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In the United States, the predominant form of school choice is parents voting with their feet. Parents with the means to do so choose suburban school districts, leaving disadvantaged children in central city schools. Central city districts in turn are widely criticized for providing poor education. The renowned American economist Milton Friedman argued that urban school districts were excessively bureaucratized and overseen by education professionals prone to make self-serving decisions.  He argued that publicly funded school vouchers would unleash competition from effective private providers, forcing public schools to improve in order to survive.

What does the evidence show? In the early 1990s, privately funded voucher experiments using randomized controlled trials introduced a scientific approach to the evaluation of vouchers. A publicly funded voucher experiment followed in Washington, D.C. Contrary to Friedman’s predictions, those experiments found that vouchers had little effect on achievement test scores. On the positive side, however, a privately funded experiment in New York City found that minority students who had used vouchers were more likely to attend college, and the Washington experiment yielded positive effects on high school graduation rates.

These experiments were not sufficiently large to provide information about whether voucher competition for students would improve public school performance. For this, we require evidence from voucher programs that have been implemented on a larger scale. Milwaukee has the largest voucher program in the U.S. Started in 1990, the program now serves approximately one-third of the city’s publicly funded school enrollment.

The results of the early voucher experiments and the Milwaukee experience suggest that vouchers convey some benefits without doing apparent harm. By contrast, experience with recently created voucher programs is uniformly negative. In Ohio, Indiana, Louisiana and D.C., achievement is significantly lower in voucher schools than in public schools. Reasons for the poor performance of recent programs relative to the experiences of Milwaukee and the first D.C. voucher program remain to be fully investigated.

Some conclusions can be drawn, however. Relying on parents to vet schools is problematic. Either parents are making choices on criteria other than academic performance, or they are not well-informed about school quality. Accreditation standards should be tighter and based on better evidence. In addition, it seems likely that the voucher amounts in these new programs are not sufficient to induce the better private schools to participate.

Political considerations and exaggerated beliefs about the efficiency of private schools have resulted in vouchers well below public school and charter school funding per student. While such low funding is attractive to taxpayers, it runs counter to the interest of students. In Milwaukee and during the first voucher experiment in D.C., overall enrollments were experiencing a sustained period of decline. Quality private schools thus had an incentive to accept vouchers that covered the low marginal cost of empty seats. In conditions of stable or rising enrollments, as during the second D.C. voucher program, quality private schools had little incentive to accept underfunded voucher students. While by no means a panacea, with tight accreditation standards and funding comparable to that received by public schools, voucher programs could play a valuable role. Underfunded voucher programs with poor accountability standards are penny wise and pound foolish.


For more, see “Educational Vouchers: A Survey of the Economics Literature,” by D. Epple, R. Romano and M. Urquiola, Journal of Economic Literature, June 2017

 

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by Dennis Epple, Thomas Lord University professor of economics

 
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