Incentives Matter: Why Government Education Is Still Mediocre after All These Years

By: Terry McIntyre - May 15, 2014, 12:01 pm

Español In 1984, psychologist Benjamin Bloom reported the surprising results of replacing traditional forms of education with one-to-one or one-to-few tutoring: 50 percent of tutored students reached or exceeded the results of 98 percent of those taught by traditional methods; 90 percent of tutored students reached the 80th percentile level.

That was three decades ago; why haven’t schools been revolutionized since? Why haven’t test results climbed to the (previous) 80th percentile level and above, given that real per-pupil spending in the United States has increased by about 50 percent during that period?

For one group of students, such gains may already have occurred. Upset with the current state of education, many people have taken their children out of school entirely, and are teaching them at home.

Studies find that these children, on average, achieve about 85th percentile results on standardized tests. These home “schools” are a lot more like individualized tutoring than one-to-many classroom instruction, since parents almost never work with dozens of children of the same age. This suggests that Bloom’s two-sigma improvement is achievable without extensive training or certification of parents.

Some argue that this may be a self-selection effect: that only the brightest and best-educated parents will teach their own. On the other hand, home educators do include those with merely high school diplomas and on low incomes, and the children of such parents also seem to do better than average.

Back to my main point: given the vast government resources, why haven’t they unlocked the key after 30 years? Why does researcher Larry Cuban conclude that a century of constant reform has led to effectively no change? Why are government schools so resistant to fundamental change? While Larry Cuban, Richard Elmore, and other educational researchers use their considerable knowledge and expertise to explore the myriad details of educational institutions’ themselves, I am inclined to take a broader systems approach, grounded in economic theory.

What if the problem, as currently stated, cannot be solved? Let us step back and ask, “Who makes the decisions, and what information do they use?” At present, important decisions about what resources to use, and how to use them, are made by numerous political agencies: departments of education, school boards, and the staffs of schools. The information available to them is mostly political information — who’s voting and for what.

There is a body of literature nearly a century old that explores some of the problems with such bureaucratic systems, compared to the alternative: decisions based on voluntary transactions where both parties “have skin in the game.” As Ludwig von Mises summarized, “Where there is no free market, there is no pricing mechanism: without a pricing mechanism, there is no economic calculation.”

Education as we know it in the United States and in many other countries is far from a free market. It is therefore incapable of performing economic calculations; it cannot determine what people want, nor how to deliver it efficiently.

This broader theory dovetails with remarks by education researcher Andrew Coulson: “Competitive educational markets have consistently done a better job of serving the public than state-run educational systems. The reason lies in the fact that state school systems lack four key factors that history tells us are essential to educational excellence: choice and financial responsibility for parents, and freedom and market incentives for educators. School systems that have enjoyed these characteristics have consistently done the best job of meeting both our private educational demands and our shared educational ideals.”

Lest one think that Coulson’s research applied only to times and places long past, there is the modern discovery by James Tooley of thousands of parent-funded schools with little or no government oversight — so little oversight, in fact, that many governments are oblivious to their very existence. Yet, tests by Tooley’s team of 32,000 students discovered that students were taught at lower cost and about one grade level ahead of those taught by competing government schools.

You may think that I have moved the goalposts, since the private schools discovered by Tooley are more one-to-many than one-to-one, but the precise form is less important than the process. Free-market schools are free to evolve, being outside the stifling confines of political control. Given freedom and incentives, some people will discover better methods, and competition will lead others to copy and adapt those better methods.

One last point: these educational innovations tend to spring up where regulations are either non-existent or effectively unenforceable. India, for example, has extensive volumes of detailed regulations, but insufficient police power to enforce them. Wise and liberal (in the classical sense) governments should sharply prune back educational regulations to allow more space for the flourishing of human creativity.