WHAT LEADS TO SUCCESSFUL SCHOOL CHOICE PROGRAMS? A REVIEW OF THE THEORIES AND EVIDENCE.

• Author: DeAngelis, Corey A.
• Position: Report

There is a large body of research showing many positive benefits of school choice. However, many questions remain on how school choice works. Rigorous school choice experiments can only determine if access to school choice programs alters student outcomes; they cannot confidently identify the specific mechanisms that mediate various outcomes. Two commonly discussed mechanisms in school choice programs, thought to generate positive student outcomes, are (1) an increased access to higher-quality schools and (2) an improved match between schools and students. We examine the existing empirical evidence and arguments for these two primary mechanisms. While there is evidence supporting both mechanisms, no studies are able to isolate the effect of quality schools on student outcomes independent of families selecting schools that match their preferences. Since the majority of this research is descriptive and has limited causal interpretation, theory is essential in guiding interpretation and policy implications. Theory suggests that people make choices based on what they believe to be the best match for their children, and those choices lead to incentives for individual schools to improve. We conclude with policy recommendations based on our summary of the literature.

School Choice

Families frequently participate in public school choice by selecting where they live. This is known as "Tiebout choice." Economist Charles Tiebout (1956) posited that families select their homes based on a basket of goods and services, including their schools. Since the decision to move is based on many factors--such as proximity to a city center, pollution levels, commute times, safety, budget constraints, and natural surroundings--moving is a very costly option for a family in order to opt out of their residentially assigned public school. More realistic public school choice comes in the form of publicly funded and privately managed charter schools that usually have specialized missions. State law requires that public charter schools are tuition-free, and, when oversubscribed, most schools use a random lottery to determine which children attend.

Publicly funded private school choice is available to fewer families. The most well-known type of private school choice is school vouchers. Vouchers provide families with public money to attend a private school of their choice. Private school vouchers are often attributed to Milton Friedman (1962), but K-12 education vouchers have existed in the United States since the 19th century in Maine and Vermont. John Stuart Mill (1869) advocated education vouchers just before town-tuition programs were implemented in Maine and Vermont. Other types of private school choice include tax-credit scholarships, tax-credit deductions, and, most recently, Education Savings Accounts (ESAs). While there are slight differences in each of these programs, they all make it less costly for parents to opt out of their residentially assigned public school in order to send their children to the school that better fits their needs.

There is substantial evidence that private choice programs have positive effects for students. A meta-analysis of 19 voucher experiments around the world indicates that private school choice improves student math and reading test scores (Shakeel, Anderson, and Wolf 2016). Out of 20 experimental evaluations of private school choice in the United States, only two find negative impacts on student math and reading test scores (Abdulkadiroglu, Pathak, and Walters 2015; Dynarski et al. 2017). One notable experiment (Wolf et al. 2013) shows that the D.C. voucher program increased the likelihood of high school graduation by 21 percentage points and one quasi-experiment (Cowen et al. 2013) finds that the Milwaukee Parental Choice Program (MPCP) increased high school graduation rates by 3 percentage points. While research of school choice effects on educational attainment is limited, a review of 12 studies suggests that private and public school choice has a positive effect on student attainment (Foreman 2017).

A review of the experimental and quasi-experimental evidence finds that U.S. private school choice programs reduce criminal activity, increase civic engagement, and increase tolerance of others (DeAngelis 2017b). Another review of the evidence shows that seven out of eight voucher studies conclude that private school choice improves racial integration (Swanson 2017). Furthermore, Egalite's (2013) review finds that 20 out of 21 empirical studies indicate that competitive pressures from school choice programs improve test scores for students who remain in traditional public schools. In addition, more than 20 evaluations (Forster 2016) have found that all of these benefits result in state (e.g., Costrell 2010, Spalding 2014, Trivitt and DeAngelis 2016) and district-level (Scafidi 2012) financial savings.

The question remains: How does school choice lead to these benefits? We examine two possible mechanisms: (1) an increase in the supply of generally better schools, and (2) a better match between educators and students. While these two mechanisms are closely related, and difficult to completely disentangle, we scrutinize the relative strengths of the mechanisms and summarize the current empirical evidence.

We discuss the impact of quality schools on the success of school choice programs, but we are not concerned with defining the absolute measures of school quality. We recognize that measuring school quality is a highly debated issue in education policy, but that is not the aim of this article. Rather, our focus is to discuss the mechanisms for improving student outcomes and to examine the evidence for successful school choice programs.

Mechanisms for Improving Student Outcomes

Within school choice programs, there are a variety of mechanisms that can lead to improved student outcomes. We will focus on two of the most compelling: (1) market competition to increase the supply of high-quality schools, and (2) improving the match between schools and students.

Market Competition

The first mechanism is largely related to basic economic theory. The traditional public school system in the United States--and around most of the world--consists of a strong public school monopoly financed by taxes (Merrifield 2001). Families pay taxes that finance K-12 public schools whether their children attend public schools or not. If families are dissatisfied with their residentially assigned options, they can opt out of their school only if they move neighborhoods or pay for private school tuition. Meanwhile, they continue paying for public schools indirectly through the tax system. Consequently, there are few incentives for public schools to innovate or respond to families' needs.

For example, imagine if a company could force people to pay for its services regardless of its quality or if individuals choose to purchase its products. As long as the company met the minimum standards set by the government, it would remain profitable without having to respond to the needs of customers. Conversely, when markets function in an open system, competitive pressures lead to quality improvement (Hoxby 2003). School choice programs diminish monopoly power held by traditional public school leaders and, therefore, lead to increased overall quality levels and lower costs (Chubb and Moe 1990, Friedman and Friedman 1990). In other words, market pressures could change the supply of schools by enticing high-quality schools to open and persist while incentivizing low-quality institutions to either improve or close down.

Parental Choice in the Student-School Match

The second mechanism focuses on the ability of families to choose their children's educational institution, which allows for a better match between schools and students. Public K-12 education is a one-size-fits-all system that is unable to serve students' varied needs. Since all children have unique interests, ability levels, desires, and learning styles, an...