The Cato Institute

New Research Shows Traditional Education Rankings Are Misleading

Traditional education rankings, such as those published by U.S. News & World Report, while well-intentioned, are unreliable and misleading…

Traditional education rankings rankings fail to provide “apples to apples" comparisons among states. By treating states as though they had identical students, they ignore the substantial variation present in student populations across states. Conventional rankings also include inappropriate or irrelevant data to the educational performance of schools, such as raw spending per pupil, graduation rates, and pre-K enrollment. 

To better measure educational outcomes, Stan J. Liebowitz, Cato adjunct scholar and Ashbel Smith Professor of Economics at the University of Texas at Dallas (UTD) with Matthew L. Kelly, a graduate student at UTD, compare state test scores for each of three subjects (math, reading, and science), four major ethnic groups (whites, blacks, Hispanics, and Asian/Pacific Islanders) and two grades (fourth and eighth), for a total of 24 potential observations in each state and the District of Columbia. They give each of the 24 tests equal weight and base their ranking on the average of the test scores.

After adjusting for the heterogeneity of students, states in New England and the Upper Midwest who typically perform favorably fall in the rankings, whereas many states in the South and Southwest score much higher than they do in conventional reports. 

The authors also produce rankings that, unlike most conventional reports, consider states’ cost-effectiveness of education spending. Florida, Texas, and Virginia are the most efficient in terms of quality achieved per cost of living-adjusted dollar spent. Conversely, West Virginia, Alabama, and Maine are the least efficient. Some states, such as Massachusetts and New Jersey, do an excellent job educating students but also spend quite lavishly and thus fall considerably when spending efficiency is considered. 

While the authors observe a positive relationship between spending and achievement using nominal dollars, it disappears when state-level cost of living adjustments are made. This does not necessarily imply that spending overall has no effect on outcome, but merely that most states have reached a sufficient level of spending such that additional spending does not appear to be related to achievement as measured by these test scores.

The authors also briefly examine additional factors that affect student performance. They find states with stronger unions tend to get worse academic outcomes. Unions are negatively related to student performance, presumably through opposing the removal of underperforming teachers, opposing merit-based pay, or because of union work rules. Additionally, the authors’ results indicate that having a greater share of students in charter schools is positively related to student achievement.

Although this study constitutes a significant improvement on leading state education rankings, it retains some limitations. There exists substantial variation in education quality within states and disagreement about desired educational outcomes. However, state-level rankings do provide an intuitively pleasing basis for lawmakers and interested citizens to compare state education policies. The authors’ main goal is to provide rankings that more accurately reflect the learning that is taking place by focusing only on academic achievement and disaggregating scores, rather than scoring inputs and state-wide test scores.

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Banned Books and Educational Freedom

This week is Banned Books Week. Freedom is certainly at stake in all this, but not the way most anti-banners would have you think…

The American Library Association is the primary champion of Banned Books Week, and the group’s website spells out why we are supposed to be outraged. “Banned Books Week is the national book community’s annual celebration of the freedom to read,” it says. The week’s goal is to “draw attention to the problem of censorship by mounting displays of challenged books and hosting a variety of events.”

Basically, we’re supposed to be incensed over people who say “I don’t think anyone should read that,” and then try to destroy the offending books Fahrenheit 451 style. The thing is, for the most part such outright censorship efforts don’t exist. No, most challenges are from parents or taxpayers who don’t want their kids reading or accessing material in public schools that they find offensive, or don’t want objectionable books in the libraries for which they must pay.

The real issue isn’t protecting books from those who would banish them for eternity. It is that public institutions select books in the first place. The instant such a selection is made freedom is already compromised.

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Excessive Voucher Program Regulations Lower Quality of Education

Not all school choice programs are created equal — and well-intentioned but heavy-handed government regulations on voucher programs limit the quality of educational options available to low-income families and trap poor children in bad schools…

The expansion of private school choice programs has been accompanied by a growing call for their regulation.

Because voucher-using families use public education dollars that would have otherwise gone to government schools, officials are often highly concerned about quality. But could overregulation be trapping poor kids in bad schools?

 Ironically, while regulators hope to prevent disadvantaged families from choosing bad schools, voucher program regulations appear to limit the quality of educational options available to low-income families.

A new Cato Institute study empirically examine school-level data from two of the most highly regulated voucher programs in the United States, the Milwaukee Parental Choice Program (MPCP) and the Ohio Educational Choice Scholarship Program (EdChoice), to determine the quality of schools participating in regulated voucher programs.

