Education

The Economist on Education Vouchers

The Economist is carrying a piece on the success of education vouchers. Sweeping aside criticism from the “education establishment”, The Economist states simply that “they work”.

But these arguments are now succumbing to sheer weight of evidence. Voucher schemes are running in several different countries without ill-effects for social cohesion; those that use a lottery to hand out vouchers offer proof that recipients get a better education than those that do not.

I am currently embroiled in an argument with my mother, someone The Economist would consider part of the “establishment”, over the worth of vouchers, and in due course I will report that argument here. But her point is essentially simple - vouchers presume a lot of things that may not be possible in reality. Given that argument, it is a good idea to look at the Economist article again.

The Dog That did not Bark: An Incomplete Analysis

One must realize, first, that The Economist - like every other media source - has its bias. In this case, the bias is a very free-market orientation. Having an MBA as my training, I share that thinking to some degree, and have guardedly supported vouchers as a promising idea. But, for that very reason, it is important to reconsider what The Economist does not say - the dog that did not bark, or the objections it sweeps aside.

For instance, speaking of the Columbian program, which assigned vouchers randomly, The Economist says:

These results are important because they strip out other influences. Home, neighbourhood and natural ability all affect results more than which school a child attends. If the pupils who received vouchers differ from those who don’t perhaps simply by coming from the sort of go-getting family that elbows its way to the front of every queue any effect might simply be the result of any number of other factors. But assigning the vouchers randomly guarded against this risk.

A little later the article counters the failure of Chile, with the success of Sweden.

Opponents still argue that those who exercise choice will be the most able and committed, and by clustering themselves together in better schools they will abandon the weak and voiceless to languish in rotten ones. Some cite the example of Chile, where a universal voucher scheme that allows schools to charge top-up fees seems to have improved the education of the best-off most.

The strongest evidence against this criticism comes from Sweden, where parents are freer than those in almost any other country to spend as they wish the money the government allocates to educating their children. Sweeping education reforms in 1992 not only relaxed enrolment rules in the state sector, allowing students to attend schools outside their own municipality, but also let them take their state funding to private schools, including religious ones and those operating for profit. The only real restrictions imposed on private schools were that they must run their admissions on a first-come-first-served basis and promise not to charge top-up fees (most American voucher schemes impose similar conditions).

The result has been burgeoning variety and a breakneck expansion of the private sector. At the time of the reforms only around 1% of Swedish students were educated privately; now 10% are, and growth in private schooling continues unabated.

Accounting for Market Failure

What the Economist has failed to conclude, in propogating vouchers, is that they seem to work only in controlled conditions. First, the article accepts that home, neighborhood, and natural ability are more important than the school. Yet, it does not take that further, accounting for cases where social and geographical mobility is not possible. In theory, vouchers may allow poor families to send their children to a private school - but what if that private school is too far? What of those neighborhoods that do not have - nor will ever have - private schools?

Similarly, Sweden is not Chile so the comparison is of apples to oranges. Yes, private education in Sweden may work for everyone. But need we remind the author that markets most frequently fail the poor - consider the massive market failure that occurs in global pharmaceutical health research.

Balancing Equity and Economics

I still retain my support for the idea of vouchers. As the FT (another free-market voice) said pithily:

Education is not, as has long been believed, too important to be left to the private sector. It is, instead, too important to be left to failing public monopolies.

But the reason education is a “traditionally core public service” is not because we believe the state can provide better education. Rather, it is because we believe it can more equitably distribute education and be the provider of last resort.

The Economist would, therefore, do well to balance free-market economics with considerations of equity, and to give due weight to the possibility of market failure as well as social factors that limit the efficacy of vouchers (see my previous post, and article: Farce of School Choice).

Free-market idealists must realize that the world is not ideal, and markets will frequently fail. When they do, they will fail the poor first. So, free-market capitalism is not a panacea. For the poor, the devil lies in the details and the Economist would do well to talk more of those details.

© 2007 The Discomfort Zone.