School vouchers: recent findings and unanswered questions.
Barrow, Lisa ; Rouse, Cecilia Elena
Introduction and summary
Many people would argue that U.S. elementary and secondary public
schools need to improve, and they would like to see U.S. students
perform better in international comparisons. Ill addition, many people
would like to do more to close the achievement gaps within the U.S.
between lower-income and minority students and their counterparts. These
concerns are shared by parents, employers, policymakers, and society
more generally. There is less agreement on the root causes of the
problems and how best to tackle them. For example, while some would
argue that insufficient funding is the primary factor, others would say
that this is not supported by the evidence, since per pupil spending has
increased faster than achievement, as reflected in scores on the
National Assessment of Educational Progress (NAEP). (1)
One strategy for improving school performance that has received a
lot of attention by all those interested in education policy is
increased competition. The idea is that just as competition can enhance
efficiency and value in the marketplace for goods more generally, it can
do the same for education. Namely, if schools must compete for students,
then they will take steps to ensure that the educational experiences
they offer are valued by parents and students. The primary mechanism
proposed by those who favor more competition in elementary and secondary
education in the public sector is an education voucher--a coupon
redeemable for a maximum dollar amount per child if spent to attend a
private school. In this way, voucher programs remove the monopoly power
of local public schools. Instead of having to attend a neighborhood
public school, students can use the voucher to attend a private school.
In the 2007-08 school year, roughly 55,000 students in three
states--Florida, Ohio, and Wisconsin--and the District of Columbia were
using publicly funded education vouchers to attend private schools (as
well as other higher-performing public schools); (2) see table 1.
Several other states have considered voucher programs, and some private
organizations have helped create privately funded voucher opportunities.
But are voucher programs effective? Do they improve the educational
outcomes of the students who use them and do they improve the quality of
the public schools? In this article, we review the existing empirical
evidence on the impact of school vouchers on student achievement. (3)
After reviewing the research, we conclude that expectations about the
ability of vouchers to drastically improve student achievement, at least
as measured by test scores, should be tempered by the results of the
studies to date. That said, many questions remain. For example, no
studies have examined the longer-run impact of vouchers on outcomes such
as graduation rates, college enrollment, and future wages. Similarly,
the research designs for identifying the potential impacts on students
who remain in the public schools are far from ideal. Finally, we have
little understanding of whether vouchers would represent a cost-neutral
alternative to our current system of public education provision at the
elementary and secondary school levels.
In the next section, we discuss the theoretical reasons for why
education vouchers should improve student achievement followed by a
discussion of the empirical approaches used for identifying the effects
of vouchers. We then review the best evidence from studies of publicly
and privately financed school voucher programs on the short-run impact
on student achievement, discuss the evidence on the potential impact on
students who remain in the public schools, consider additional voucher
outcomes, and conclude.
Why should competition improve our educational system?
The idea of injecting competition into the public school system is
not new; for example, Milton Friedman (1962) argued in the early 1960s
for separating the financing and provision of public schooling by
issuing education vouchers. The rationale behind school vouchers is that
competitive markets allocate resources more efficiently than do
monopolistic ones and that public schools in the U.S. have
"monopoly" power because children are assigned to attend their
local neighborhood school. Parents can always choose to send their
children to a private school, but that means paying for schooling
twice--once through property taxes (for the public schooling they are
not using) and again through private school tuition. If parents had more
publicly funded options for their children's schooling--once they
had selected a residential location--then schools would have to compete
for students. Further, more options may improve the match between the
educational interests and needs of students and their schools.
Importantly, schools in this model would have an incentive to improve in
the areas valued by parents. Thus, if parents select schools based on
their academic quality, then schools will compete for students by
providing better academics; alternatively, if parents value religious
education or sports, then one would expect to see schools compete to
serve these interests.
There are two hypothesized ways by which increased school choice
would improve student educational outcomes. The first is a
"direct" effect for those students who actually exercise
choice. Assuming that students would only choose to attend a school
other than their neighborhood school if that school were academically
better (or a better match), then the academic achievement of students
who opt for a different school should improve relative to what their
performance would have been had they stayed in the neighborhood public
school. In addition, there is an "indirect," or "general
equilibrium," effect on students remaining in the public schools.
Competition should induce the public schools to improve in an effort to
attract (or retain) students. Thus, not only should the achievement of
those who choose to attend private schools increase, but so should the
achievement of those who do not choose as well. In other words,
competition should increase the efficiency of public schools. Of course,
expansion of the private sector is a critical component of increasing
competition. Without new school entries and/or increases in the size of
current private schools, vouchers would have limited ability to increase
choice.