Using tuition, enrollment, and customer review scores from the website GreatSchools (an online non-profit that reviews schools) as proxies for school quality, the authors find strong evidence suggesting that lower-quality private schools are indeed more likely to participate in voucher programs than higher-quality schools in both locations. Deregulating these programs and expanding other school choice programs would prove much more beneficial to all.

Voucher regulations are created with the good intention of protecting vulnerable families, but an unintended consequence is increased cost to participating schools. Private schools must make a cost-benefit decision when determining whether to participate in a given voucher program. The benefit is the additional voucher funding while the cost is mainly additional program regulations. These regulations vary by program, but can include random-based admissions, teacher and administrator certification requirements, prohibition of parental copayment, standardized testing, requiring schools to allow students to opt out of religious programs, and additional paperwork.

In Milwaukee, schools with higher tuition levels are significantly less likely to participate in MPCP. Specifically, a $1,000 increase in private school tuition is associated with a 2.3 percentage-point (3 percent) lower likelihood of participation in the program. Additionally, the authors find evidence that a one-point increase in a GreatSchools review score is associated with an 11.4 percentage-point (14.8 percent) reduction in the likelihood of program participation.

Similarly, in Ohio a $1,000 increase in private school tuition is associated with a 2.8 percentage-point (3.8 percent) lower likelihood of participating in the EdChoice voucher program.

This evidence is significant and suggests that regulations deter high-quality private schools from participating in voucher programs in these localities. It would be wise for decisionmakers to reduce the costs of private school participation by deregulating these two programs and expanding policies that are less likely to be regulated, such as Education Savings Accounts or tax-credit scholarships.

Heavy government regulation on school choice voucher programs raises the costs of participation, limiting the quality of educational options available to low-income families and trapping poor children in bad schools.

Instead of trying to control the decisions that low-income families make regarding their children’s schools, policymakers ought to empower these families with the freedom to make educational decisions for their own kids. This additional freedom would lead to more options for the families that need them the most and a more educated society for all of us.

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Janus Is a Win for the First Amendment

Yesterday, the Supreme Court held that government “extraction of agency fees from nonconsenting public-sector employees violates the First Amendment” in Janus v. American Federation of State, County, and Municipal Employees (AFSCME)… 

Finding that "forcing free and independent individuals to endorse ideas they find objectionable raises serious First Amendment concerns,“Janus overturned a 40-year-old precedent (Abood v. Detroit Board of Education) that allowed public-sector unions to charge nonmembers “agency fees.” Currently, half the states have laws that enable such fees.

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Is Public School a “Public Bad”?

When people claim that schooling is a public good, they likely mean that schooling is simply “good for the public.” However, empirical evidence found in a new report estimates that public schooling in the United States has over a $1.3 trillion negative effect on society…

In a new report, Corey A. DeAngelis, an education policy analyst at the Cato Institute’s Center for Educational Freedom, calculates the net effects of government-run schools on U.S. society overall, comparing the results produced by government schools to those produced by a feasible policy alternative: private schools. In order to make apples-to-apples comparisons, DeAngelis uses the most rigorous private school choice evidence available on academic outcomes, taxpayers costs, and criminal activity.

The author’s model finds a net negative externality of government schooling of over $1.3 trillion. By comparison, this would be equivalent to about 7% of the U.S. GDP in 2016. DeAngelis contends that public schooling also fails both conditions specified in the standard economic definition of a public good, and in light of his data, taxpayers should not subsidize government schooling merely on the basis that it is a merit good, or “good for the public.”

To calculate government schooling’s ability to educate the population, DeAngelis’ most significant data comes from the effects of private school choice programs on graduation rates. Studies done in Washington, D.C. and Milwaukee find that students who attend private schools through a school choice program increase their likelihood of graduating high school by 21% and 3%, respectively. By using the more conservative 3 percentage point increase in graduation rates, DeAngelis calculates that government schooling results in about 1.5 million fewer graduates, which leads to negative social effects of over $419 billion nationwide.

To calculate taxpayer costs, DeAngelis compares the average tuition and fees charged in all private schools to the average per pupil expenditure in all public schools. On average, it costs around $1,355 more to educate a child in a government school each year. When taking into account the 13 years a student spends in school and the 50.47 million students currently enrolled in government schools, this costs taxpayers an additional $889 billion.

To quantify the effects of government schooling on social cohesion, DeAngelis looks at a study that finds private schools reduce the likelihood that male students will commit felonies by 4 percentage points in Milwaukee. Assuming these benefits only accrue to the half of the student population that is male, we should expect around 1.01 million fewer felons. Combining this number with a report by researchers McCollister, French, and Fang in 2010 that finds that the social cost of a felony is around $23,242, a 1.01 million increase in the number of felons produced by government schools leads to over a $23 billion increase in social costs.

