The Power of Vouchers

by on February 18, 2008 at 7:46 am in Economics, Education | Permalink

Many studies of education vouchers have looked at the achievement of children who are given vouchers and who transfer to private schools.  Generally these studies have found small but meaningful improvements (e.g. here and here).  A voucher program, however, is about much more than transferring students from lousy public schools to better private schools it’s about creating incentives to improve the public schools.

Florida’s Opportunity Scholarship Program rated schools.  Students at schools that received an F in multiple years became eligible for a voucher that allowed them to attend a private or higher-rated public school.  In Feeling the Florida Heat? (ungated version) a paper sponsored by the Urban Institute Rouse et al. look at what happened at failing schools.

…we find that schools that received a grade of “F” in summer 2002 immediately improved the test scores of the next cohort of students, and that these test score improvements were not transitory, but rather remained in the longer term. We also find that “F”-graded schools engaged in systematically different changes in instructional policies and practices as a consequence of school accountability pressure, and that these policy changes may explain a significant share of the test score improvements (in some subject areas) associated with “F”-grade receipt.

Thus, this paper shows two things.  First, that the test scores of the students in the public schools improved when vouchers gave the schools better incentives to perform.  Second, at least some of the improvement comes from changes in how students are taught.  The author’s note, for example:

…we find that schools receiving an “F” grade are more likely to focus on low-performing students, lengthen the amount of time devoted to instruction, adopt different ways to organize the day and learning environment of the students and teachers, increase resources available to teachers…

It is not true that "nothing can be done to improve the schools."  Incentives matter.

Notice that Florida’s program worked even though the program was very weak.  It offered vouchers only to students in the worst schools and only after those schools received F grades in multiple years.  The vouchers were relatively small and could not be topped up.  In addition, the program lasted only a few years before it was declared unconstitutional by Florida’s supreme court.

A true voucher program would be national, would not discriminate among students, would offer funding equal to that spent on students in public schools and would be permanent. Competition in such a system would be more intense and even more productive than in Florida’s program.

Mike Fladlien February 18, 2008 at 8:22 am

Of course scores improved in schools that received an F…It is easy to pick low hanging fruit. Tim Harford had a chapter in his book, the Logic of Life, in which he shows that moving children doesn’t increase test scores, but simply improves their utility. In my opinion, the only pedagogy that will increase a student’s attendance, achievement, and standardized test scores, is a caring teacher no matter where that teach is employed.

Stephen Downes February 18, 2008 at 8:32 am

> A true voucher program would be national, would not discriminate among students, would offer funding equal to that spent on students in public schools and would be permanent.

That’s a touching statement of faith. But you should know about the perils of generalizing from highly selective examples to the population as a whole.

Ben February 18, 2008 at 8:39 am

The basis of this study is flawed because of the focus on test scores. Standardized testing is not an effective measurement of intelligence (see Flynn, “What is Intelligence?: Beyond the Flynn Effect”). The two key flaws with this reasoning are that 1) tests are not consistently baselined every year, but instead every 3-5 years or more, resulting in a false increase in intelligence scoring; and 2) schools that perform poorly on tests will focus more of their time on teaching to the test rather than on educating students.

The ultimate fallacy in education reform today is that improved test scores equates to improved education. Nothing could be further from the truth. As a result of this focus, students are not learning how to think creatively and extensibly. The learning they’re being exposed to is rote memorization and not education, which in the long run does not serve society well, assuming your goal is to continue the shift toward a service-oriented job market where many jobs require problem-solving skills. It’s a slippery slope that programs like vouchers and NCLB have put us on; one that leads to a far weakened position for the US.

tim February 18, 2008 at 8:53 am

@Ben

Please explain how “vouchers” are the cause of standardized testing? or vice versa? They are not related. The emphasis on testing comes from the desire to be able to “measure” a school;s and individual’s performance. It doesn’t work.

My time in high school was spent in independent study and mentorship programs which I believe are in jeopardy because of the emphasis on testing. Essentially I was off the grid so to speak. Choice in how a child is educated is important as one method of instruction does not work for all children. This is why vouchers and school choice are more important than standardized testing.

