School Choice Boosts Public School Performance

April 3, 2004 • Commentary

School choice opponents claim that choice harms public schools. Research, however, shows the opposite. A new study published by Harvard economist Carolyn Hoxby addresses the question: “Do public schools respond constructively to competition induced by school choice, by raising their own productivity?” The answer: Yes, they do, and the benefits are greatest where large numbers of students are eligible for choice.

The fact that choice benefits public schools — not just students who switch to private schools — is a key aspect of school choice. Because public schools improve due to competition, school choice benefits reach beyond those students who take advantage of the opportunity to attend a private school with a voucher or tax credit scholarship. Because competition forces both public and private schools to improve, choice is like a rising tide that lifts all boats. Even students whose parents don’t shop around for a private school will benefit because their existing public schools will get better.

It’s true that some studies have shown no productivity gains for public schools when choice is introduced. But these have examined programs where choice is limited to only a small number of students or where the program is too new for effects to be visible. Hoxby, in contrast, looked at those programs that have existed for awhile and which are large enough to produce real competition.

In Milwaukee, for example (where children receive vouchers worth up to $5,783), the improvement in the public schools has been impressive. Students in public schools where at least two‐​thirds of students were eligible for vouchers scored 8.1, 13.8, and 8.0 national percentile rank points higher in math, science, and language, respectively. Although still positive, achievement gains were somewhat smaller for students in public schools, where fewer students were eligible for vouchers.

The story in Michigan and Arizona is similar. In both states, public schools raised achievement in response to competition. The largest achievement gains were in those public schools that faced the most competition.

Hoxby also points out that there is plenty of room for improvement in our nation’s public schools. Using economic analysis and a historical examination of spending as it relates to achievement, Hoxby shows that public schools currently operate at about 50 to 65 percent of their achievement potential. Much of their productivity is currently lost due to hard and fast rules that dictate hiring practices, pay scales, and investment in philosophically appealing but unsuccessful educational methods. Dissatisfied parents who are able to move their child and money to another school create pressure for public schools to become more effective and efficient. That positive pressure benefits those students who remain in those schools.

Even when it comes to money, school choice benefits public schools. U.S. private schools cost, on average, 60 percent of what public schools do. That means students can switch to private schools and pay less than what the state spends to educate them in public school. States and localities would continue collecting the same tax revenues they do now, but would have fewer students to spend it on, so students in public schools would enjoy more funding, not less. If smaller class sizes in public schools are a good thing, allowing more students to use private schools is the most cost‐​effective way to achieve it. Instead of vilifying school choice as an attack on public schools, school leaders should embrace choice as a way to get more resources for their students.

One of the best things for public schools is to open them up to competition from private schools. Without the positive pressure of outside competition, any industry will remain content with the status quo. Everywhere we look in our economy, competition and consumer choice provide the engine that fuels change. It has always been this way and it always will be. The rules of economics are as natural as breathing, and basic economics tells us that choice matters.

The low academic quality of many of our public schools is neither flattering nor comfortable. If we are going to change things, we will have to accept this basic economic fact: Consumer choice lifts all boats.

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