as Education Secretary Betsy DeVos borrowed from Rick Hess to warn, charters are becoming “the Man” they were supposed to replace.

Diverted Educational Resources = Higher Student Achievement?

Education scholars such as Richard Kahlenberg from The Century Foundation claim that since school choice programs “divert important resources away from the public schools,” children left behind in traditional public schools could be negatively impacted academically. However, a peer-reviewed study recently released by Temple University professor Sarah Cordes finds that charter school competition actually improves student achievement in nearby traditional public schools in the nation’s largest school district—New York City.

Specifically, Cordes finds that attending a traditional public school within a mile of a charter school in NYC increases student achievement in math and reading by about 0.015 standard deviations, or around 11 days of additional learning in both subjects. The detected effects increase with the proximity of the public charter school competition.

But why does this happen?

Residentially assigned public schools only lose funding if families are able to exit them for an alternative private or public educational option. If a traditional public school leader knows that their educational institution could be financially harmed by the choices of individual families, they will have a strong incentive to cater to the needs of their students. Since parents care about the academic success of their children, public school leaders will need to focus on turning educational resources into vital lifelong outcomes when faced with competitive pressures.

Although these findings may surprise those that listen to the frequent claims made by public education monopolists, they should not surprise social scientists. This study only adds to the abundance of the evidence existing on the topic that points in the same direction.

Prior Scientific Evidence 

Rich Kids and College Tuition

Last week, the Trump Justice Department announced that it would scrutinize colleges’ consideration of applicants’ race in their admissions decisions. The announcement suggests the DOJ’s current leadership believes school policies intended to boost enrollments of some minority groups violate anti-discrimination laws and improperly reduce admissions for other groups.

Over the weekend, Washington Post columnist Christine Emba responded that “Black People Aren’t Keeping White Americans Out of College. Rich People Are.” She argues that some wealthy parents “buy” their kids’ way into selective colleges when those kids don’t have strong applications. As a result, fewer seats are available for non-wealthy kids with stronger applications.

Regardless of what one might think of the consideration of race in the application process, one should understand that Emba’s analysis is incorrect. “Rich kid admissions” help non-rich kids to attend college, and reducing the number of enrolled rich kids would reduce the enrollment of other students, whatever their demographics.

Last year, Regulation published a pair of articles debating the Bennett hypothesis, the idea that colleges raise their tuition and fees whenever government increases college aid to students. One of the articles, by William & Mary economists Robert Archibald and David Feldman, includes an insightful discussion of the economics of college admissions and price setting (i.e., scholarship decisions).

Selective colleges practice what economists call price discrimination, in which admissions and prices are set with an eye to a student’s willingness (and ability) to pay–what schools politely call “need aware” admissions. Applicants with limited admission prospects but who have wealthy parents may be admitted, but they will be charged a high price. These are the kids and parents who pay the staggering $50,000+ a year “list price” that selective private schools are quick to say that few of their students pay. Most other enrollees, on the other hand, had applications that admissions officers considered more desirable, but the students had less willingness to pay, so they were awarded scholarships, i.e., large price discounts. The discounts, in turn, are financed in part by the high prices paid by the rich kids and their parents.

Latest Voucher and Test Score Findings Are Not Negative

One might expect that a report with a title referring to “more findings about school vouchers and test scores” would include the latest studies. However, Mark Dynarski, a Senior Fellow at the Brookings Institution, and Austin Nichols, a Principal Associate of Social and Economic Policy at Abt Associates, recently argued that the new voucher evidence is negative, even though the two most recent studies in Louisiana and Indiana show null to positive effects on student achievement.

How did these researchers come to their counterintuitive conclusion?

It appears that the researchers did not include the two most recent evaluations of voucher programs in Figure 1 below, which is taken from their report. That would not be much of a problem if the title and body of the report did not indicate otherwise.

Figure 1: Findings from Four Current Studies of Vouchers and Eight Previous Studies

 

If the researchers simply used previous results, the article (and its title) should not indicate that the latest estimates from Indiana and Louisiana are used. Further, the forest plots should not indicate that multiple years of results are used.

So what does the experimental voucher research actually say?