Greg February 18, 2008 at 9:08 am

I tend to be pretty free-market in general, but I’ve always been skeptical of school vouchers. This type of research goes a long way towards convincing me that they would be effective. I’d be interested to know if other states experimenting with vouchers have seen similar effects.

Comment on a comment – excellent analogy between slavery and education! Let’s privatize the State Department and armed forces as well. Markets in everything!

john pertz February 18, 2008 at 10:31 am

Stephen Downs wrote:

“That’s a touching statement of faith. But you should know about the perils of generalizing from highly selective examples to the population as a whole.”

No, what is not touching are the smug attitudes of the pro government side in this debate. There is no greater example of mass government failure in the United States than secondary public education and we get the same deny, deny, deny, deny response from its advocates. The way the pro government side bashes vouchers or any other attempt to reform the public schools is ideology at its WORST.

spencer February 18, 2008 at 11:09 am

Vouchers sound a lot like Medicare to me.

Under Medicare a patient is free to select their doctor with the government paying for it. Moreover, individuals are free to top-off Medicare coverage by buying supplemental private insurance.

Now doesn’t that sound exactly like the voucher system being advocated by libertarians? Each student gets a voucher that the student is free to select their school with the government paying for it. moreover, student would be free to top-off voucher coverage by buying supplemental private instructions.

Medicare has gotten much more complex because the political system does not just pass out money without having to impose extra regulations, etc., to try and prevent waste and crime. Wouldn’t exactly the same thing happen to a voucher system the first time some entrepreneur found a way to exploit the system without actually providing a good education?

steve February 18, 2008 at 11:39 am

Re: schools rated F do better the following year. At least in part, this is the result of regression toward the mean. Is there any attempt to address this fairly obvious and very important point?

Colin February 18, 2008 at 11:54 am

Steve – you didn’t RTFS, did you? Section 5.A.3 -> “Mean Reversion and Selection” describes how the researchers deal with this precise issue.

akatsuki February 18, 2008 at 12:15 pm

So would not the act of getting feedback itself cause an incentive to improve. Getting an F might have led to the gain alone.

We might also consider that the actual testing is the incentive to improve, as it creates a core curriculum that can be taught to. The so-called “teaching to the test” nightmare of educators who don’t care about standards whatsoever.

dsquared February 18, 2008 at 1:01 pm

Section 5 A 3 seems to me to be quite mixed up with the concepts of “mean reversion” and “regression to the mean”.

Jarick February 18, 2008 at 2:04 pm

Strange that a group of economists seem pretty hell-bent on forcing consumers to nationalized education in the name of diversity. Especially the comments that further move in the direction of forcing students to attend schools outside their neighborhood to avoid any kind of class separatism.

I grew up on the edge of a bad neighborhood with bad public schools. Because I was white and didn’t qualify for the busing programs, my parents decided to take extra jobs to send me to private school to keep me away from the gang and drug elements of the public. I’d be curious to know about the criminal element in some inner city schools (which maybe I’m wrong but could be correlated with lower test scores) and the impact school vouchers would have on juvenille crime (if any).

As for the tribalism, any former public school student knows quite well that it is alive in well in every school, and not necessarily on the basis of class or race. It seems to be impossible to have a large heterogeneous group without self-grouping. And I’m not sure what the benefit would be in forcing students to abstain from pursuing those relationships (unless of course it is crime-related).

Andrew February 18, 2008 at 5:14 pm

“A benefit of public schools is the (imperfect) mixing of different groups.”

Yeah, as in the benefit of the smart kids like me getting beat on by the older, dumber, meaner kids. That kind of mixing?

“Tribalism is one of the most destructive forces on the planet. Because a proclivity for tribalism appears to be written into our genetic code, active, ongoing measures are needed to tamp it down.”

Give me a break.

LemmusLemmus February 18, 2008 at 5:24 pm

I think this thread nicely illustrates one reason libertarianism isn’t more popular: its proponents are often so unlikable. People in favour of public schooling are in fact irrationaly adhering to a religion, which happens to be pretty much the same thing as slavery.

