Public Schools through the Public Choice Lens
Regarding the state of government (“public”) schooling in the United States today, two facts stand out. The first is that the average amount of money spent per pupil has dramatically increased during the past 35 years and is now one of the highest in the world, and the second is that student achievement, by both historical and international standards, is among the lowest of industrialized countries. In conjunction with the spending increase, the current situation is surprising.
Why is it that spending larger sums for public education does not lead to better results while a higher price purchases a higher-quality service nearly everywhere in the private sector? And why haven’t fundamental changes to the schools been made through the political system despite long-falling student achievement? Public Choice theory and economic reasoning make it clear that, far from being contradictory, the current state of affairs in American public schools is the logical result of the processes by which they are run and funded, and that the continuance of the status quo is the result of rational choices by voters within the current democratic system.
Just how much is spent on schooling in the United States? In 2004–2005, the average expenditure per pupil was $9,266, the National Center for Education Statistics says, while the average expenditures in 1984 and 1994 were $6,219 and $7,504, respectively. This represents a 23.5 percent increase over ten years and a 49 percent increase over 20. It’s also 52 percent more than what 29 other countries spent in 2003, according to the Organization for Economic Cooperation and Development.
Yet despite the vast spending increases, the average combined SAT score dropped from 1060 in 1967 to 990 in 1980, after which it rose modestly to around 1028 in 2005. Fifteen-year-old U.S. students scored 483 on the 2003 Program of International Student Assessment, 17 points below the average of all the countries that participated. Thus by the dual standard of cost and benefit, the public school system is doing poorly.
One great difference between government-run operations (such as the public schools) and all organizations on a free market, whether for-profit or nonprofit, is that government agencies are allocated funds by political decisions, while free-market organizations must earn their revenue either through voluntary gifts or voluntary exchange. This distinction has important implications for the actions of these two groups. Free-market organizations strive to maximize profit by increasing revenue and reducing costs; these profits are then either distributed to owners or shareholders or are used to further the goals of the organization. Organizations in which costs exceed revenue earned close or go bankrupt. Thus they constantly strive to become more efficient and productive, and the inefficient producers are driven out.
As Public Choice theory tells us, however, the people who run government agencies have no such incentive to decrease costs and increase revenue because they are not subject to market competition and do not stand to benefit from any profits made. In fact, through a perverse process exactly opposite to the market process, failing schools and districts are often given more money in the desperate hope that the problem will be solved. Public Choice theory also demonstrates that for any public school or school system it is rational to waste resources because of the “use it or lose it” phenomenon. If a school were to have a budget surplus, its budget for the next period might be curtailed—something its administrators would abhor. Thus the public education system typically does not provide incentives for cost-cutting and quality-improving measures. In fact, it does the opposite.
Cost and Quality at Private Schools
Based on this reasoning, and other things equal, one would expect to see, on average, private schools providing better-quality education at lower cost (per pupil) than public schools. Indeed this is exactly what we find. Adam Schaeffer of the Cato Institute, in his policy analysis, “They Spend WHAT? The Real Cost of Public Schools,” found that in the five metro areas studied, public schools spend nearly twice the amount of money per pupil (93 percent more) than the estimated median private school does. That students were sent to these tuition-charging schools instead of to “free public” schools is further evidence the private schools were providing a higher-quality education even at lower total cost.
Instead of competing for students and donations, public schools and school systems compete for allocations from legislatures and bureaucracies. One factor in making these allocations is student performance on standardized tests. This artificial substitute for competition creates perverse incentives for all levels of the education apparatus. Individual teachers and schools, for example, knowing that funding is dependent not on general student knowledge and sharp critical thinking skills, but rather on one test, are induced to teach students only those skills which will be tested (a process known as “teaching to the test”). When schools receive money according to how many students enroll in upper-level classes, they have an incentive to spur more students to take those classes, resulting in unqualified students falling behind and advanced students being held back. In addition, states have an incentive to make standardized tests easier rather than harder so that more students will pass. Thus the perverse results are seen at all levels: individual schools, districts, and state governments.
Rational Ignorance and Bundle Purchases
Public Choice also explains why voters don’t show up en masse on election day to vote for candidates who will change the educational system. Although many citizens agree that the schools could and should be run better, few have a detailed plan of how that could best be done, and therefore few have a standard by which to judge the education proposals of candidates. This is a result of rational ignorance. To cast the smartest vote regarding education policy, a parent (for example) would have to devote an enormous amount of time to learning about the various issues related to education: the inner workings of the local school system, the broader laws of economics, Public Choice theory, the structure of the teachers’ unions, the fine print of the No Child Left Behind Act, and more. Yet after all this work, the parent would still only have one vote to cast. Thus the cost to the parent of learning about this political issue far outweighs the potential benefit of one well-informed vote.
