Trading Places

errrm … would this not leave you with a system in which the schools in the richest areas were able to buy the best students from other schools, while schools in the poorest areas quite literally sold their best students to raise money to cover running costs. Surely in order to work, this tradeable permits system needs the assumption of no other sources of funds for the schools, which seems unworkable to me.

Why is the quality of a school routinely viewed as a one-dimensional phenomenon? If it does, indeed, approximate well to parents’ current beliefs, must it? It’s not their view of cars, or shops or many other things.

Wouldn’t an auction system accomplish the same thing more understandably?

In other words, let the schools bid on students–the government will pay the lowest tuition someone bids, and private sources can add on if they want to change schools.

Actually, Daniel, grouping problem students can be a huge help. If you can get 6 bouncy children in one room, and assign a teacher who deals well with them, they will do fine–but if you put one bouncy student in each of 6 classrooms of 20 students, often neither the bouncy student not anyone else gets taught.

I see what you mean. It strikes me, though, that it could go either way and that the least likely possibility is that the decision maker’s preferences over children will be independent of the hand he has already been dealt. This is highly disanalogous to telecoms minutes or kilowatts, where it makes sense to assume monotonic and independent preferences. I would be really interested to see if someone’s actually checked the conditions under which a market like this might clear, but my Bayesian prior would be that there is no guarantee that there would be any market equilibrium at all and most likely there wouldn’t.

I’m sorry, but I don’t understand the mechanics. How do schools get paid? Is there some kind of NFL draft going to happen? where school A buys draft picks from school B? If so, what happens to student choice? If a student picks an undersubscribed school, he/she gets in but if he/she picks an oversubscribed school he/she goes into the draft? That would incentivise advantaged students (who think to game the system) to chose the second or third school in the league table, rather than the first, so they stay out of the draft. Then the “top” school and the sink schools end up dividing the disadvantaged students between them.

If this did work, it’s not clear how the funding incentive will affect the school administrators making the choice between a high revenue / disadvantaged student body and a low revenue / advantaged one. If the revenue difference is significant and if the parents of the advantaged kids can’t be hit up for the difference, administrators would be best compensated for running sinks.

This idea is clever, but it won’t work in many places where it’d be most useful. In the South Bay (where I work now) or in East King County (where I used to work) there are small cities such as Cupertino, Los Gatos, Medina and Mercer Island that are much wealthier than their neighbors such as Santa Clara or Renton and have no incentive to play this game. Swapping different levels on income around Seattle (where I used to live) or San Francisco (where I live now) seems more useful, but large cities like this have far fewer school-age children than the suburbs do. These two cities have the lowest children per capita in the US.

Don’t the race academies in the South already do this? They forego public money, in exchange they get to limit admissions to “highly advantaged” (a.k.a. white) children.

On further thought, if “advantaged” is defined very broadly, so that there are only a few “disadvantaged”, but they’re fairly horrible specimens, then trades can occur.

Consider the toy version above (#13), but instead of ten advantaged, ten disadvantaged, make it 18 advantaged and two disadvantaged. Then each school gets permits to admit nine advantaged. If there’s no trades, each school would have to take one disadvantaged student, guaranteed to disrupt classes. So it’s worth it for school A to offer to buy a permit from school B to avoid picking up the disrupter. School B will have to take a disrupter anyway. Enough extra money might enable it to manage both.

The way to make such a scheme work is there needs to be no disadvantaged students that are acceptable to the oversubscribed schools. If there are, then the oversubscribed schools can admit them and retain their standing and thus continue being oversubscribed. Schools will pay rather than take disadvantaged students only if disadvantaged really does equate to undesirable.

I don’t see this happening. I suspect, if this scheme were to be adopted, large groups would be labelled disadvantaged, which is what’s implied by the use of the term “highly advantaged” after all. All minority children, perhaps, would be labelled disadvantaged, for who can deny the existence of racism? But there are many minority children who can do just fine in school. Better to figure out which ones they are and just admit them rather than give away some of your budget.

I think there’s something just a bit oblivious about saying, “let’s have a system of choice, and how can we rig the incentives so it produces the exact same behavior as we’d command if we didn’t have a system of choice?

Just learn to let go; Choice isn’t about producing the outcome YOU desire, it’s about people getting to chose for themselves.

Brett — the problem with “letting people just choose for themselves” is that in actual educational markets the imperfections are such that some people (those whose children have desireable characteristics) get what they want, and others don’t get what they want (they might, sometimes, get what they choose, having chosen not what they wanted but what they thought they could get. Suppose Mr. Smith and Mr. Patel both choose St. Edmunds for their kid, but Lincoln High, being oversubscribed, gets to select which kid it wants to enter the school; Mr. Smith’s kid. They both chose, and one of them got what he wanted, but the other didn’t. Surely, you are not in favour of agents of the state choosing which kid’ll get to attend the better school.