DeAngelis concludes that “instead of simply throwing more money at failing government schools, we should make better investments by allowing families to customize their own children’s educations.” He recommends that states fund education directly – rather than schooling – through a universal Education Savings Account (ESA) program, that allows families to opt out of their failing government schools and take their education dollars to the private schools that work best for their children.

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More School Choice Is Better for Education

Public-education advocates argue that voluntary schooling selections — that is, school choice programs — damage democratic societies by reducing the quality of education. Turns out, they’re wrong…

The potential benefits of increased access to private school choice programs in the United States remain a hot topic in educational policy.

According to economic theory, private schooling should improve student achievement by increasing competitive pressures on educators to provide high-quality educational experiences. In addition, since children have differing interests, abilities, and learning styles, private school choice would allow for an improved match between educators and students.

A new study shows that a 1 percentage point increase in the private share of total primary schooling enrollment would lead to moderate increases in student math, reading, and science achievement scores.

The new study serves as a counterpoint to arguments made by opponents of school choice, who have seized on recent evaluations of U.S. private school choice programs to claim they harm those the programs are intended to help.

Despite private school choice programs’ benefits, in the United States private school enrollment has actually declined from almost 12% in 2000 to around 8% in 2012.

Policymakers ought to increase access to private school choice around the world, including Education Savings Accounts, tuition tax credits, individual tax credit deductions, and voucher programs could increase access to private schooling and other private educational services within countries.

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Is College Worth the Money?

Thanks to massive, distorting subsidies extracted from taxpayers, that is a far tougher question to answer than it should be… 

The average college graduate makes around $1 million more over her working lifetime than the average person with just a high school diploma — but there are a lot of caveats….

Federal student aid — including Pell grants, loans, and tax-favored savings plans — enable colleges to jack up their prices, and allow students to pay — and demand — more than they would were they using their own money or funds voluntarily given to them. 

The average four-year undergraduate degree now costs roughly $40,000 to $134,000 in tuition and fees. Roughly half of people who start college do not finish within six years, and many never graduate. Considering there are higher default rates for student borrowers who owe relatively small amounts than those paying off larger sums, defaulters end up basically paying for at least part of college without getting the degree essential to increasing their earnings. For these people, the “investment” in college was a significant loss, not a gain.

Meanwhile, about a third of people holding a four-year degree are in jobs that do not require it, and are in such career tracks on a largely permanent basis. And while various types of engineering majors and a few others can make big bucks right out of college, people with majors like psychology or English can struggle to find well-paying work.

Research shows declining literacy rates for people possessing bachelors and advanced degrees, as well as stagnant or declining earnings for degree holders.

The big college wage premium we see is more a function of a high school diploma’s value dropping than a college degree’s rising.

On the whole, for students who are prepared for college-level work and intend to major in something in demand in the economy, college is worth the investment.

Those unprepared for college, however, or who plan to major in a field with few job prospects, should really think twice.

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School Inc. – A Personal Journey with Andrew Coulson

School Inc. takes viewers on a worldwide personal quest for an answer to the question — if you build a better way to teach a subject, why doesn’t the world beat a path to your door?

Why doesn’t education use innovation to grow like a successful business?

School Inc. – A Personal Journey with Andrew Coulson, follows the late Andrew Coulson, series creator/writer/host and Cato Institute senior fellow, as he sets out on a worldwide personal quest for an answer to this question.

This three-part, three-hour documentary series reveals many unfamiliar and often startling realities: the sad fate of Jaime Escalante after the release of the feature film Stand and Deliver; Korean teachers who earn millions of dollars every year; for-profit schools in India that produce excellent results but charge only $5 a month; current U.S. efforts to provide choices and replicate educational excellence; and schools in Chile and Sweden in which top K-12 teachers and schools are reaching large and ever-growing numbers of students. 

Throughout the three-part, three-hour series, Coulson examines the role of innovation, the universal search for educational excellence and – for better or worse – the application of the profit motive.

With its beautiful visuals, surprising twists, and energy, School Inc. takes you on a personal, highly insightful journey.

Learn more about School, Inc and how you can watch it…

On Twitter? Join the conversation with #SchoolInc.

Why is College Increasingly Expensive?

Colleges take in more tuition revenue than necessary — and federal student aid may play a big role…

In his new study, Not Just Treading Water, Cato’s director of the Center for Educational Freedom, Neal McCluskey, shows that contrary to oft-heard assertions, colleges and universities have often raised tuition revenue well beyond what has been needed to make up for lost state appropriations. He also looks at several alternative explanations for rising prices, and determines that while all likely play parts, federal student aid—coupled with colleges’ limitless desires for resources—may be the primary culprit, not only enabling colleges to increase their tuition and fees, but also encouraging states to limit their appropriations.

