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The Voucher Paradox

By Chris | November 16, 2007

Economists don’t agree on many things. When they do, they almost invariable face strict opposition from the public. From free trade to Pigou taxes, good economics collides with good politics. So, I was very surprised to find that educational vouchers are widely supported by economists and the general public, yet have had very little political success.

“Economists favor expanding competition and market forces in education. Over two-thirds (67.1%) agree that parents should be given educational vouchers that can be used at government-run or privately-run schools—while 30.5% oppose the idea.”

~”Do Economists Agree on Anything?” (gated unfortunately)

And from The Economist:

In principle, vouchers are popular: a YouGov poll for The Economist (see chart) finds 53% of people favouring them, with only 32% opposed.

What about the other 15 percent of the public? It seems that a lot of people simply don’t know enough about them to have much of an opinion. One survey found that 40 percent of Americans aren’t familiar with them. For an overview of public opinion, look here.

Nevertheless, given the general support of the public and economists, why don’t we see more voucher programs? My guess is teachers’ unions are very effective at combating voucher legislation. Also, while in theory people support school choice, in the short-run vouchers mean public education cuts or more taxes: both hard sells. Even Tyler Cowen, who considers himself a libertarian, is wary of vouchers:

“Vouchers would create a new middle class entitlement, ostensibly aimed at education but often simply capitalized in the form of cash. In the meantime public schools would require additional subsidies to stay open. How pretty a picture is this?…I would be happier with vouchers if we were starting from scratch in designing educational institutions.”

What got me thinking about vouchers was this excellent report by John Stossel. I was particularly struck by one study cited in the video noting that 4th grade Americans compare favorably to other students globally and only fall significantly behind their foreign counterparts in middle school and high school. Two other clips caught my attention. One showed militaristic teacher union rallies and the other captured desperate parents at lotteries clinging to tickets in hopes that their child would win a spot in a good school. While Stossel may gloss over some of the complexities of an issue, he certainly is persuasive. The world would be a better place if more economists had his talent.

I’m in favor of vouchers, but agree that the system needs to constructed carefully. Currently, we’re imposing a huge opportunity cost on parents who would otherwise prefer to send their children to better schools. In other words, we’re giving parents a financial incentive to give their kids less education.

When it comes to funding, I disagree with Tyler that vouchers would create a massive entitlement. In good school districts, vouchers would have a small impact on attendance. Ceteris paribus, kids and parents prefer larger schools that are familiar, close and offer lots of extra curriculars. Additional subsidies, would not be needed to prop up the local public school. Conversely, the worst school districts would see attendance and funding plummet. Either they would fail, or the government would be forced to improve the school. We’ve been blindly throwing money at education for years with little impact. The right voucher system would force bureaucrats to direct attention and money where it is most needed.

Topics: Economics, Education | No Comments »

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