The (Keynesian) Economics of School Choice

In the halls of Congress and on the presidential campaign trail, a debate is raging over which set of economic proposals to pursue in order to rebuild the national economy. At the same time, K-12 education reformers are engaged in their own frantic search for the right recipe(s) that can unlock the full power of teaching and learning. But rarely do we acknowledge that one individual stands, improbably, at the center of both debates – John Maynard Keynes.

Keynes’ influence on economic thinking is well established: ever since 1936, when he first argued the economy was driven not by prices but by “effective demand,” we’ve been in a continual debate over whether outside agencies (like, say, the government) are required to intervene during times of crisis. By contrast, Keynes’ influence on education thinking remains largely invisible – yet most urban school districts across America are being recast in the image of his core theories, particularly the notion that providing more choice in schooling will empower urban parents to drive demand in a new way and, in so doing, unleash a series of tailwinds that can transform public education.

Regardless of how one feels about the move toward greater school choice, it is almost surely here to stay. Consequently, as more and more parents encounter the inchoate marketplace of public school options for their children, we should stop asking ourselves whether school choice is “good” or “bad”, and start asking a different question instead: In what ways can urban parents’ newfound power as education consumers engender more schools capable of giving more young people the skills and self-confidence they need to become active, visible contributors to the public good – a public good that, amidst the din of the ongoing battle between our intermixed democratic and capitalistic ideals, still seeks to fulfill our founding spirit of E Pluribus Unum – out of many, one?

That’s a big question, and I think it’s possible for us to answer it – but only if we understand the extent to which urban parents can actually drive “effective demand” in ways that will ultimately serve their and the larger community’s interests.

I know of what I speak, because I’m the parent of a two-year-old in Washington, DC. Most of my closest friends are also DC residents, and also the parents of children about to enter formal schooling. All of us are spending a lot of time thinking about where to send our kids, and all of us are well-educated and motivated to make the right choices: in short, we are the low-hanging fruit in an idealized marketplace in which knowledgeable parents can drive demand.

But there’s a problem: most of the resources that exist today to edify my friends and neighbors are still reflective of the myopic notion that schools can be meaningfully ranked according to a single measure – test scores. To make matters worse, whereas in theory all families in DC have the same chance to get into the same set of schools, the reality is that most middle-class families will have more of a particularly precious resource than their lower-class compatriots: the time it will take to evaluate and assess which schools are the best fit for their child.

As an example, look at Great Schools, the wildly successful organization that accurately bills itself as “the country’s leading source of information on school performance.” Great Schools receives more than 37 million unique web visitors a year, and it supports parent outreach and education programs in three cities – including here in DC. In a world where parents are feeling overwhelmed and under-informed, Great Schools is the closest thing to a one-stop-shop out there.

The good news is that Great Schools is filled with great information that will be helpful to parents – from individual school data to concrete recommendations about ways to stay connected to their school; build new play structures; start a school library; or identify the attributes of a great principal. Ultimately, however, the main factor fueling Great Schools’ growth is its school ratings system, and the bad news is that each school’s 10-point score is still determined by a single measure – “its performance on state standardized tests.”

The appeal of such a simple recipe is clear; it’s equally clear that such a formula will never drive effective demand. Instead, this sort of rating system is feeding a different beast. Keynes had a name for that, too – he called it our “animal spirits,” and warned that, absent a holistic picture of any given situation, these spirits can lead us “to depend on nothing but a mathematical expectation.” When that happens, Keynes cautioned, “enterprise will fade and die,” and where “effective demand is deficient not only is the public scandal of wasted resources intolerable, but the individual enterpriser who seeks to bring these resources into action is operating with the odds loaded against him.”

In other words, parents and policymakers need to be guided by more than their animal urges for simple answers to complex problems, and schools need to be evaluated by more than one criterion. As Keynes first suggested, 75 years ago, “it may be possible by a right analysis of the problem to cure the disease whilst preserving efficiency and freedom.”

The same sort of recipe can apply to school choice – but only if we prevent ourselves from seeing choice itself as the panacea; it is freedom and efficiency that we need. And until our freedom to choose is matched by our efficiency to help parents better understand what powerful learning looks like – and requires – our future efforts to help parents drive demand are likely to remain as elusive as our current efforts to get many of those same parents back to work.

The X Factor of School Reform

In case you missed it, there was a great piece in yesterday’s New York Times, the core message of which has a lot of relevance for those of us who, barely a week removed from not one but two major reports of misleading test data being used to evaluate schools and school districts, continue to search for the simplest way of evaluating what may be the most complex undertaking in the professional world — creating a challenging, engaging, relevant, supportive and experiential learning environment in which all children can learn.

The Times article had nothing to say about school reform — it was about the Fed’s inability to decide whether to stimulate the economy now or later. And it was about how even in a social science flush with quantitative data, the “social” aspect of the science — i.e., human behavior — is sufficiently complex and nonlinear to make certainty a chimera. “One point I always make to my graduate students,” said Robert Solow, a Noel Prize winner and MIT professor, “is never sound more certain than you are.”

Would that such caution were commonplace in our current conversations about education reform!

Of course, the message is not that economics is a boundless free-for-all discipline that uses numbers to hide its own guesswork — charges that are sometimes made to rebut the growing push in education circles to embrace a greater use of student information to guide adult decision-making — but one message seems clear: beware the worship of “data” in your search for certainty, as long as human beings are part of the equation. “The entire question of how emotion will change people’s behavior is pretty much outside the standard model of economics,” said Dan Ariely, a professor at Duke. “Pride is not in the model. Fear is not in the model. Revenge is not in the model. Even simple things like disenchantment of people who are fired from their jobs — the model doesn’t account for how devastating that experience can be.”

Reform leaders, are you listening?