Even more, an informed parent might still not vote for the candidate with the better schooling plan because political decisions, unlike market decisions, are “bundle purchases.” While one chooses any variety of individual goods and services on the market, one must choose a single politician with all of his policy positions. Stuck with a choice of two candidates, each of whom has some agreeable and some disagreeable views, voters are very often forced to choose the lesser of two evils. Note that such language is rarely used to describe market purchases.
Even if a parent voted for the politician who advertised the best plan for educational reform, the politician might fail to live up to his campaign promises. Candidates compete for votes and have an incentive to say or promise whatever is necessary to be elected. But dishonest campaigning is not illegal—no politician ever went to jail for breaking a campaign promise. In addition, politicians generally cannot be ejected from office during their terms; thus in the case of a lying candidate, the voter would be stuck with a representative committed to the status quo until the next election, at which time entirely new issues (apart from education) might take priority. This is the opposite of the market, where many goods can be returned immediately for full refunds, and where false advertising is punished both by the law and by consumers who withdraw their patronage. So widespread public dissatisfaction persists but the education system does not change.
A few alternatives to the current public system have been proposed, including school vouchers and charter schools. While both options stimulate a limited sort of competition on the supply side of schooling, they too are fundamentally flawed. First, the requirements and mandates that the government would impose on all schools accepting vouchers (in terms of curricula, standardized tests, and hiring policies) could create even more State control over education than already exists. Second, these proposed solutions would do nothing to address the abnormally large quantity of education that is demanded under a system of taxpayer-financed schooling.
In the final analysis, the only solution that solves all these problems is the complete separation of state and school. Only in this way can a high-quality, low-cost, diverse, and voluntary educational system be achieved.
Comment by Catherine Jaime on 8 October 2010:
A very good article. The comparisons between private schools and public schools is striking.
But the author left out one important part of the education equation — home schools. Home schooling is the true free market solution for many of us, and costs significantly less per student than even the private schools. And many of us are not just teaching our own children at home — we are contracting with others to provide services (classes) at a fair market price. In the end, this “parent-controlled, free market” version of education generally wins on all accounts — particularly the costs AND results you were discussing.
Comment by Justin on 15 October 2010:
Excellent comment, Catherine. My wife and I have been planning on home schooling our children ever since we started actually looking into how public education works.
An excellent book to read on the various forms of education (which was one of the books that helped push us towards home school) is “A Thomas Jefferson Education” by Oliver DeMille.
Comment by John on 22 October 2010:
Could we drop the phrase “public school” in favor of the more accurate “government school”?
Comment by Rick on 10 March 2011:
I just finished reading “A Thomas Jefferson Education” which was recommended by one of our moms. Great stuff!
My classical school helps bridge the gap for parents who would like to make a step toward home schooling and private education at an affordable price.
Comment by Nate on 18 March 2011:
Home schooling may be a free market solution but my experience has introduced me to many kids that were ill-prepared, whether socially or academically, for college. I’ve also met those that were prepared but I’ve found that their “better” academic performance than the “average” public school kid up to college was due more to their parents deep interest and influence in their lives, training (discipline, character) and education. Given a set of parents that are equally involved in the lives of their kids, public school kids tend to be better educated and prepared for college and the “real world” than their home schooled counterparts. Its the kids with parents that are not that involved – for whatever reason – that end up “left behind” and in the process may drag other kids (or the system) down with them.
