The school-reform movement stands at a crossroads. One camp wants unfettered free markets, while charter school leaders and others want to offer families choice and preserve meaningful oversight and accountability.
This debate is playing out in Texas on Senate Bill 3, which would create two forms of school vouchers. Though packaged as savings accounts and tax credits, Senate Bill 3 is essentially a voucher bill that takes a raw free market approach.
As a free market economist who has studied school reform for two decades, I find this debate important. Economics 101 tells us markets are typically the most efficient way to allocate resources — that supply and demand is best for consumers. With good information and options to choose from, when the decisions of one consumer don’t affect others and certain other conditions hold, efficiency is exactly what we get. For most of life’s activities — from the grocery store checkout line to finding a job — markets are indeed the best approach.
But free markets don’t make sense for schools. Families expect schools to do a lot of things for their children — teach academic skills, social manners and good values — most of which families don’t have good information about.
The decisions made by each family also affect other families. Parents don’t need a Ph.D. to figure out that classmates and friends affect their children as much as teachers do. Research shows that families pay a lot of attention to who is in the schools they are choosing from. This makes schools a bit like country clubs, though exclusivity is unhelpful to making the market work.
Even if free markets did work well, it would be reasonable for policymakers to ask for some measurable results. It’s hard to think of another case where government writes checks to private organizations without checking whether taxpayers are getting anything for their money.
Reporting test scores is a start — but it’s not enough. To ensure high-quality choices for students and families, there must also be a mechanism to weed out consistently low-performing schools. For the reasons above and others, markets alone do this poorly.
Even if a free market for schooling were efficient, it’s hard to argue it would be fair. In the average free market, wealthier people get higher quality items while low-income families get the lowest. That might be tolerated when we are talking about buying breakfast cereal at the grocery store — but not when we are talking about schools.
Basic economics tell us that a government subsidy like a voucher will set a floor for private school tuition. But remember that private schools with the best reputations are also trying to be exclusive. Surveys of private schools suggest that the best ones are not interested in altering their admission standards to accept vouchers from public school students.
The research lines up with what basic economics predicts. Across many studies, students using vouchers end up with lower achievement levels than those in traditional public schools. The effects have been especially bad in states like Louisiana and Ohio, where voucher programs are most similar to Senate Bill 3. The results seem better for vouchers when we look at high school graduation rates and college-going, but there are only a few studies of those measures — and only in urban areas. The most convincing study shows no effect on college-going.
These results shouldn’t surprise us. Intuitively, we all understand that schooling is quite different than going to the grocery store.
To ensure quality, accountability and fairness, the government still needs to play a significant role. It might not be the role we have today. Having all schools run by school districts works in many places. In others, we can do better — and we must. But there is little reason to think a broad-scale, unfettered market with vouchers is the best solution. Basic economics, and evidence, tell us so.
Blind faith in markets is no better than blind faith in government. We need them to work together.
Harris is professor of economics, the Schleider Foundation Chair in Public Education and the founding director of the Education Research Alliance for New Orleans at Tulane University.