Nice job.

tgb1000 February 18, 2008 at 6:22 pm

I’m open to some experimentation with vouchers, but I notice none of the advocates here have really addressed Diogenes comment, i.e. the fact that many voucher advocates are most interested in subsidizing religious education. Can the voucher money be used to fund a madrassa (or whatever) teaching Death to America? Or a fundamentalist Christian school teaching theocracy? Is that acceptable in the name of competition? If not, who is going to stop it?

And it’s interesting how in these debates, voucher proponents inevitably describe public schools as if they were ALL failing miserably, when in fact, many are excellent. By all means, let’s try new ideas to improve those schools that consistently have problems, but let’s not pretend every public school is a hell-hole or a plantation (?).

Kari February 18, 2008 at 8:01 pm

Vouchers are not based on fully accurate information. Standardized test scores never show provide an accurate depiction of a school’s reputation. Yes, perhaps the test scores are failing but maybe the school wants to focus more on overall education, instead of just teaching the student the test. Perhaps the schools do need to increase their scores, but school’s that receive a failing grade seem to focus primarily on the test information the following year. There test scores may in fact increase, but did the students learn anything other than what was presented on the test? I would say not. Preaching just test information alone, is not teaching. The vouchers are a lame way of attempting to eliminate public schools. One needs to focus on improving public schools, not criticizing them.

jorod February 18, 2008 at 8:22 pm

You can find as many excuses as you want to evade vouchers. The next step is to merge failing or underfunded schools with healthy, successful schools with good management. Allow rural schools to merge for economies of scale. Scary, isn’t it?

Grant February 18, 2008 at 8:57 pm

meter, the real world has (mostly) free association. Public schools are small, compulsory institutions; a completely different beast. Yes there are bullies in both, but in a free society people usually have the option of disassociating from individuals whom they regard as walking negative externalities (or alternatively associating with positive ones). Imagine the conflict which would occur in the real world if people did not have these options.

To me, the comments on this page simply re-illustrate Austrian criticisms of any socialized industry: We can’t decide on what sort of schooling is desirable without price signals, and we don’t have any way to rationally choose between the different methods of improving schools because the knowledge of how to do so is dispersed and private. I’d bet when dealing with as large and diverse as America, those are some pretty big hurdles.

Bill February 19, 2008 at 12:35 am

For Lemmus:

We have what are called school zones that determine which elementary, middle or high school that your children can go to. We have to prove residency in a zone in order to register our children into the proper school…and yes based on where we live. The other options are to pay out of pocket for private school, home school our own children, or we can request out of district placement if there are special circumstances that would warrant an out of district placement. So in effect, economics determines where your children can go to school. If you live in a good area, usually there good schools. The resources that are controlled by people in positions of power are not diatributed equally. It is a fact that teachers are not placed at a particular school based on the REAL needs of the students who attend there. Teachers are able to shop around where vacancies exist and choose the school that they want to teach at if they desire.

Do you have a public school system where you are from and explain how your system works please

Bill

Floccina February 19, 2008 at 4:41 pm

meter,
Sometimes the bullies run in gangs, as in the schools that I went to. Further those on the margins, the very homely, the very timid, the very weak, can be picked at on and torn apart. They often do cannot learn to deal with the abuse. Children can be cruel. I will always remember Elizabeth McLaughlin who end up in mental institution. She may have ended there anyway but the years of cruel abuse couldn’t have helped and at least her time it school could have been less torturous.

Bill February 19, 2008 at 6:47 pm

NW……….

I can agree with most of your opinion, but I still struggle with believing that all parents would do the right thing if they were put in charge of their child’s education. Without a standard of basic achievement that is enforced by the laws of society, we might be brought back to the days, not that long ago when children were not required to go to school by the law of the society, and parents were allowed to keep them at home to care for younger siblings, or even to let them go to work as was the norm during the industrial period before stricter laws were enacted. I think everyone agrees that providing unconditional LOVE and the BEST education possible are the two most important things that parents can do for their children. all this control over educational funds scares me…

Tell me where I am wrong…

Bill

Bill February 19, 2008 at 9:02 pm

I agree Floccina…however students that only come to school a few days a year are in violation of the existing state laws. No child should be allowed to graduate that can not read, write and do math. This is why we have High School Exit exams and a credit system for earning a High School Diploma. There are also alternative programs for students that want to leave high school and earn a GED.

