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Economist: Vouchers Not Economically Logical

Vouchers, the transfers of public dollars to private schools that religious conservatives like Kristi Noem and Lee Schoenbeck so eagerly promote, don’t produce better education in rural areas or anywhere else. Vouchers don’t even make sense from the free market perspective that supposedly undergirds the Republican thinking of Noem and Schoenbeck.

Tulane economist Douglas Harris, who researched education reforms in New Orleans after the 2005 hurricane, has posted a working paper laying out how K-12 education doesn’t comply with the six basic assumptions of efficient free markets. Those assumptions:

  1. Choices of individuals do not affect other people.
  2. Consumers (and producers) have good information.
  3. Consumers (and producers) have many options to choose from.
  4. No switching costs exist.
  5. Demand is flexible.
  6. Technology can be improved, and those gains can be monetized through intellectual property rights.

Professor Harris explains that none of those assumptions apply to education. I brutally abbreviate his well-developed points and omit his thorough citations:

1. Individual schooling choices affect other people in many ways. …each individual’s education benefits other people… benefits of education are passed down to future generations, from parent to child, and through broader social networks. Education reduces the likelihood that they commit crimes against others… increases the likelihood that people vote… and, more generally, lays a foundation for democratic participation….

2. Families have imperfect information. …almost no parents directly observe what happens in schools, and almost everything they see is filtered through the minds of their adolescents and teenagers. …Other educational goals like worker productivity and civic responsibility… are not observable until adulthood. Even if we could track children this long, the information would come too late.…Student outcomes are heavily influenced by what happens years before entry into formal schooling.

3. Families have limited options. …Students generally have to physically travel to a brick-and-mortar school building every day, and time and transportation are costly. …the only viable options are schools close to home or work. Families are geographically constrained in a way unlike perhaps any other product or service.

4. Switching costs are high. …schools vary as to which material is taught and in which grade…. When switching schools, students may, therefore, miss important content or experience wasteful redundancy. Students must also adjust to new instructional philosophies, schedules, norms, and rules. This is likely why research consistently shows that when students switch schools, their academic outcomes initially drop, as do those of students in receiving schools…. In addition to these academic costs, schooling is an inherently social enterprise where friendships are essential. Students have difficulty making friends at new schools when their prior schools are forced to close…. The higher these switching costs…, the more rigid is school enrollment, the less responsive schools will be to consumer needs, and the less efficient will be market operations.

5. Schooling demand is nearly fixed. The demand for schooling is extremely high, to the point that it is a basic household necessity. …parents are also legally required to care for and educate their children, starting in kindergarten and at least up to age 16…. These compulsory schooling laws mean that schools can survive even if families are dissatisfied. Children have to go to school somewhere. This fixed total demand allows schools to persist in the market even when no one is satisfied.

6. Establishing intellectual property rights for school improvement is inherently difficult. Schooling is a service and social enterprise produced by people more than machines. This means it is difficult to isolate—and therefore profit from—intellectual property. Entrepreneurs can develop and sell textbooks, curricula, and software, but these tools represent only a fraction of the “technology” of schooling, and the more dominant elements, which fall under the broad umbrella of implementation, cannot be copyrighted or patented. For this and other reasons, economists have long recognized that the potential for innovation in the service sector is more limited than in other sectors, which limits productivity gains and leads to rising service sector prices… [Douglas N. Harris, Tulane University, “How Free Market Logic Fails in Schooling—and What It Means for the Role of Government,” Annenberg/Brown University EdWorkingPaper No. 23-866, November 2023].

What is a government supposed to do with an enterprise as vital to society but as unamenable to the assumptions of the free market as K-12 education? Dr. Harris offers six general roles that government should fulfill in schooling every child:

  1. Fund public schools: “The positive externalities of schooling mean that public subsidies are necessary to prevent under-education.”
  2. Adopt standards and accountability to ensure schools produce public-oriented goods like civics education and not just private-oriented goods like job training.
  3. Require transparency in curriculum, policies, and funding decisions to “prevent schools from using misleading advertising, adopting illegal or discriminatory policies, and allocating inordinate funding away from the classroom to profit school leaders and owners.”
  4. Make all schools accessible to all students “by keeping tuition and fees to a minimum and preventing schools from selecting only certain types of students.”
  5. “[F]acilitate citizen engagement” in building and funding schools.
  6. Allow school choice—not vouchers, which drain select students and public resources to private schools without producing any reliable and equitable educational outcomes, but options like charter schools that focus on specific student needs and South Dakota’s open enrollment.

