School Choice Could Improve SA’s Results

Education Minister, Angie Motshekga, announced last week that 67.8 per cent of matric students had passed the 2010 examinations, compared to the 60.7 per cent in 2009. Some people applauded the improvement; others were appalled by the 32.2 per cent failure rate. Many suggestions for improving the pass rate have been made, most dealing with the way students should approach their studies and how parent involvement could improve results. These suggestions are important, but solutions to the education problem have also to be addressed at a more fundamental level.

In her paper, School Choice: The Three Essential Elements and Several Policy Options, Stanford University Professor of Economics, Caroline M Hoxby, laments the fact that more economists are not involved in studying and providing comment on education policy. She outlines an economists’ approach to schooling which includes incentives and constraints that can be built into schools policy to improve student achievement. An approach that could be applied to publicly financed schools in any country and which, for South Africa, offers real potential for improving schooling.

The idea of ‘school choice’ was conceived by economist Milton Friedman, who suggested that children from low-income homes should be given vouchers to enable them to attend schools of their choice. A great deal of work has since been done on the economics of this basic proposal, especially in the US where the idea has been tested in various forms with students attending charter schools, magnet schools, and private schools.

At its core, ‘school choice’ is based on limiting government intervention in schooling yet still deals with the basic requirements of “remedying the financing problem” (due to disparities in parental incomes); “setting basic parameters” to ensure that education providers do not charge excessive fees when the government budget is the source of the funds; and ensuring that providers compete with each other “on an even playing field”.

These requirements are necessary but not sufficient for ‘school choice’ to bring about overall improvements. Three essential elements, Hoxby stipulates, are required to ensure the success of a school choice programme.

The first essential element is ‘supply flexibility’ which means that schools must be allowed to open wherever there is a demand, expand or contract according to demand, adjust to any changes in the nature of demand and even close when this is deemed the only outcome. Choice disappears if schools are prevented from responding to an increase or a reduction in demand or changes in the nature of the demand.

The second essential element is that the money should follow the student. This allows students to desert a failing or sub-standard school and move on, with the money following them, to a more efficient one. Students need to be given the ability to seek and obtain the education they desire and deserve.

And this is why flexibility is essential. When good schools receive sufficient additional applications to warrant expansion, they must be free to build on extra classrooms to accommodate more students. No-one should have the power to intervene and force students to attend failed schools merely to fill empty classrooms or boost an ailing budget. Such an intervention defeats one of the most important objectives of school choice: to create competition between schools for educational excellence.

Most importantly, private schools should be invited to participate in the ‘school choice’ programme. The per-pupil cost to government of students attending participating private schools usually is less than if they attended a government school – Milwaukee students in the US receive voucher subsidies of 55 per cent of the per-student funding in the city’s public schools. Independently-managed charter schools in Chicago receive 75 per cent of the amount that would have been spent on the student if they had remained in a regular Chicago public school. The reason is that private schools and independently operated schools have demonstrated that they can provide the same or better schooling at lower cost.

The third essential element is independent management of government schools. Schools need to have the capability to differentiate themselves from each other. According to Professor Hoxby, “schools must be able to innovate with regard to pedagogy, staff compensation, the organisation of work, and the allocation of the budget among uses such as technology, personnel, longer school days, longer school years and so on”. Without independent management there can be no meaningful competition. To succeed in increasing the quality of education, the competition must be real. Government schools that start losing students to more preferred schools must be forced to improve their offerings. In Milwaukee, schools that faced the most competition as a result of the introduction of a voucher programme showed a six to eight percentage point improvement in mathematics marks alone. For a school choice programme to succeed, responsible officials must allow successful schools to benefit and grow. Failing government schools should not be protected from competition through administrative measures.

Schools must be in a position to introduce incentives such as merit pay increases for staff members who are recognisably excellent teachers. They must also be in a position to withhold increases from teachers who do not perform well, or to retrench them. Collective bargaining is a hurdle that would have to be overcome when establishing independent management in government schools and the introduction of school choice. Schools, when denied the right to utilise economic incentives and constraints to reward good teaching and deal with persistent poor teaching, are placed in a straitjacket that is bound to lead to a continuation of mediocre or poor results.

Price differentiation receives a great deal of attention in the economic approach to school choice. For instance, inducing schools to accept expensive-to-educate students, such as disadvantaged children from low-income homes, or children with disabilities, can be achieved by the use of flexible pricing; providing a higher per-student allocation to schools that take in students that suffer educational disadvantages and lower per-student allocations for inexpensive-to-teach students. While such differentiation sounds complicated and requires careful monitoring to avoid unintended consequences, in Florida, USA, a voucher programme for which every disabled child in the state is eligible has proved very successful.

The utilisation of the school choice economic approach to government-funded schooling in South Africa has much to commend it. This article provides a very sketchy description of Professor Hoxby’s proposals interspersed with my own views on the issues she raises. She elaborates in great detail on the various aspects in her papers, and provides examples of various programmes and the reasons for successes and failures. A proper understanding of school choice requires further reading about her research and recommendations, available at

Author: Eustace Davie is a director of the Free Market Foundation. This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.

Feature Article/11 January 2011
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