Many empirical studies find that students in private schools have
higher educational achievement levels than those in public schools. (4)
The findings from such studies are presented by voucher advocates as
prima facie evidence that vouchers would improve student achievement for
all. Namely, voucher advocates argue that private schools outperform
public schools because their existence depends on providing a good
product. Educational vouchers are intended to make public schools
compete in this same way; so, only schools (either public or private)
providing a good product would survive. However, this literature is not
conclusive because of the difficulty (described later) in identifying
the impact of schools on student achievement. Not surprisingly, critics
argue that the observed superiority of private schools in these studies
arises because the students who attend private schools differ from the
students who attend public schools rather than because private schools
are more effective than public schools. (5) If the observed relative
superiority of the private sector is due more to the particular
background characteristics of its students than the greater
effectiveness of its schools, the achievement of current public school
students would not necessarily improve in private schools.
While the debate continues on whether private schools, in general,
are better at educating children than are public schools, researchers
have since turned to more direct evidence on the impact of vouchers by
studying actual school voucher programs. We begin with an overview of
the challenges of testing whether vouchers improve student outcomes
before reviewing the evidence to date.
Empirical approaches to studying school vouchers
To study whether educational outcomes in the presence of vouchers
are better than educational outcomes in the absence of vouchers,
ideally, one would begin with a group of students and educate them for a
period of time under the current public school system. At the end of the
period, one would assess various outcomes for the students and
administer a test, the results of which would perfectly reflect what the
students know. Then one would turn back time so that the same group of
students was reverted to their conditions at the beginning of the
experiment. That is, the students would be the same age, have the same
living conditions, and so on. This time, one would educate the students
in a system with education vouchers. At the end of the same period of
time, one would again assess the students' outcomes and what they
know. The difference between the students' outcomes under the
current and voucher systems would isolate the impact of vouchers because
vouchers would be the only difference at the beginning of each
experimental period. (6) If implemented on a small scale, this
experiment would allow one to estimate the direct effect of vouchers; if
implemented on a large scale, this would uncover the potential effects
on all students, including those who remain in the public schools.
Obviously, such an evaluation is not possible. So, to study the
direct effect of vouchers, researchers must rely on comparing the
achievement (or other outcomes) of students who were offered a voucher
(or actually used a voucher to attend a different school) with the
outcomes of students who were denied a voucher, were ineligible for a
voucher, or remained in the public schools for other reasons. (7) The
empirical challenge is that the outcomes of the nonvoucher students may
not provide a valid approximation of what would have happened to the
voucher students had they not been offered or used a voucher. The
voucher students may not have done as well (or as poorly!) as the
nonvoucher students in the absence of the voucher program because their
individual characteristics differ substantially. For example, the
students with parents who are very educationally focused and motivated
may be more likely to apply for a school voucher, and yet these students
may have done better than their non-voucher classmates even in the
absence of the voucher program because of their higher level of parental
support and encouragement. Unless the research design can take these
individual characteristics fully into account, the estimated impact of
vouchers will not likely generate the true impact of vouchers on student
achievement (in statistical terms the estimated impact will be
"biased"). As a result, researchers have relied on analytical
strategies that attempt to control for all differences between the two
groups of students, observed and unobserved.
The first strategy is to control for students' achievement
(typically a test score) prior to using the school voucher in order to
adjust for nonschool factors (such as having educationally focused
parents or low family income) that affect this achievement and that
might also be correlated with a student's likelihood of applying
for a voucher. This strategy amounts to comparing the change in
achievement of students before and after participation in the voucher
program with the change in achievement of students who did not
participate in the program. The assumption that must hold for this
estimate to generate the true (unbiased) effect of vouchers is that
there are no other differences that would explain changes in the test
scores between the two groups of students except for the use of a
voucher. Although this approach has some appeal, one might reasonably be
concerned that students who were not doing well (or were doing very
well) ill the public schools were more interested in a different
schooling experience and that prior test scores do not perfectly reflect
academic "ability," achievement, or motivation.
A second, more compelling strategy to generate estimates of the
effect of vouchers on student outcomes is to use a random assignment
design. In this "experimental" research design, students are
randomly assigned to either a "treatment group" that is
offered a school voucher or a "control group" that is not. In
this case, there are no differences in the observed or unobserved
individual characteristics, on average, between the two groups because
the offer of a voucher was determined not by one's family's
income or motivation, but purely by the flip of a coin. As a result, one
need not control for other student characteristics. Properly
implemented, such a strategy is viewed as the "gold standard"
for estimating a causal relationship between vouchers and student
outcomes. In practice, however, nonrandom differences can emerge between
the treatment and control groups to the extent that the researchers
conducting the study are not able to adequately follow up with both
groups of students.
