Why is free education so popular? A political economy explanation

• Author: Juan A. Correa,Yijia Lu,Mauricio Villena,Francisco Parro
• Date: 01 August 2020
• Published date: 01 August 2020
• DOI: http://doi.org/10.1111/jpet.12396

J Public Econ Theory. 2020;22:973–991. wileyonlinelibrary.com/journal/jpet © 2019 Wiley Periodicals, Inc.

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Received: 25 June 2018

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Revised: 4 June 2019

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Accepted: 1 August 2019

DOI: 10.1111/jpet.12396

ORIGINAL ARTICLE

Why is free education so popular? A political

economy explanation

Juan A. Correa

1

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Yijia Lu

2

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Francisco Parro

3

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Mauricio Villena

3

1

Facultad de Economia y Negocios,

Universidad Andres Bello, Santiago,

Chile

2

School of Law, New York University,

New York, New York

3

School of Business, Universidad Adolfo

Ibáñez, Santiago, Chile

Correspondence

Francisco Parro, School of Business,

Universidad Adolfo Ibáñez, 7941169,

Santiago, Chile.

Email: fjparrog@gmail.com

Abstract

This paper analyzes the political support for different

funding regimes of education in a one‐person, one‐vote

democracy. We focus the analysis on four systems that

have had a preponderant presence in the political debate

on education: a private system, a public system that

delivers the same resources to each student (universal‐

free education), a public system that intends to equalize

results, and a public system that aims to maximize the

output of the economy. We show that a system of

universal free education is the Condorcet winner. The

level of income inequality and the degree to which

income distribution is skewed to the right are key factors

behind this conclusion. We also show that the voting

outcome of public versus private funding for education

depends crucially on the type of public funding under

consideration.

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INTRODUCTION

Universal free education has become popular in several regions of the world. Western

democracies have it at different stages of the educational ladder. European countries, such as

France, provide free tuition to European students, and Germany offers free tuition even to

international students. Argentina, the Czech Republic, and Greece supply free education at all

educational levels. Most of the United States primary and secondary students attend public

schools, which provide free education, funded by a mix of federal, regional, and local

resources.

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In other countries, such as Chile, South Africa, and the United Kingdom, where

1

An extensive cross‐country analysis of education’s tuition fee schemes can be found in Bentaouet Kattan (2006).

higher education is not free, social movements have pressured the authorities to implement a

scheme of universal free education for higher education.

2

In this paper, we give a political

economy explanation for the popularity of free education.

A system of universal free education allocates public funds equally across students. This

system, however, is not completely consistent with the main implications of a strand of the

literature that emphasizes, first, the importance of economic growth to improve living standards

and, second, human capital investments as the engine to promote growth (Benhabib & Spiegel,

1994; Hanushek & Kimko, 2000; among others). This branch of the literature points to a system

in which public resources for education should be allocated to students with higher skills (so as

to maximize aggregate output), relying on alternative instruments for redistribution. Universal

free education also implies that public funds are allocated regardless of the student’s family

income. However, studies such as Samoff (1996) and Larkin and Staton (2001) highlight the

importance of equity in the allocation of public resources spent on education. This implies that

disadvantaged students should be supported with more resources, which would allow

equalizing human capital across students. Hence, universal free education does not point in

the direction suggested by these two strands of the literature.

A third strand of the literature suggests that different public funding systems should be

implemented at different stages of the educational system. Empirical studies document low

returns to interventions targeting disadvantaged adolescents, but high economic returns for

remedial investments targeting young disadvantaged children (Cunha & Heckman, 2007;

Cunha, James, Lochner, & Masterov, 2006; Heckman, 2008; Heckman & Masterov, 2007). This

evidence implies an equity–efficiency trade‐off for late child investments but not for early

investments (Cunha & Heckman, 2007). Thus, public resources for education should focus on

low‐income students at earlier stages. However, at later stages, when human capital inequalities

are difficult to undo, public resources should be shifted toward high‐human capital students so

as to maximize output, relying on an alternative instrument for socially desirable redistribution.

The popularity of free education at different stages of education is not completely aligned with

the implications derived from this third strand of the literature.

Then, why is universal free education so popular in the world? This paper gives a political

economy explanation for this popularity. We model a static economy populated by a continuum

of heterogeneous agents or parents, and each of them has one child and must vote for the

funding regime that will finance the education of the child. Parents are heterogeneous in terms

of human capital, which equals the family income. The parents’human capital is exogenously

given and distributed according to a lognormal distribution function, as in Glomm and

Ravikumar (1992) and Becker (1993). We study the Condorcet winner among four funding

regimes that frequently appear in the political debate: a private system, a public system that

delivers the same resources to all students, a public system that intends to equalize results, and

a public system that aims to maximize the output of the economy.

Our analysis shows that a public system that universally invests the same resources in each

student is the Condorcet winner in a one‐person, one‐vote democracy. The intuition behind our

2

In Chile, the Confederation of Chilean Student Federations (CONFECH), a national body made up of students at Chilean universities, led a series of student

protests across the country in 2011. The student movement demanded, among other things, an increase in state support for public universities and free public

education. In South Africa, the “Fees Must Fall”movement emerged in 2015 after the government announced an increase in mandatory fees at the universities.

Students were placated after the proposal for the increase was dropped. The 2010 United Kingdom student protests were a series of demonstrations held in

opposition to the planned increase of the cap on tuition fees by the Conservative‐Liberal Democrat coalition government. The biggest demonstration occurred

in November 2010, officially known under the phrase of “Fund Our Future: Stop Education Cuts,”where thousands of students marched through central

London demanding free education.

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