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Can competition be created in an education market of perfect irrationality?

FrameBenignly          28 January 2016 09:05 PM

I believe a free market education system would only be a small improvement. I think the big question is: what are markets competing on? In both education and health care it seems as though businesses are competing on the appearance of quality rather than actual quality. I often compare public US high schools with private US colleges. In that comparison, I'd say colleges come out slightly ahead, but only slightly. It seems as though both private and public schools engage in a lot of inefficient practices. But in resolving this problem, I'd like you to make two assumptions: 1) Schools do not primarily compete on educational quality because of consumer ignorance. 2) Simply informing consumers of the issue will not have a significant impact on school quality; there needs to be an incentive to encourage correct consumer decisions without specifying the precise education reforms to be used. Under these assumptions, is there a way to move forward with a market-based system?

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aliad 13 February 2016 11:24 PM

National achievement tests + Employer Attention

If you can implement national testing that both covers skills that employers are interested in and that produces enough differentiation to be useful to employers, then with a little encouragement, you can get employers to ask for and to consider these test results when evaluating candidates for employment.

Once that happens consumers will start being interested in making sure there school is at least good at teaching to that test.


VoiceOfRa 17 February 2016 09:54 PM

Note that in principal this would still work if a private entity implemented this test.

The practical problem is that using any such test would be deemed illegal on disparate impact grounds unless the entity making it is sufficiently politically connected.


aliad 19 February 2016 08:42 PM

Yes, that is why you would want at least some political leverage. The only way around that I can see is to sue against requiring college degrees (without looking for a major in a specific area) as discriminatory based on disparate impact. Then offer in settlement a consent decree where a group of employers agreeing to accept a "college equivalency" certification test on an equal footing with a college degree.

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melian 29 January 2016 06:00 AM

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.


is4junk 1 February 2016 01:51 PM

Here is a libertarian's take on the issue.
The Education Apocalypse: How It Happened and How to Survive It.

With all the free online courses I am surprised people still pay for higher education. As for high school and below there is Khan academy. At least for those that truly want to learn but don't have good instructors.


ChristianKl 29 January 2016 03:47 AM

Standardized testing does succeed in giving schools a basis on which the compete. Under a free market schools are more likely to pay high performing teachers better than to pay teachers based on effort metrics like them having a master in eduction.

But the advantage of private schools isn't only competition it's also diversity.
We live in a world where it's good if not everyone thinks alike.