When I went to school, there were no standardized tests, and no exit exams. Kids that could not learn were moved to the next higher grade and it was called a social promotion. There was no Special education, there was no accessible class rooms for disabled kids. We have come a long way since those days. One thing we did have back in the early 60s that you will not find in any high school..a designated smoking area outside that even had a concrete pad, with an aluminum cover in case of bad weather. We could go out to smoke on lunch break or in between classes and it was allowed. This was before stricter laws were passed that the kids of today have to abide by.

Bill

Grant February 19, 2008 at 11:31 pm

Floccina,

Do parents or legislators have more incentives to do the right thing for students? Of course parents won’t make perfect choices, but they’ll tend to make better choices than a bureaucrat somewhere.

I’m not sure why people think that central planning of other (non-public good) industries is so disastrous while simultaneously believing its needed for education. Why should anyone be surprised that state-run education is performing poorly? It seems to me that the laws of economics apply as equally to shoes as they do secondary schools.

Floccina February 20, 2008 at 11:47 am

Bill we are not supposed to debate in the comments here but I like this exchange of ideas (sorry Tyler):

“I agree Floccina…however students that only come to school a few days a year are in violation of the existing state laws. “

But that does not stop the practice.

“No child should be allowed to graduate that can not read, write and do math. This is why we have High School Exit exams and a credit system for earning a High School Diploma.†

The tragedy is not that they get a diploma; most who cannot read do not get diplomas. The tragedy is that after so many hours and so much money spent they have so little skill. They would be better off with the cash that it cost than with the schooling. I only stated it to show that even if people choose not send their children to school we will not necessarily be much worse off.

If a child is hates school and is not interested in learning and parents do not car if learns he will not learn in the current system.

Note I am against vouchers except if they are used to reduce net spending on schooling, I gave reasons in a comment above.

NW February 20, 2008 at 2:15 pm

We aren’t supposed to debate? How about clarify? If someone cannot expose fallacies in my reasoning, what’s the point of the discussion?

Bill, you question whether or not parents will do the right thing or not with vouchers. I think it is a given that some will not, much like some do not in the current system.
Nowhere did I suggest that the education standards be dropped, or that schools be eliminated.
I support school vouchers on these grounds:
Parents, not governments, are responsible for children.
Governments and parents are both made of humans, therefore just as fallible.
The current system is not producing the results expected.
The current system has created a virtual monopoly.
Improvements for the consumer typically, though not always, follow when practical options are added to a closed set.
Money is power, and it belongs in the hands of the individual parent, not the government, or the teachers’ union.

I also find that the opposition to vouchers typically fall in one of two categories:
Arguments that might exist with vouchers that already exist in the current system.
Arguments on the micro level, when we are trying to improve a macro issue.

Bill February 20, 2008 at 7:32 pm

I appreciate the dialog that we have in this thread. I certainly don’t have all the answers, but it seems that as a group we all care about the declining state of our educational system.

I am for vouchers, but I am also for taking a look at the last 40 years of public education and finding out what really needs to be done. If you have read Tomas Sowell’s book “Inside American Education, ” IMO he hits on some of the real problems with public education, and give reasons why these problems have not been fixed.

Most of the studies that I have reviewed point to “teacher quality” as and most important factor in educational success. I would challenge anyone to find a school district that portions public resources, teacher assignments and more based solely on the needs of the children…I doubt seriously you will find even one. It is a fact that the state I live in (Lousiana) has the least qualified teachers assigned to the poorest school districts. This does not make sense, but this practice goes on every day, in every school district in the United States.

Please share your thoughts. I would think that this forum is patronized by professional people that do not take any comments personally. What I want is to glean answers from others who may have a different perspective than me. I appreciate Ryan’s input to this forum…and I must say I agree with his thoughts on this subject.

