Tuesday, April 20, 2010

Private vs. Public Education

A friend has been in my ear about why a fully privatized education system is infeasible at this time. I'm just the third party to her debate with another economist, but I'm going to try to organize some thoughts I've had while listening to the debate.

A fully private education system would suffer, I think, from some dynamic inconsistency. It's easy to argue that parents would take all the tax money they saved to buy their children high-quality education, and in fact that quality could go up as price goes down. But it is also very possible, maybe even likely, that parents with lower incomes would prioritize spending money on things other than their children's education. If the parent has no particular incentive to send their kid to the best possible school, and a healthy skepticism of the education system (perhaps because they didn't receive a good education), it's easy to imagine a cycle taking hold for the poor that is difficult to escape.

Suppose, however, that we assume all parents value education as a good and will seek high quality education they can afford for their children. Where will the higher quality schools locate? Probably in wealthier neighborhoods, because more families there will be able to pay for education. Thus students in low-income neighborhoods may be priced out not by tuition costs, but by their location (i.e. they cannot afford to get to the quality school even though they can afford the tuition). Costs like these are often glossed over when "libertopians" consider their ideal world.

Don't misunderstand this post - I'm all for school vouchers and bringing more accountability to the education system. But I think academics often miss the point that not everyone values education the same way they do, and their proposals for reform implicitly assume education is a normal good for everyone all the time. In addition, reforms need to be considered within institutional structures. Major reforms require larger institutional changes and these challenges need to at least be acknowledged by libertopians.


Ravi said...

Interesting analysis.

However, even if the highest-quality schools were still the exclusive domain of the wealthy, wouldn't a fully privatized system encourage the type of healthy competition inculcated by capitalism in all locations, thereby improving the overall quality of education for everyone?

Adam Gurri said...

Education is a complicated area--in particular because there's no easy way to measure its effect on people's economic well being.

I will say this, though: typical critiques of purely private education complain that this would provide the children of affluent families with high quality education while low income families may have to send their kids to lower quality schools.

What's strange about that is that it's exactly what has happened in our public school system. Fairfax County has a fantastic public school system--for its affluent middle class kids. Poorer, inner city DC families, on the other hand...

jroddy said...

As to the "parents would spend their money otherwise" argument -- that's why they have vouchers, not a cash payment, as it limits the savings possibilities by going to the cheapest public school.

I also echo both Ravi and Adam's comments.

Josh Knox said...

Friedman supported public education on the premise that its role in social conditioning provides the positive externalities in the form of productive participants in civil society.

Thoughts on measuring the success of education through the crime rate?

Adam Gurri said...

You'd have to make all kinds of untestable assumptions in order to extrapolate how successful education was from a given crime rate.

Pete Abbate said...

Competition will increase the quality of schools as long as people have access to alternatives. Vouchers solve the value problem but in a fully private system, the government would not provide vouchers because it wouldn't collect any money to spend on education (this post, or idea, was originally a response to a fully private system not a voucher system).

And to Adam, interesting point on quality effects. Do you think people in wealthy areas pay more through the tax mechanism for schools, or do you think secondary affects play a big role in this? i.e. Teachers would rather work in and live near a higher income area because of safety concerns, greater opportunities to raise a family, etc.

Adam Gurri said...


Well we can definitively say that it is not that wealthy counties pay more for their schools. DC has the highest dollar-per-student spending of any school system in the country, and it also has the worst school system in the country. Inner city schools in NYC face the same paradoxical situation concerning high amounts of spending for negative return on investment.

The indirect effects come not from teachers wanting to work or live there, but (I think) from the kinds of students you get in Fairfax County vs. the inner city. If you come from an affluent family with two parents who make your education a priority, you already have an enormous number of advantages that a school would have to work really hard to screw up.

This is also why it's so hard to measure whether schools are really adding anything of substance at all. It's often pointed out how much more people with college degrees make than people who didn't get their High School diploma, but is that because the degree gives them an edge or because the kind of person who gets a college degree is more likely to have a higher paying job than the kind of person who drops out of High School?

Pete Abbate said...


Correct me if I'm wrong, but modern college admission and dropout rates are as high as they've been in history, correct? Could tracking the performance of college dropouts vs. those with only a diploma and no college (perhaps vs. those who went to technical school out of high school as well) shed some light on how much value education adds for those with similar characteristics? Just trying to figure out how we could find some data to better track the effect of education.

Adam Gurri said...

I'm sure it would make for an interesting data point, but again you'd run in the same problem--the kind of person that does some college and drops out could simply be different from the kind of person who dives into the working world straight out of HS.

Paul said...

Most anything would be better then the unionized monopoly we have in place now.

Compared with the totality of knowledge which is continually utilized in the evolution of a dynamic civilization, the difference between the knowledge that the wisest and that which the most ignorant individual can deliberately employ is comparatively insignificant. ~Fredrich Hayek in The Constitution of Liberty