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This is an excellent question. I don’t have a perfect solution, but here are a few observations:

  1. The main problem is that ignorance is not limited to consumers - the “experts” are ignorant as well. Very little is currently known about what makes a good school or a good education strategy. It is impossible to determine the school quality by simply looking at the academic performance of its students (which for the most part depends on their native abilities). A possible solution would be creating a national database which would track the performance of students with similar abilities and family backgrounds in different schools. This would allow objective evaluation of school quality that could guide the consumers.

  2. While the effect of the free market on the quality of education might be limited, there is a strong evidence (for example, from the Swedish voucher program) that it can give the same quality for much lower expense.