The Perverse Incentives of School Choice

When researcher Josh Cowen is talking about the negative effects of school vouchers on education, he often points at "subprime" private schools-- schools opened in strip malls or church basements or some other piece of cheap real estate and operated by people who are either fraudsters or incompetents or both.

This is a feature, not a bug. Because as much as choice advocates tout the awesomeness of competition, the taxpayer-funded free market choice system that we've been saddled with has built in perverse incentives that guarantee competition will be focused on the wrong things.

The free market does not foster superior quality; the free market fosters superior marketing. Now, the marketing can be based on superior quality, but sometimes it's just easier to go another way.

The thing about voucher schools is that quality is not what makes them money. What makes them money is signing people up.

That's it. Voucher school operators don't have to run a good school; they just have to sell the seats. Once the student is signed up and their voucher dollars are in the bank, the important part of the transaction is over. There is no incentive for the school to spend a pile of money on doing a good job; all the incentive is for the school to come up with a good marketing plan.

Betsy DeVos liked to compare the free market for schools with a row of food trucks, which was wrong for a host of reasons, but one was the market speed. Buy lunch at a food truck, and you become part of the marketing very quickly. Within minutes, you are either a satisfied customer telling your friends to eat there, or warning everyone to stay away. Reputations are built quickly.

But for schools, the creation of a reputation for quality takes a long time, time measured in years. The most stable part of the voucher school market is schools that already have their reputation in place from years of operation. But if you are a start-up, you need to get that money for those seats right now. If you are a struggling crappy private school with a not-so-great reputation, you don't have time to turn that around; you've got to up your marketing game right now.

So the focus (and investment) goes toward marketing and enrollment.

Won't your poor performance catch up with you? Maybe, but the market turns over yearly, as students age out and age in to school. And you don't have to capture much of it. If you are in an urban center with 100,000 students and your school just needs to fill 100 seats, disgruntled former families won't hurt you much-- just get out there and pitch to the other 99,900 students. And if you do go under, well, you made a nice chunk of money for a few years, and now you can move on to your next grift.

This is also why the "better" private schools remain unavailable to most families holding a voucher. If a reputation for quality is your main selling point, you can't afford to let in students who might hurt that record of success.

Meanwhile, talk to teachers at some of the less-glowing private and charter schools about the amount of pressure they get to make the student numbers look good.

Because of the way incentives are structured, the business of a voucher school is not education. The business of the voucher school is to sell seats, and the education side of the business exists only to help sell seats. Our version of a free market system guarantees that the schools will operate backwards, an enrollment sales business with classrooms set up with a primary purpose of supporting the sales department, instead of vice versa.

Charter schools? The same problem, but add one other source of revenue-- government grants. Under Trump, the feds will offer up a half a billion dollars to anyone who wants to get into the charter biz, and we already know that historically one dollar out of every four will go to fraud or waste, including charter businesses that will collect a ton of taxpayer money and never even open.

"Yeah, well," say the haters. "Isn't that also true for public schools"

No, it is not. Here's why. Public schools are not businesses. They are service providers, not commodity vendors. Like the post office, like health care in civilized countries, like snow plows, like (once upon a time) journalism, their job is to provide a necessary service to the citizens of this country. Their job should be not to compete, but to serve, for the reasons laid out here.

And this week-ass excuse for accountability-- if you do a bad enough job, maybe it will make it harder for your marketing department-- has been sold as the only accountability that school choice needs.

School choice, because its perverse incentives favor selling seats over educating students, is ripe for enshittification, Cory Doctorow's name for the process by which operators make products deliberately worse in order to make them more profitable. The "product" doesn't have to be good-- just good enough not to mess up the sales. And with no meaningful oversight to determine where the "good enough" line should be drawn, subprime voucher and charter schools are free to see just how close to the bottom they can get. It is far too easy to transform into a backwards business, which is why it should not be a business at all.

If your foundational belief is that nobody ever does anything unless they can profit from it (and therefor everything must be run "like a business") then we are in "I don't know how to explain that you should care about other people" territory, and I'm not sure what to tell you. What is the incentive to work in a public education system? That's a whole other post, but I would point to Daniel Pink's theory of motivation-- autonomy, mastery and purpose. Particular a purpose that is one centered on making life better for young human beings and a country better for being filled with educated humans. I am sure there are people following that motivation in the school choice world, but they are trapped in a model that is inhospitable to such thinking.