As the sixth role makes clear, Harris is open to alternatives to traditional public education, which he acknowledges is chock full of problems of its own. But Harris says vouchers are not an effective alternative:

Vouchers do not meet any of the conditions necessary for the market to be efficient. For the same reasons, they are likely to be inequitable. These concerns are borne out by evidence suggesting that this movement is, at best, not the most likely to succeed of the relevant alternatives and, at worst, has the potential to undermine decades of success on achievement and other measures. Even the seemingly potent argument about “parental freedom” is more tenuous than often recognized because vouchers give relatively few actual, viable options in practice, especially for marginalized and oppressed groups. The schooling market is inherently different from other markets, so, when it comes to the role of government, we cannot treat it as if it were the same [Harris, Nov 2023].

We need to look for better ways to educate every child, but as Harris explains, both evidence and economic logic show that vouchers are not a viable educational policy solution.


  1. sx123 2023-11-05 12:43

    I am against vouchers and homeschooling (except in the rarest of cases). And I think public schools would be better and stronger if private schools and home schooling (which has seen an incredible rise the last few years) were shut down.

    But the argument is that since people that send their kids to private schools pay taxes like everyone else, some of their tax money should go to their kids’ private school.

    We need consistent, high caliber education in this country. If public schools are having half-@ssed performance, that needs fixing, not replacing with more private and home schools.

  2. Rambler 2023-11-05 12:58

    As I listen to some of the right-wing hate mongers on too many of the local AM radio stations, they all seem to operate from the same set of talking points including that pubic education is terrible in our state and country. Nothing could be further from the truth or more un-American. Public education helps all of society form a more perfect union and a better state and country to live in. Detractors belief in the old days centered around the idea that give a student a workbook and he/she would learn what they needed to know. That has been replaced now by substituting the workbook with a computer. The idea that a quality education can be derived from a workbook or software program is a joke.

  3. O 2023-11-05 13:41

    Are you telling me that GOP self-serving economic talking points are not based in real economic fact? Next thing, you will be telling us that tax cuts do NOT increase revenues!

    Public education is due for a reckoning: pushing back against the erosion by the right, the erosion by bulldozer parents, the problems caused by judicial dumping, and the erosion of the COVID years, rigorous and abrupt reform will come t put this valuable train back on track.

  4. Cory Allen Heidelberger Post author | 2023-11-06 05:01

    Yes, O, once again, we encounter Republicans talking a good game about their principles but ignoring those principles in forming policy.

  5. Cory Allen Heidelberger Post author | 2023-11-06 05:02

    Rambler, the right-wing denigration of public schools is of a piece with their constant denigration of government. They don’t want either to work, and they implement policies and run candidates whose goal is to erode those institutions to support their narrative of anarcho-capitalism.

  6. Cory Allen Heidelberger Post author | 2023-11-06 05:05

    SX, like you, I oppose vouchers. I’m far more tolerant of home school: if you have the means and desire to teach your own kids to be complete citizens, go for it… but you should still expect to contribute fully to the public education system to handle schooling the kids from 90–95% of families who can’t home school. You should also expect accountability and transparency requirements (see Harris’s principles!) equivalent to what the public schools face, to ensure that you are fulfilling the community’s interest in good citizen-making.

  7. Donald Pay 2023-11-06 10:50

    I’m not sure how it works now, but school boards used to have to vote to excuse students from public school to attend some other private school or to be homeschooled. We were given no data on which to determine whether students were making educational progress, their attendence, etc. Essentially we were giving such students a year-long get-out-of-school pass just because a parent signed a form. This was required by state law, and we had no recourse but to excuse these students from school for an entire school year.

    I found this profoundly disturbing. Most private schools and homeschools do a fine job of education, but there are some instances where there was relatively little schooling involved in a few of these homeschools. It was essentially a ticket to truancy, where the kids roamed the streets, and state law prevented us from stopping it.

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