Anti-Lemons: School Reputation and Educational Quality

Journal of Public Economics, 2006

This paper studies the e¤ects of incentive mechanisms and of the competitive environment on the interaction between schools and students, in a set-up where their e¤ort a¤ects the students' educational attainment. We show that increasing the power of the incentive scheme and the e¤ectiveness of competition may have the counterintuitive effect of lowering the students' attainment. In a simple dynamic set-up, where the reputation of the schools a¤ects recruitment, we show that increased competition leads to segregation of pupils by ability.

2005

We show that, when school quality is measured by the educational standard and attaining the standard requires costly effort, secondary education needs not be a hierarchy with private schools offering better quality than public schools, as in Epple and Romano, 1998. An alternative configuration, with public schools offering a higher educational standard than private schools, is also possible, in spite of the fact that tuition levied by private schools is strictly positive. In our model, private schools can offer a lower educational standard at a positive price because they attract students with a relatively high cost of effort, who would find the high standards of the public school excessively demanding. With the key parameters calibrated on the available micro-econometric evidence from the US, our model predicts that majority voting in the US supports a system with high quality private schools and low quality public schools, as assumed by Epple and Romano, 1998. This system, however, is not the one that would be selected by the social planner, who prefers high quality public schools combined with low quality private schools.

In this paper, we analyze the equilibrium on the market for schooling where both public and private schools coexist and where individuals are differentiated by income and ability. We study the distribution of students across sectors while examining the conditions for the existence of a majority voting equilibrium in the context of non single peaked preferences. Finally, we examine the existence of a hierarchy of school qualities, as a consequence of the discriminating pricing strategy used by private schools to internalize the effect of peer groups.

The Economic Journal, 2003

Contributions to the 'school choice' debate have exploded in the last ten years. Most of the recent contributions have come from the US on the back of the American revolution in market-led school choice experiments. However, the central idea has a long pedigree and understanding recent contributions like the new book edited by Caroline Hoxby requires some background. The first thing to understand is that in this book the phrase 'school choice' is used synonymously with the idea of a voucher system. Unlike in other countries, the context of the 'school choice' debate in the US refers to the extent to which market principles can and should be used in education and the details of the type of voucher (or charter school) scheme and its possible effects. This article explains where the school choice idea came from and briefly summarises the state of the debate. Of necessity, we review what is happening in the US in school choice reform, before examining what is new in the Hoxby volume. We then reflect on what is missing so far in this debate-exploring the idea that educational outputs are not unidimensional and that this can induce incentive problems. We also suggest that the key concept of accountability has been given insufficient attention in this debate.

Journal of School Choice, 2009

Would large-scale, free-market reforms improve educational outcomes for American children? This question cannot be reliably answered by looking exclusively at domestic evidence, much less by looking exclusively at existing "school choice" programs. Though many such programs have been implemented around the United States, none has created a truly free and competitive education marketplace, being too small, too restriction laden, or both. To understand how genuine market forces affect school performance, we must cast a wider net, surveying education systems from all over the globe. The present paper undertakes such a review, assessing the results of decades of international research comparing market and government provision of education and explaining why these international experiences are relevant to the United States. In more than 150 statistical comparisons covering eight different educational outcomes, the private sector outperforms the public sector in the overwhelming majority of cases. Moreover, this margin of superiority is greatest when the freest and most market-like private schools are compared to the least open and least competitive government systems (i.e., those resembling typical U.S. public school systems). Given the breadth, consistency, relevance, and decisiveness of this body of evidence, the implications for U.S. education policy are significant.

Economics of Education Review, 1995

This paper contributes to the literature on competition in public schools. Borland and Howsen (1992) showed that the "'market structure" of public schools affected academic performance. In this note, we consider the possibility that the performance of neighboring school districts could influence performance. Student academic performance was modeled as a function of control variables and competition from neighboring school districts. Academic performance of subject school districts was shown to be positively associated with the performance of neighboring districts but the effect was small. The findings confirm the Borland and Howsen implication that additional efforts to strcngthen inlerjurisdictional competition may be useful.

2006

In this paper, we analyze the equilibrium on the market for schooling where both public and private schools coexist and where individuals are differentiated by income and ability. We introduce a non linear in means model of peer effect by shedding the light on the fact that school quality is not solely dependent on mean ability but also on the dispersion of abilities. We study the distribution of students across sectors while examining the conditions for the existence of a majority voting equilibrium in the context of non single peaked preferences. Finally, we examine the presence of a hierarchy of school qualities. In the paper we shed the light on equity problems related to the access to educational quality while analyzing the functioning of the educational system.

