School Choice: Can It Improve the Quality of Education in America? 10/24/2017 School Choice: Can It Improve the Quality of Education in America? 6 10 4 8

and Student Performance 10/24/2017 Educational Spending and Student Performance

and Student Performance 10/24/2017 Educational Spending and Student Performance In recent decades, Americans have been concerned about the poor performance of students and rising costs of education. The numbers tell the story.

Average SAT Test Scores 10/24/2017 Average SAT Test Scores Combined SAT Test Score 1060 1040 1020 1000 980 1967 1970 1975 1980 1985 1990 1995 1999 2005 2007 The achievement scores of U.S. students dropped in the ‘70s, changed little in the ‘80s, and have risen modestly since.

Average 8th Grade Mathematics Achievement Score: 2006 10/24/2017 A Cross-Country Comparison of Average 8th Grade Math Scores Average 8th Grade Mathematics Achievement Score: 2006 Canada 534 Japan 531 Australia 527 Germany 516 U.K. 515 Austria 511 Belgium 510 Hungary 504 Country average 500 Poland 498 France 495 U.S. 489 Italy 475 The mathematics achievement scores of eighth grade American students lag behind those of many other countries.

Real Spending per Elementary & Secondary Pupil (in 2005 dollars) 10/24/2017 Real Spending Per Pupil Real Spending per Elementary & Secondary Pupil (in 2005 dollars) $ 10,000 $ 8,000 $ 6,000 $ 4,000 1970 1975 1980 1985 1990 1995 2000 2005 Real spending per pupil on public elementary and secondary schools more than doubled during the 1970-2005 period.

A Cross-country Comparison of Spending Per Primary Pupil, 2005 10/24/2017 A Cross-country Comparison of Spending Per Primary Pupil, 2005 Hungary $ 4,438 Korea $ 4,691 Germany $ 5,014 France $ 5,365 Australia $ 5,992 OECD Average $ 6,252 U.K. $ 6,361 Belgium $ 6,648 Japan $ 6,744 Italy $ 6,835 Sweden $ 7,532 $ 9,156 U.S. Source: OECD, Education at a Glance, 2001. Spending per primary student in the United States is among the highest in the world.

Economics and the Structure of the Educational System 10/24/2017 Economics and the Structure of the Educational System

Economics of the Educational System 10/24/2017 Economics of the Educational System Economic analysis indicates the structure of the educational system may well be a contributing factor to its high cost and poor student performance of recent decades. Education is largely provided by government-operated firms with substantial monopoly power. Competition is largely absent; educational consumers have limited choice among schools. Because it is costly for parents and students to shift away from low-quality schools, they are in a weak position to discipline and direct schools.

Economics of the Educational System 10/24/2017 Economics of the Educational System Public school administrators have a strong incentive to expand their budgets by seeking additional funding from budgetary agencies, but have a weak incentive to cater to the views of parents and students. This structure is likely to result in higher schooling costs and a disconnect between the quality (and structure) of schools and the preferences of educational consumers.

Questions for Thought: 10/24/2017 Questions for Thought: 1. “The best strategy to reverse the decline in student performance in recent decades is to increase spending on education.” -- Evaluate this statement. 2. “Public school administrators have strong economic incentives to operate efficiently.” -- Evaluate this statement.

Increasing Competition and Expanding Consumer Options 10/24/2017 Alternative Ways of Increasing Competition and Expanding Consumer Options

10/24/2017 School Vouchers Under a pure voucher plan, rather than financing schools directly, the government would provide students with a certificate equal to the current expenditure per pupil.

School Vouchers Advantages: Objections: 10/24/2017 School Vouchers Advantages: A voucher plan would put competition to work to improve our schools. A voucher system would also encourage diversity, which would allow a larger number of Americans to choose a type of schooling that is more consistent with their preferences. Objections: Beneficiaries would be high income families. Racial imbalance might increase. Funds would be drained away from public schools, causing them to further deteriorate. A voucher plan targeted towards low- and middle-income families would eliminate these objections.

10/24/2017 Charter Schools Charter schools are publicly funded but are run independently from the traditional public school system. Charter schools operate under a contract (“charter”) with a government agency. Charter schools differ from voucher programs in some dimensions. Religious schools are not permitted to be charter schools, while vouchers are sometimes permitted to be used at such schools. Charter schools are not permitted to charge tuition as all of their students are subsidized by public funds.

Choice for Students of Failing Schools 10/24/2017 Choice for Students of Failing Schools Alternatively, parents with children in failing schools could be provided with vouchers. Students would get a voucher to cover the cost of education at an alternative private school or let parents choose another public school if their public school fails.

10/24/2017 The Effect of Structural Change

Impact of Structural Change 10/24/2017 Impact of Structural Change Thus far, movement towards school choice has been modest. Preliminary findings indicate: The achievement scores of African-American students tend to be higher after one to two years in voucher programs. The impact of charter schools on student achievement is inconclusive. Most parents of students in charter schools and voucher programs indicate they are highly satisfied with their children’s schools. Targeted voucher programs tend to increase racial integration in schools in highly segregated communities.

Questions for Thought: 10/24/2017 Questions for Thought: 1. Should parents have the right to choose which school their children attend? Discuss. 2. Suppose that statistical studies indicated that additional choice did not change student performance, but that it did improve student and parental satisfaction with schools. Would these findings strengthen the case for school choice?

10/24/2017 End Special Topic 10