Comment by GA Krohnfeldt on 27 June 2011:
I would humbly suggest that education systems in this country – public, private, home, or charter – face an entirely different student than our pre-digital age educators faced in an academic setting. Given national averages on performance (and 18 years of expertise in school improvement circles), there are fewer and fewer students capable of higher level thinking skills and higher levels of cognitive development, which means we have far less to work with in any educational setting. Why? There is ample research to suggest that 21st century technology is a blessing, in many respects, which allows for rapid gathering of superficial information, but that the far more negative trade off is a human mind that lacks many of the cognitive and social skills our pre-digital age counterparts boast; our children are being wired differently, from the cradle. Digital age students can gather and push information, but they can not do anything with it. They lack the ability to have meaningful social interactions in face-to-face settings (which include recognizing subtle language and body language cues). Tthey lack problem solving abilities, visualization, and the ability to make legitimate predictions and make reasonably accurate conclusions. They lack academic stamina (can’t read more than a few paragraphs at a time), and simply do not have the patience (or ability to retain learned inforation) for higher level mathematics. They can not determine what is factual from fictional / real or imaginary. They do not understand the concept of plagiarism, and when explained, think the concept is ridiculous and cavalierly find better ways of stealing someone else’s thinking to use as their own. While this may not be detected quite as often at the elementary level – where generally only concrete thinking skills are required – it becomes drastically and tragically apparent when students reach the secondary level and have to move from concrete regurgitation of information to abstract thinking. While I would agree that our current educational systems (all of them) are in need of change, I would also suggest that we need to seriously evaluate the way we spend our time as a society and the way we are currently raising our children, in the lap of 21st century digital luxury (which many countries, who outperform us, see as absolutely laughable). No amount of money, style of leadership, or nuance in academic setting can change this scenario. We must recognize the need – recognize these new addictions – and make the necessary changes on every level if we are going to continue to be successful as a nation. By the way, this is the first blog I have ever posted, and likely to be one of the last…I have better things to do with my time.
Comment by J Feaster on 11 August 2011:
I agree that the cultural standards can subvert the efforts of even excellent schools. I would also submit that our population in general is nutritionally deficient and stunted, resulting in a lot of health issues (physical and mental) which could be drastically improved, if not cured, with proper diet and nutrition. In my experience with home educating three young men, I have found the “hands off” approach most beneficial. When my husband was sick with cancer, my curriculum-based, exhaustive efforts to lesson plan, etc, took a back seat to care-giving. After four years of haphazard “school,” and another four years of basically “unschooling,” my boys are doing very well. We adapted the attitude, “If you can’t lead yourself, how can you lead a family one day.” They take ownership of their education, and are basically self-taught, although when I see opportunities for them to learn valuable skills from excellent teachers, I pay for that privilege. How often do we teach and learn about amazing people who did amazing things a hundred years ago, or more, and then we find out they were in their teens, and we silently think, “Oh, well, my son could never do that . . .” Or worse, there is often a little giggle, and the speaker remarks how lucky we are nowadays that our young people don’t “have” to do it “the hard way;” they can get a “good education” instead. Balderdash. Do we really believe that if it’s not stuffed in by an external, perhaps well-intended- source, that young people won’t want to learn and cannot learn? Well, I’m here to encourage you that young people have an insatiable appetite to learn about their world, and they have an innate desire to take charge of their destinies. Why do we spend so much time convincing them that they need to jump through arbitrary hoops “for their own good if they ever want to have a decent job.” We are training them to not trust themselves. We tell them so often that they are “too young” to do any meaningful work, that they actually start to believe it. No wonder they turn to video games, sex, drugs and alcohol. They are bored out of their minds. They instictively sense that they are created to do more than sit in a classroom all day. In addition to Thomas Jefferson Education, I strongly recommend reading anything by John Taylor Gatto. When I started homeschooling 19 years ago, I judged my own success by how well I duplicated public school at home, and how well did the boys do on standardized tests. Gatto set me free. Whose standards are they, anyway? It’s been eight years since my husband got sick, four years since he died. My oldest son is now 19 – he will finish a degree in International Business this year, and he has been successful in raising money for canoe racing in Texas and England. He wants to be a self-employed entrepreneur. My 17-year-old son is a national pianist, has been teaching piano for two years, and he co-founded a completely student-operated theater company designed to “elevate the communities perception of student leadership.” No adult participation is allowed. That theater company has produced three plays so far and has about $4,000 in the bank. He is also active in training for youth in government and has been invited to be a leader at the next training week at our state capital. He wants to become a concert pianist and is practicing about eight hours a day towards a major competition in January. My 11-year-old – well – we’re still waiting to see where his gifts are, but he has great people skills already. I can attest to the fact that young people are amazingly competent when allowed to take the risk of failing and learning from their mistakes. That’s the real world, and we need more young men prepared to be good husbands, fathers, and leaders. I understand that not all home situations are conducive to this sort of freedom in education, however, I also have seen first-hand how many homeschool mothers micro-manage the children at home out of fear that their kids will not compete against government education students. Any teaching in any system motivated by fear of failure is not good for children.