International Encyclopedia of Education, 2010

1997

This chapter concentrates on policies that increase the efficiency of schools rather than just more spending. The first focus is on the causes of educational inefficiency. These include lack of standards and accountability, centralization, unaccountable management and labor, federally induced inefficiency, and nonmarket inefficiency. Steps policymakers can take to increase productivity are: (1) focus schools on learning; (2) apply principles of effective instruction; (3) increase the amount of instruction; (4) ensure quality instruction; (5) improve the organization of work and instruction; (6) employ uniform standards; (7) allow for student differences; (8) work to overcome "Matthew effects" of increasing ability differences; (9) group students in appropriate ways; (10) develop external examinations; (11) hold educators accountable; (12) incorporate appropriate incentives; and (13) abolish or voucherize federal education programs. Particular attention is given to the role of privatization, which might better satisfy educational requirements for all but the special interests of public school providers and defenders of the status quo. The evidence for the superior achievement of private schools suggests enlarging their numbers with publicly subsidized vouchers. (Contains three figures.) (SLD)

With each passing year, the number and variety of school choice proposals continue to grow. The purpose of these proposals, whether implicit or explicit, is to reintroduce market forces to the field of elementary and secondary education. Education markets, it has been argued, are more efficient, academically effective, and responsive to the demands of families than state-run school monopolies. In the policy debates that arise over each new proposal, much emphasis is given to political viability, cost, and likely susceptibility to legal challenge. Less time is spent assessing a proposal's ability to create an effective education market. In fact, the specific require-ments for the creation of effective education markets are seldom discussed. One way of addressing this deficit is to provide a metric for rat-ing school reform plans based on the size and quality of the educa-tion marketplace they are likely to create. The current article sug-gests one such metric, which I have dubbed...

Information plays a key role in markets with consumer choice. In education, data on school quality is often gathered through standardized testing. However, the use of these tests has been controversial because of behavioral responses that could distort performance measures. We study the Chilean educational market and document that low-performing students are underrepresented in test days, generating distortions in school quality information. These distorted quality signals a↵ect parents' school choice and induce misallo-cation of public programs. These results indicate that undesirable responses to test-based accountability systems may impose significant costs on educational markets.

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ABSTRACT Over the past few decades, the figure of the market has clearly made its way into the field of education. For some authors, it represents an alternative to regulation by the public authorities, a different form of co-ordination which is better able to meet the objectives of the education systems. Through a secondary analysis of the PISA 2006 database, we test this hypothesis, as well as an alternative one which suggests that the quasi-market, rather than being linked positively to effectiveness of the education systems, would be associated with the students’ achievement dependence on their socio-economic and cultural background and on the social composition of the school they are enrolled in. Our findings suggest that the quasi-market regulation (school autonomy and competition for student recruitment) (1) is not linked to effectiveness and (2) tends to be associated with a stronger link between schools’ social composition and student achievement.

2009

The literature suggests that competition among schools might increase quality. However, not much empirical evidence is present as only a few countries allow competition at a large scale. One exception is the Netherlands. Free parental choice is the leading principle of the Dutch education system since the beginning of the 20th century. Based on panel data for the Netherlands we

Choice Reviews Online, 1994

This dissertation includes three papers in the field of economics of education. The first paper provides estimates of the long-run impacts of tracking high-achieving students using data from a Boston Public Schools (BPS) program, Advanced Work Class (AWC). AWC is an accelerated curriculum in 4th through 6th grades with dedicated classrooms. Using a fuzzy regression discontinuity approach based on the AWC entrance exam, I find that AWC has little impact on test scores. However, it improves longer-term academic outcomes including Algebra 1 enrollment by 8th grade, AP exam taking, and college enrollment. The college enrollment effect is particularly large for elite institutions. Testing potential channels for program effects provides suggestive evidence that teacher effectiveness and math acceleration account for AWC effects, with little evidence that peer effects contribute to gains. The second paper uses item-level information from standardized tests to investigate whether large test score gains attributed to Boston charter schools can be explained by score inflation. To do so, I estimate the impact of charter school attendance on subscales of the test scores and examine them for evidence of score inflation. If charter schools are teaching to the test to a greater extent than their counterparts, one would expect to see higher scores on commonly tested standards, higher stakes subjects, and frequently tested topics. However, despite incentives to reallocate effort toward highly-tested content, and to coach to item type, I find no evidence of this type of test preparation. Boston charter middle schools perform consistently across all standardized test subscales. The third paper analyzes a Massachusetts merit aid program that gives high-scoring students tuition waivers at in-state public colleges with lower graduation rates than available alternative colleges. A regression discontinuity design comparing students just above and below the eligibility iii threshold finds that students are remarkably willing to forgo college quality and that scholarship use actually lowered college completion rates. These results suggest that college quality affects college completion rates. The theoretical prediction that in-kind subsidies of public institutions can reduce consumption of the subsidized good is shown to be empirically important.

2000