School Choice and Voucher Implementation

Advocates believe more school choice will allow better student-school fit than public education. But others maintain better matching will not improve performance unless financial pressures improve educational practices. A voucher-based educational market linking funding to pupil counts based on parental choice could motivate improvement, especially in inefficient public schools, eliminating allocations unrelated to student achievement. This market model of school choice assumes an efficient market of equivalent products, buyers and sellers of comparable size, mobile market entry and exit, and perfect knowledge among market participants. Although no market is entirely efficient, this model’s proponents believe vouchers would increase competition and yield more efficient achievement-to-cost ratios.

The Market and Public Schools

Public-school advocates argue it is inappropriate to view public schools in a market context. They note that beyond individual instructional effects, public schools influence social cohesion, with some research suggesting more school choice would increase racial and socioeconomic segregation, thus decreasing social cohesion. But established housing patterns already relatively segregate schools today. Choice proponents maintain vouchers could break the school-housing link. This claim cannot yet be evaluated, because broad voucher systems have not yet been implemented. Another argument against vouchers has been that competition would result in fewer resources for the most needy students; however, little evidence exists on how vouchers might impact spending on public schools or distribution of spending.

Another reason to be skeptical of the market view of schools is the crucial role information plays in market efficiency. Inadequate parental information about schools’ quality may result in poor choices. Many schools, though, are providing more information in public report cards. Studies show positive relations between parental choice and school quality, suggesting parents make academically beneficial decisions. This relationship seems strongly related to the school’s or community’s socioeconomic status. Because of unavoidable inequalities in school and student achievement, even perfect parental information and school access cannot guarantee equal distribution of gains. Whatever the market conditions, unless families base choices on academic quality, not features like proximity and cocurricular programs, increased competition may not boost achievement.

Competition’s Impact on Schools

Since theory alone cannot determine vouchers’ feasibility, evidence on school choice should be considered. Of many competing forms of school choice, open enrollment within and between public school districts and private-public school competition parallel most closely the likely effects of voucher programs. Research on these choices has produced mixed results.

Public-Sector Competition

A study of open enrollment in Chicago, where half of high-school students chose to change schools, showed changing did not significantly raise changers’ graduation rates or harm those left behind, except in the case of Chicago’s “Career Academies,” where those attending experienced small benefits. These results suggest better school-student fit can improve outcomes. Since such intradistrict choice does not affect revenue, it may not stimulate school improvement; thus interdistrict choice, threatening student loss, seems a better model of competitive educational markets. Anecdotal evidence indicates interdistrict choice leads to innovations to attract and keep students, even when few actually move. Moreover, studies of interdistrict competition with virtual choice due to large numbers of area districts showed competition led to improved school quality and student performance.

Public-Private Competition

Since an area’s private and public schools compete, a market-based argument suggests competition should improve local student outcomes. Though one study found increased private-school enrollment led not to greater public-school achievement but greater resource investment, this finding seems ungeneralizable. Given public-school funding’s complexities, including possible reciprocal effects of private-school enrollment on area revenues, simple correlation between private-school enrollment and public school funding cannot be predicted. Factors like parental preference, community affluence and educational demand, and private-school establishment where public ones are weak all need accounting for. By considering effects of public-school quality and community features on private-school supply, researchers have found competition from private schools benefits public-school students’ performance. Gains are modest, with public-school test scores and graduation rates rising less than 5%, implying vouchers would not significantly elevate public school efficiency unless students found private schools much more attractive. Differences between these school sectors need further scrutiny.

Student Outcome Differences

Comparing test-score differences between the sectors’ students has yielded mixed results. Recent evidence showed positive private-school effects, especially for urban minority pupils, but the largely nonexperimental data did not rule out alternative causes of improvement. But even if private schools’ student achievement is not clearly superior, their educational cost may be. Private-school education, especially Catholic, can cost 50% less per pupil. If achievement is equivalent and these costs are accurate, then private schools are more cost-effective. However, these estimates ignore subsidies masking additional costs. Also, private schools often enroll advantaged children, who are inherently less costly to educate. Such student differences and unobservables like parental motivation to support education hinder valid comparison of the two sectors’ efficiency in producing achievement.

Voucher Experiments

Since educational experiments use random assignments and control groups to eliminate the need to account for background and unobservables, they are more comprehensible and useful in gaining public support than other means. Though political constraints have limited voucher experiments, recently several providing data on school-sector differences have been privately funded, targeting low-income urban students in various grades. Students were randomly chosen by elective lottery to receive modest vouchers. Postvoucher surveys showed attending private school benefited African Americans. In two years, their test scores narrowed the national Black- White achievement gap by up to one half. These effects were large compared to other interventions like class size reduction. However, assessments did not control for peer effects, so improvement may have been due to student, not school, quality. Also, missing effects for non-African Americans remained unexplained, and attrition may have biased results towards better pupils. Finally, imperfect randomization, possible experimental-setting influences, and failure to account for varying school quality in both sectors argue caution in generalizing from the experiments’ results.

Voucher Policies’ Likely Impact

While voucher experiments furnish evidence favoring general voucher implementation, the possibility of peer effects warns that a general policy rendering both school sectors demographically similar might eliminate a key ingredient that makes private institutions motivate change. Further, nonexperimental evidence, though inconclusive, is important for predicting voucher-policy effects. The evidence of unobservables and other nonmarket explanations of achievement gain indicates optimizing these might cause improvements more efficiently than costly voucher plans. It is also unclear whether increased private-education demand would be met by better schools. Economic theory suggests that the most efficient private schools are now thriving in high-demand markets and that additional schools may be weaker than many public schools, eliminating incentives for change. Another unknown is the voucher plans’ impact on public-school funding. Again, competition might produce public education providing less social support than the current system. As voucher plans change student distribution across schools, affecting social cohesion, trade-offs are likely, as schools sacrifice qualities like diversity for achievement. Voucher programs could be designed to motivate public-school support through taxation, but the effects of such incentives are unknown, as are the effects of voucher plans’ administrative costs.

Conclusions

Although results are mixed, evidence on school competition supports the notion that it improves student outcomes. Despite significant differences between public and private schools, especially in teacher compensation and student outcomes, it is unclear whether schools or students account for differences. Voucher experiments show a positive private-sector effect. But existing theory and evidence suggest future voucher policies’ success depends on policy details like private-school requirements and the size, eligibility, and financing mechanism of vouchers. Though cautious optimism is warranted, socioeconomic effects of widespread voucher implementation are uncertain.