Bill

Darin London February 22, 2008 at 1:59 pm

the ‘decline’ of teacher quality over the past 40 years neatly coincides with the movement of women away from the teaching jobs into the workforce on a more even playing field with their male peers, something I think all of us would cheer. The unions have exacerbated the situation by stridently avoiding any performance related pay plans for teachers that would reverse the trend of quality flight. That being said, it is naive to believe that a purely private education system would do any better. Can we say ‘Walmart School’? Its cheap, can be put up in any society anywhere in the world, doesnt teach anything ‘controversial’, etc. My problem with much of the privatisation movement is also related to the home-school movement. There are huge industries out there fueling the debate in their favor. They dont want governments to be able to collectively bargain for the teaching materials, books, supplies, computers, etc. that are necessary to teach a student in this day and age. They really dont even want private schools to do so, unless they can be set up in such a way that all of the costs of purchasing this stuff is passed onto the consumer without any pushback on the producer to change their prices. Ideally, we would all be forced to bargain with these producers on an individual basis, with no real collective power to force prices down. Again, this may be good for a certain part of the economy, but not for the global economy as a whole, nor is it good for individual freedom and liberty. The only way to move forward is to reform the existing public school system with better school choice, small vouchers in the case where a school by necessity must be closed down, merit pay, and better accountability on the part of the school administrators.

NW February 23, 2008 at 4:19 pm

Ryan,
I would be hesitant to use http://www.ny.frb.org/research/epr/98v04n1/9803krue.pdf to support your paper. It appears to have had its conclusion written first and facts found afterward. The paper is, at best IMO, inconclusive. (It would be a rather long post to give a point-by-point analysis.)

“On a social level, outside of market claims, I oppose the idea of privatizing education because I believe that would increase the gap between those who can afford to go to a good school and those who can only afford to attend A school.”
How would it increase the gap? If the money spent per student by the federal government remains constant, how does the gap grow?
“Education run as a business is not going to be a program interested in its students first.”
Common statement, but the question isn’t whether or not a business will put students first. The question is if a government bureaucracy or privatized school will respond better to the educational needs of their students. Given that with a voucher system schools would have constant financial incentive to meet the expectations of the parents, whereas, with the current system there is only one option for most parents and no real competitive demands on public schools, I believe that in comparison there will greater attention paid to students with privatized schools.

I agree that teachers’ salaries are too low, but I find that a separate subject. Doubling salaries would correspond to higher taxes. I find it highly unlikely that this is a politically viable solution.

If we attempt to present a real world solution, one that will produce results and have a chance of being implemented, I think that we need to try to get more for our money. Doubling the cost of teachers, however legitimate, is not going to make for a good campaign slogan.

I watched a fight for higher teacher salaries in Washington State about ten years ago. The rhetoric was high on both sides. The wallet won.

Ryan, do you have a way to fundamentally change the voters’ view? Regardless of the use, or lack of, vouchers, I think both systems would benefit from significantly higher teacher salaries. I do not see a method of getting there.

Bill February 23, 2008 at 7:08 pm

For NW and Sandy:

In your model of private schools, how do you get past the FACT that private schools have entrance requirements. Many test students and will refuse to take that student if the student does not meet their entrance requirements. What is my child has a behavioral problem? Will all of the private schools take my child? Will kids that fit into this model be forced to go to public schools? How does this system make it better for the same kids that are being forced to attend bad schools because of economics?

Bill

NW February 23, 2008 at 8:53 pm

Bill,
I did not think about the entrance criteria before you mentioned it. Honestly, though, I think I’ve already answered this. Will students be denied access to an school/entrance into a grade level-based on- behavior/academic level? Yes…just like they sometimes are in the current system. This is not an anomaly that may arise with a voucher system, but a current reality.
Vouchers will not make parents care, though it might give them a greater sense of ownership. It won’t make children geniuses, and it won’t change the social and economic barriers in existence.
I don’t see added negatives. I do see tax dollars being put to better use by forcing schools to earn their money. I do see people at all levels being able to vote with their feet in ways that they cannot do at the present. I do see a shift from a few deciding for many, to the many deciding for themselves and their children.
I still don’t see how the end result, an educated child, is not going to be produced in better quality and quantity when the people are given an independent voice.

Teachers’ Salaries

Yes, you could compute their salaries on the school year. However, the things you are dismissive about: lesson plans and continuing education, are not options but requirements for some teachers. Your suggestion that they just pick up a second job for that two to three month break isn’t completely honest. Some do find work, but not everyone is going to find financially rewarding an employer in their geographic area that is willing to hire them for a couple of months out of the year.

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