1. To Accompany “Economics: Private and Public Choice 10th ed.” James Gwartney, Richard Stroup, Russell Sobel, & David Macpherson Slides authored and animated by: James Gwartney, David Macpherson, & Charles Skipton Full Length Text — Micro Only Text — Part: Topic: Next page Copyright 2003 South-Western Thomson Learning. All rights reserved. School Choice: Can It Improve the Quality of Education in America? 69 6 5

2. Jump to first page Copyright 2003 South-Western Thomson Learning. All rights reserved. Educational Spending and Student Performance

3. Jump to first page Copyright 2003 South-Western Thomson Learning. All rights reserved. In recent decades, Americans have been concerned about the poor performance of students and rising costs of education. The numbers tell the story. Educational Spending and Student Performance

4. Jump to first page Copyright 2003 South-Western Thomson Learning. All rights reserved. Average SAT Test Scores The achievement of scores of American students dropped in the 1970s, changed little in the 1980s, and rose modestly in the 1990s. 19671970197519801985199019951999 980 1000 1020 1040 1060 Combined SAT Test Score Source: Statistical Abstract of the United States, 2000.

5. Jump to first page Copyright 2003 South-Western Thomson Learning. All rights reserved. A Cross-country Comparison of Average 8 th Grade Math Scores The mathematics achievement scores of eighth grade American students lag behind those of other countries. Source: OECD, Education at a Glance, 2001. Italy U.K. U.S. Australia Country average Hungary Netherlands Belgium Average 8 th Grade Mathematics Achievement Score Japan Korea 485 496 502 525 529 532 540 558 579 587

6. Jump to first page Copyright 2003 South-Western Thomson Learning. All rights reserved. Real Spending Per Pupil Real spending per pupil on public elementary and secondary schools more than doubled during the 1970-2000 period. Sources: Statistical Abstract of the United States, 1993 & 2000; and http://www.nea.org. 1970197519801985199019952000 $ 2,000 Real Spending per Elementary & Secondary Pupil $ 4,000 $ 6,000 $ 8,000

7. Jump to first page Copyright 2003 South-Western Thomson Learning. All rights reserved. A Cross-country Comparison of Spending Per Primary Pupil, 1998 Spending per primary student in the United States is among the highest in the world. Source: OECD, Education at a Glance, 2001. Hungary Korea U.K. Germany France Netherlands Belgium OECD average Spending per Primary Student, 1998 Australia Japan Italy $ 2,028 $ 2,838 $ 3,329 $ 3,531 $ 3,752 $ 3,795 $ 3,799 $ 3,915 $ 3,981 $ 5,075 $ 5,653 $ 6,043 U.S.

8. Jump to first page Copyright 2003 South-Western Thomson Learning. All rights reserved. Economics and the Structure of the Educational System

9. Jump to first page Copyright 2003 South-Western Thomson Learning. All rights reserved. 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 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. Jump to first page Copyright 2003 South-Western Thomson Learning. All rights reserved. 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. Economics of the Educational System

11. Jump to first page Copyright 2003 South-Western Thomson Learning. All rights reserved. Questions for Thought: 1. “The best solution 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.

12. Jump to first page Copyright 2003 South-Western Thomson Learning. All rights reserved. Alternative Ways of Increasing Competition and Expanding Consumer Options

13. Jump to first page Copyright 2003 South-Western Thomson Learning. All rights reserved. Under a pure voucher plan, rather than financing schools directly, the government would provide students with a certificate equal to the current expenditures per pupil. School Vouchers

14. Jump to first page Copyright 2003 South-Western Thomson Learning. All rights reserved. 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. School Vouchers Objections: Beneficiaries would be high income families. Racial imbalance would 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.

15. Jump to first page Copyright 2003 South-Western Thomson Learning. All rights reserved. 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 typically 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. Charter Schools

16. Jump to first page Copyright 2003 South-Western Thomson Learning. All rights reserved. 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. Choice for Students of Failing Schools

17. Jump to first page Copyright 2003 South-Western Thomson Learning. All rights reserved. Impact of Structural Change

18. Jump to first page Copyright 2003 South-Western Thomson Learning. All rights reserved. Preliminary findings for school choice programs: 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. Impact of Structural Change

19. Jump to first page Copyright 2003 South-Western Thomson Learning. All rights reserved. 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?

20. Jump to first page Copyright 2003 South-Western Thomson Learning. All rights reserved. End Special Topic 9