Total state and local appropriations to higher education were not cut over the 25-year period examined, rather rising roughly $10 billion using a higher-education specific index of inflation.

On a per-pupil basis, looking at a 25-year smoothed trend, 6 states saw both appropriation and tuition and fee revenue rise, 31 saw appropriations drop but increases in tuition and fees more than make up for the loss, 11 states saw per-pupil appropriation cuts that were not fully covered by increases in tuition revenue, and 2 states—Louisiana and Wyoming—saw the ideal situation from a student perspective: appropriations rose while tuition and fee revenue declined.

Delaware, North Dakota, Alabama, Nebraska, and Alaska experienced the highest gains in net per pupil revenue trends while Idaho, Wisconsin, Georgia, California, and Iowa were the biggest net losers.

Because many of the per-pupil “cuts” were a result not of cuts to overall funding, but big enrollment increases, no state failed to see significant increasing trends in total revenue from appropriations and tuition and fees.

After examining state appropriations and tuition revenue, McCluskey looks at some alternative explanations for skyrocketing prices, all of which, he concludes, likely play parts in price inflation.

One is the hypothesis that increasing costs are due to higher education’s necessary reliance on human power. McCluskey notes that this “disease” would largely be accounted for in the higher education inflation adjustment he uses, while it tends to ignore colleges’ ability to increase efficiency.

More fundamental to college pricing, McCluskey argues, is that colleges naturally have a desire for evermore resources, and federal student aid enables them to raise prices well in excess of what they could charge in its absence. Federal student aid may also encourage state legislators to restrain their appropriations to schools.

“By all indications, the state of higher education financing over the last quarter-century is not how it has been portrayed: institutions treading water just to stay financially afloat as state and local governments have withdrawn their support,” argues McCluskey. “What may well be enabling much of this is federal student aid, and colleges taking not just whatever they need, but whatever they want.”

Read the research….

Are Apprenticeships an Option for America’s Youth?

A college education is not everyone’s cup of tea. The United States needs other ways to instill job skills in the younger generation. Could apprenticeships be the answer?

The German apprenticeship system is sometimes viewed as an appealing alternative to the U.S. focus on higher education as a pathway to jobs. But replicating the German model in the United States would require huge — and, for some, hugely unpopular — changes to the structure of the economy, and may not be such a good idea.

 In her new study for the Cato Institute, Apprenticeships: Useful Alternative, Tough to Implement, Gail Heriot, a professor at the University of San Diego School of Law and a member of the U.S. Commission on Civil Rights, encourages apprenticeships in America, and suggests solutions to pitfalls new apprenticeship programs may face. With the belief that, while difficult to implement, apprenticeships could be useful in a rapidly changing labor market, Herlot outlines various ways to encourage apprenticeships and successfully build an American-style apprenticeship model.

Heriot goes on to contend that traditional colleges and universities are ill-suited to predict future job trends and prepare its students for rising job demands, suggesting instead that alternatives such as apprenticeships may help students succeed in a changing labor market.

Traditional higher education curriculum is catered more toward what faculty members are interested in teaching rather than what skills students may find most useful in a rapidly changing job market. Colleges and universities are designed to resist external and internal political pressure, through tenure, while public subsidies insulate them from market discipline, making such institutions unfit to respond to changes in the labor market.

Difficulty in predicting changes in the job market is less likely to occur with apprenticeships where students are working directly with teachers who are in-touch with the realities facing their profession.

While implementing apprenticeships, employers may face the problem of the ‘runaway apprentice’: an apprentice who quits after the employer invests in him, but before the apprentice is useful enough to make the employer’s investment worthwhile. One possible solution Heriot suggests to this problem is to ensure that apprentices can take out a loan to pay for their own instruction, thus creating the right incentives for both teachers and students to invest in an apprenticeship program. Other solutions include providing yearly bonuses or enacting non-compete agreements enforced by the courts.

Modest public subsidies could also mitigate the ‘runaway apprentice’ problem and avoid the need for a large bureaucracy. For example, a $5,000 voucher could be funded and administered at the state level for a two-year apprenticeship program where the employer substantially increases the apprentice’s salary from one year to the next. Both parties could split the $5,000 at the end of the program, creating incentives for the employer to impart valuable skills to the apprentice, and for the apprentice to complete the program.

“Creating apprenticeship opportunities is going to require some real thought,” concludes Heriot. “Encouraging apprenticeships as an alternative or supplement to higher education, which is clearly serving many people poorly or not at all, is certainly an idea worth pursuing.”

Read the study….