Educational Reform The Role of Incentives and Choice

Why is Education important??? As knowledge and technology increase, the necessity for education also grows. Technology requires some educational base. Example of older people. Knowledge is not useful except for those who posses it. High school grads and dropouts

High school Dropouts vs. Graduates vs.

Marginal Benefit, If Any Although resources have been pouring into education at the k-12 level, high school senior performance has remained stagnant. TIMSS (Third International Mathematics and Science Study), the most recent study gauging students across the world found that the U.S. is among the lowest participating in the study.

TIMSS

Spending per pupil Spending per pupil is the highest in the world in the United States while the U.S. has one of the lowest math scores. Spending per pupil has trended upward (possibly due to rising real wages, pupil:teacher ratio) and, but scores have remained around the same.

United States spending vs math achievement

Spending vs scores…

Why support public education? Equal opportunity  Commutative justice  Distributive justice External benefits  Economic growth  Better workforce  Less crime???

Thomas Jefferson “If the condition of man is to be progressively ameliorated, as we fondly hope and believe, education is to be the chief instrument in effecting it.”

Equal Opportunity: emerging from the markets Commutative justice: justice emerging from voluntary exchange Distributive justice: (equality) justice needed that doesn’t result from voluntary exchange-equality of opportunity Henry Simmons hoped both combined would result in equality. (distributive justice lays the foundation while commutative justice is handled by the market)

Student Achievement Marginal benefits vs. marginal costs  Diminishing marginal returns  Increasing marginal costs Students will continue to achieve and further their education as long as their perceived benefits outweigh their foregone opportunity and costs.

Benefits Perceived benefits are most important  if the perception of benefit is more instantanious, one may be more inclined to partake in the education The individual may accurately (or inaccurately) perceive benefits of education that may not match actual benefits in the future  Employers’ selectivity toward more educated workers will increase benefits

Costs Employment in lieu of education Difficulty of learning Television Tuition increases

High Stakes Testing (achievement) Strengthens the relationship between school performance and benefits such as college prospects and employment. Increase importance focused on learning the material-these tests focus on core principals of a specific subject. Severely limits taking watered-down subject matter. Performance is gauged by specific standards as opposed to how others do on the test.

???????????????????????? ???????????????? Will high stakes tests cause teachers to teach the test? Will teachers or administrators skew the results to create more favorable data? Will parents actively require children to go to classes outside of public school to improve their grades?

Adding Required classes Requiring higher level classes for graduation. Investing in required classes may benefit the pupils, but there will be a perceived higher marginal cost.

The economic organization of public schools Public schools waste a significant part of their resources. Decision making in competitive markets is much more efficient. Schools and teachers together facilitate learning by reducing the marginal costs of achievement.

Knowledge General knowledge-information easy to transmit Specific knowledge-information difficult to transmit  Specific knowledge becomes a problem when leaders of a company (school) do not have the knowledge necessary to make good decisions for the dispersed units of an organization.

More knowledge Assembled knowledge-knowledge developed in an organization as its members interact Tacit knowledge-knowledge difficult to put into words such as knowledge gained by trial and error.

Decisions Decisions must be made by the people with the best information.  This information is difficult to transmit; therefore the decisions should be made by schools on how to best allocate resources to improve achievement. The public education system is more likely to respond to bureaucrats and politicians than it is to students and parents.

Competition in general… Competition within school districts are limited because families have little flexibility. Suburban and private schools are more competitive and thus serve the students better. Higher income families have more opportunity to evaluate the school or district’s performance and thus have greater ability to find a better school, and in turn this increases inequalities and destroys equal opportunity.

Public School Ratings: Discover the Best Public Schools in Any Area school-district/ratings.jsp school-district/ratings.jsp

The economic approach to organization Assign decision rights (transferable)  Centralized decisions in schools lead to less specialized education Evaluate decisions (profit)  Evaluation methods result in pleasing special interest groups instead of increasing overall achievement  After tenure, teachers aren’t evaluated heavily  Performance has nothing to do with salary, only length of employment and amount of education Reward good decisions (investment or consumption)  By allowing more competition, schools will become “profitable” and will attract more students and more resources  Teachers need more evaluation and motivation to do well