Of course, complete privatisation (withdrawal of any government involvement in education whatsoever) is your preferred alternative. Me, I don’t see that as feasible (and would reject it even if I did, for reasons to do with justice, though I know they won’t carry much weight with you!)

All the mechanisms I mention in the post are efforts NOT to curtial choice, or to achieve a prescribed outcome, but to render choice more equal (and much more equal than in the status quo that many self-styled opponents of choice defend, one in which the government colludes with the most advantaged parents in giving them a great deal of choice, and deprives less advantaged parents of any effective choice).

The rest of you — keep going, this is incredibly interesting to me!

“In actual educational markets the imperfections are such that some people get what they want, and others don’t get what they want”

That’s not a property of free markets as contrasted with controlled ones, that’s a property of reality as contrasted with fantasy. It’s never possible for everybody to get what they want. And that’s as true of any of the above proposals as it is of an unregulated market.

I’ll stick by my position: Anybody who insists that a system of “choice” has to incorporate incentives and rules to make sure the outcome is to their liking, doesn’t want choice. They want control. And they ought to have the honesty to admit it.

Brett,

ok, I’ll just say that almost no-one involved in the school choice debate pretends that they are not interested in policymakers exercising control over the way that children are allocated to schools. They differ as to how much choice to allow, and how it should be distributed. A handful of people believe in complete privatisation. A large number say that they oppose choice (but don’t make proposals that would eliminate it). The rest of us may not, by your definition, care about school choice in any fundamental sense. But that’s where the debate is.

People already have a choice. They can and do move to a different school district if they don’t like the one they are in. I know people who put down Grandma’s address if it is in a better district. If you want to discuss how to make our schools better, I think you have to talk about other things.
People might argue that poor people can’t move. I would argue that many poor people couldn’t get their kids across town to the “better” schools.

with regard to #19, I think that this demonstrates why I’m suspicious of this one. Professional sports teams’ trading is not meant to achieve an optimal allocation (it’s not even obvious what an optimal allocation would be) and I don’t think that there are many sports economists who would argue that the market for players clears in any meaningful way. It might not be death for the idea (market clearing isn’t the be-all and end-all, and nobody with their head screwed on would ever have thought that the theorems of welfare economics were going to be any help here). But I think that sports teams and draft picks would be a better analogy than emmissions permits.

Mythago,
my point is:
1. choice is already happening for the rich and middle class.
2. poor people wouldn’t have the choice even if given a choice. They can’t afford to get across town.

This whole discussion on choice is strange because it totally sidesteps the real (alleged) problem of bad schools.

People already have choices. Homeschooling, alternative schooling, moving, using someone elses address, applying for other districts (You can do that in some states, certainly in CA).

The only people who really don’t have a choice are the poor.

dan, I understand what you’re saying about the poor having just about zero choice. But school choice is really available only to the wealthy. “Using someone’s address” is illegal; homeschooling is not legal, or practical, everywhere; and ‘alternative’ meaning ‘private’ is certainly not available to the poor.

The discussion on choice doesn’t really sidestep the problem of bad schools; you have to assume there are bad schools or there’s no substantial reason for choice.

I went to school in a school district where a) all public high schools were magnet schools and b) public transportation was subsidized by the city for students, making choice very achievable for students. Moreover, funding was roughly inversely proportional to the success of the school (with some exceptions). The highest performing school, which had an international baccalaureate curriculum and sent 95% of its students to university had the lowest per student funding, whereas the worst off school, which had less than a 30% graduation rate, had one of the highest student funding ratios. The rationale was that the highest performing school did well because of the IB curriculum, caliber of students (predominantly white upper middle class), and quality of its teachers, all of which were not that expensive after an initial investment, and also that sending more money to the worst performing school might create an incentive for students to go there. The result was interesting in that it ended up with a very high performing school with overcrowded classrooms (There were 50 students in my calculus class, and in some classes the last students had to sit on the windowsill or stand. Indeed, some teachers asked their students to attend class in rotating four day shifts and then skip on the fifth day to relieve crowding); substandard classrooms; and worn out/photocopied books. In contrast, the worst performing school had extremely small class sizes, motivated teachers, and was in a beautifully renovated building. It did not have the intended effect of reducing inequality however, and despite the extra funding, the school remained underperforming, with about 40% of neighborhood students choosing not to attend.
While funding is certainly important for good schooling, the correlation between money and quality of a school seems not to be as strong as many people are assuming, especially if it’s a superficial amount. It may not be as strong as the correlation between type of students and school, or perhaps administration and school quality. Of course, if a school could provide to disadvantaged students all the resources available out of school to privileged students (trips to museums and libraries, one-on-one tutoring, music lessons, healthy balanced meals, behavior altering drugs, etc.), which are expensive, funding could neutralize student performance inequalities. This would take a very large amount of funding as well as talented teachers and administrators, not necessarily a given.