School Choice or Best Systems_ What Improves Education_ - Margaret C. Wang [41]
Andrew Coulson developed a more comprehensive index of educational market freedom in 2006, which weighs both the extent of parental choice and both public and private schools’ autonomy over such things as curriculum, testing, budgets, staffing, and teacher certification. A controlled statistical (regression) analysis taking into consideration demographic factors showed that the index explained more of the variation in a combined measure of test scores and graduation rates “than did race, wealth, presence of nuclear families, or parental education,” which are well-known to be related to achievement. 12
Competition among School Districts
In a 1956 article titled “A Pure Theory of Local Expenditures,”13 economist Charles Tiebout pointed out that government jurisdictions such as counties and school districts compete with one another to attract and retain citizens. Communities provide a diversity of offerings, and rational citizens choose to move to or stay in those that best satisfy their weighting of perceived benefits, including such things as cultural amenities, well-regarded schools, rurality, proximity to work and recreation, and low taxes.
Competition among communities for residents can foster competition, efficiency, and the matching of freely chosen interests with public offerings in a manner resembling private markets. Tiebout’s article led to many empirical studies of the demand for public amenities such as public libraries, policing, sanitation, and health services. The “Tiebout effect,” as it has come to be called, explains a wide variety of local government phenomena such as why urban and regional governments use zoning laws to prevent “free riding” by citizens who want to build small homes in communities with high property wealth and low tax rates and why big, inefficient cities lose residents.
The Tiebout effect can also explain why some public schools are better than others.14 In 1992 I first became interested in the possible benefits of small districts and local funding, and so I carried out the first study to compare school district size and reliance on state rather than local spending and student achievement.15 The study used a random sample of students within the 37 states and the District of Columbia that participated in the National Assessment of Educational Progress academic testing program. I found that student achievement was inversely proportional to average school district size (after controlling for state demographics). The smaller the share of K-12 expenditures paid for by local districts, moreover, the worse the achievement. As many studies have shown, per student expenditures had no relation to achievement.
Other researchers have studied school district size and achievement and come to similar conclusions. Melvin Borland and Roy Howsen16 may have been the first to employ the Herfindahl Index to measure the effects of Tiebout choice in public school districts. The Herfindahl Index is a measure of industry concentration that can range from zero (fully competitive) to one (fully monopolistic and consisting of a single provider).17 The Federal Trade Commission defines industrial markets below 0.1 as unconcentrated, between 0.1 and 0.18 as moderately concentrated, and above 0.18 as concentrated. 18 By these standards, education markets are highly concentrated, that is, substantially uncompetitive.19 Borland and Howsen’s research on Kentucky school districts concluded that school districts with a Herfindahl Index of more than 0.50 had