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Benefits Of Choice Go Beyond Schools And Into Economy
This piece appeared in Investor's Business Daily on June 7, 2004.
The idea of giving parents control over what schools their children attend, including private and parochial institutions, is increasingly viewed as a way to improve publicly funded education, especially in America's cities. Yet there is growing evidence to suggest that widespread adoption of what is typically called "school choice" would have a dramatic economic, as well as educational, benefit.
Indeed, a persuasive case can be made that, even if school choice were educationally neutral, proving to be no better or worse than the current government monopoly, its adoption would give the U.S. economy a powerful and sustainable economic boost.
Let's start with this important fact: according to the National Center for Education Statistics, per pupil spending at religious and independent schools averages $4,600, versus $6,857 at public schools -- a difference of $2,257. In 2003, the Yankee Institute in Hartford, Connecticut, conducted a study, published in the October/November issue of The American Enterprise, showing that if all 47.6 million American public school students were educated in private or parochial schools the national savings would be greater than the annual total of all state budget deficits. In other words, were public education delivered with private efficiency, there would be no state budget crisis. As dramatic as the savings would be, reducing state and local budgets for public education represents but a fraction of the stimulus that would come from making school choice a universal option. Consider the financial implications of releasing American families from the burden of having to compete for expensive homes in the relatively small number of communities with good public schools. In her 2003 book The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke, co-authored with Amelia Warren Tyagi, Harvard Law professor Elizabeth Warren argues that, in spite of a 75 percent increase in inflation adjusted wages over the last 30 years, the average family with two working parents actually has less discretionary income than the traditional family with a single wage earner had a generation ago. As a result, "1.6 million Americans will file for bankruptcy this year," she says, while "9 million families … are in credit counseling." Home mortgage foreclosures, credit card defaults, and car foreclosures are all at record levels. Contrary to common belief, these statistics are not the result of too many undisciplined trips to the mall, buying the latest designer clothes or electronic games for the kids. Apart from higher premiums for health insurance and the second car for the working spouse, Professor Warren finds that the biggest squeeze on middle-class families comes from high mortgage payments for housing in towns with desirable public schools. "What’s happening today," says Warren, "is that young parents buy houses with just three thoughts in mind: schools, schools, and schools." The problem is that "in inflation-adjusted dollars, they’re paying more than 70 percent more then their parents paid for a house …." Not surprisingly, Warren is sympathetic to the concept of universal school choice. Giving all parents a taxpayer-funded voucher that they could spend at any school, public or private, would “relieve parents from the terrible choice of leaving their kids in lousy schools or bankrupting themselves to escape those schools.” The intriguing complement of freeing parents from the need to buy high priced high real estate in suburbs with above-average public schools is the creation of powerful incentives to revitalize decaying cities and, in the process, retard urban sprawl. As Duke University economist Thomas Nechyba points out, using choice to sever "the link between school quality and residential location" would encourage many middle class families to purchase and renovate homes in blighted urban areas. Longer term, school choice would lead to a dramatic increase in the property values of currently distressed city neighborhoods, creating a tax base that would further stimulate local economies. In 1997 economists William Bogart and Brian Cromwell conducted a study for the National Tax Journal on "How Much More Is A Good School District Worth?" They compared home prices in an area of Cleveland where some children were permitted to attend highly rated schools in suburban Shaker Heights with other city communities served only by the Cleveland Municipal School District. Bogart and Cromwell found that the opportunity for a family's children to attend superior schools added between $5,303 and $11,648 to the value of a city home. If the elimination of state and local budget deficits, the dramatic reduction of mortgage payments by hard pressed middle class families, and the cost-saving revitalization of America's cities were not enough to spark an economic boom, consider the interesting relationship between the growth in the number of charters schools -- public schools freed from the yoke of district bureaucracy and union rules -- and the increasing popularity of online education. According to Kathleen Vail, associate editor of the American School Board Journal, a growing number of charters are meeting the needs of their communities by becoming "cyber schools," offering online courses to an estimated 40,000 to 50,000 students in the 2001-02 academic year. A National School Boards Foundation survey of prominent educators confirms that the more schooling options parents are allowed, the more their children naturally gravitate to online education. What this means from an economic point of view is that further expanding school choice, with vouchers or tax credits for private education, would at the very least give a boost to the software industry. Another likely beneficiary of a choice-inspired increase in online education is the leisure travel industry, which currently sees most of its profits confined to the few weeks between winter and spring, and the months of July and August, when most families with school aged children are free to travel. One of the intriguing findings about internet-based education is that most children can learn just as much from so-called "asynchronous courses" -- that is, courses offered at any time or at the student’s own pace -- as they do from being connected simultaneously with other students and a teacher. As school choice allows more and more children to take advantage of online education, their families would be free to vacation during less crowded off-peak periods, allowing a fuller utilization of hotels, airlines, and related travel facilities. Liberal policymakers have typically sought to stimulate the U.S. economy, not by improving domestic education policy, but by restricting the free flow of labor and goods with rapidly developing countries such as India, Brazil, and China. Perhaps they ought to be paying attention to the fact that these same developing countries are pioneers in the privatization of public education. India is a leader in internet-based teaching with the biggest education software center in the world. Brazil has encouraged the growth of large chains of independent schools, with nearly 20 percent of students in the state of São Paulo being educated privately. And in China, school choice has gone from being completely outlawed in the mid-1980s to the point where today 54 percent of preschools and 9 percent of vocational high schools are privately managed. What do these "less developed" countries know about stimulating growth that America’s liberal policymakers have yet to discover? Giving parents control over the education of their children is not just sound pedagogy -- it's pretty good economics, too.
Dr. Lewis M. Andrews is Executive Director of the Yankee Institute for Public Policy Inc. at Trinity College, a Connecticut research and educational institute.
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The Yankee Institute for Public Policy, Inc. is a nonpartisan educational and research organization founded more than two decades ago. Today, the Yankee Institute's mission is to "promote economic opportunity through lower taxes and new ideas for better government in Connecticut." The Yankee Institute for Public Policy, Inc. is classified by the IRS as a 501 (c) (3) public charity. Contributions are deductible to the extent allowed by law.