A simple comparison of the outcomes of students in the treatment
group (those offered vouchers) and those in the control group (those not
offered vouchers) will generate a true (unbiased) estimate of the impact
of being offered a voucher on student outcomes--a parameter known as the
"intention to treat" in the research literature. This impact
reflects two factors that are important for proper evaluation of a
voucher program: the rate at which students who are offered a voucher
actually use one and the relative achievement of students in private
schools. As such, the intention to treat has two appealing properties:
It is the only unambiguously true (unbiased) estimate that one can
obtain using typical statistical methods, such as ordinary least squares
regression, and it reflects the overall potential gains from offering
the vouchers as a policy (since those who are offered vouchers cannot be
compelled to use them).
Many are also interested in whether students who actually use
vouchers experience academic gains as a result--an effect known as the
"treatment on the treated" among researchers. Because actual
use of a voucher is not randomly determined, analysts must resort to
nonexperimental methods to generate consistent estimates of the
treatment-on-the-treated gains by those who actually use vouchers to
attend private school. A common approach is to use an instrumental
variables strategy: Whether a student was randomly offered a voucher is
used as an instrumental variable for the student attending a private
school. This type of analysis would generate a consistent estimate of
whether the schools that the voucher students attended were more, less,
or equally as effective as the schools that the nonvoucher students
attended.
Evidence on the direct impact of school vouchers on students
In the U.S., two types of school voucher programs have been
studied--those financed by the government (publicly funded school
vouchers) and those provided by the private sector (privately funded
school vouchers). From a public policy perspective, the evidence from
publicly funded programs is most relevant as these programs incorporate
some of the design features that might be built into a larger school
voucher program, such as limitations on which students are eligible to
receive a voucher and the provision or reimbursement of transportation
(if any at all). That said, some of the most compelling evidence (from a
methodological perspective) comes from the privately funded vouchers, so
we review that evidence here as well. We begin with evidence from
publicly funded programs.
We translate the estimated impacts for all of the programs into
"standardized effect sizes" (or) in order to compare estimates
across studies. In particular, the estimated difference in test scores
between voucher and comparison (nonvoucher) students has been divided by
the standard deviation of the test score from a national sample of
students. The reason for dividing by the standard deviation is to
account for the fact that studies have used different tests to assess
the students. The problem is that an assessment of whether a gain is
"big" or "small" depends on the shape of the
underlying distribution of the test. Thus, for example, a five-point
gain using a test that has a narrow bell shape (a small standard
deviation) implies a larger gain in student learning than does an
eight-point gain using a test that has a wide bell shape (a large
standard deviation). Thus, researchers "standardize" the test
score gain by the spread of the distribution to account for its
underlying shape and often report "effect sizes" in standard
deviation units.
Once standardized, however, one must still judge whether an
estimated effect size is large or small. Recently, Hill et al. (2007)
attempted to review effect sizes from many studies of educational
interventions. While they caution that it is only valid to compare
effect sizes when using comparable populations, contexts, and
interventions, as well as the outcomes being measured, they report that
effect size estimates from randomized studies average 0.33[sigma] for
elementary schools, the typical grade level for the studies of voucher
programs we review here.
Table 1 (pp. 4-5) briefly describes publicly funded voucher
programs in the U.S. Since the launch of the Milwaukee Parental Choice
Program in Wisconsin in the early 1990s, several other publicly financed
voucher programs have been started, including one in Washington, DC, in
which the vouchers are allocated on a randomized basis. Not only is the
Milwaukee Parental Choice Program one of the oldest publicly funded
voucher programs in the U.S., it has also been subject to numerous
studies. The program is open to low-income students who may use a
voucher to attend any participating school (including religious schools)
worth approximately $6,501 in the 2007-08 academic year. Nearly 19,000
students and 120 schools participated that academic year.
Most of the studies regarding potential achievement impacts of the
Milwaukee program were conducted when the program had only been in
operation for about four years and vouchers could only be used at
nonreligious schools. At that time, about 12 schools and 800 students
participated. Because the schools participating in the program were
required to take all students who applied and to randomly select among
applicants in the event of oversubscription, researchers had two
potential comparison groups available--unsuccessful applicants and a
random sample of low-income students from the Milwaukee Public Schools.
Using both comparison groups, Rouse (1998) reports mixed results of the
"direct" effect of the program: She estimates intent-to-treat
effect sizes ranging from 0.06[sigma] to 0.11[sigma] in math and from
-0.03[sigma] to 0.03[sigma] in reading, although the impacts in reading
are never statistically different from zero, meaning that the difference
may have arisen by chance. (8)
Evidence from the Cleveland Scholarship and Tutoring Program (CSTP)
suggests even smaller impacts on student outcomes. The voucher program
is open to all students living within the boundaries of the Cleveland
Metropolitan School District, with preference given to students in
low-income families. (9) Students are permitted to use the vouchers at
both nonreligious and religious schools. (The tutoring program provides
tutors to interested students from kindergarten through 12th grade.) The
CSTP data allow researchers to identify three groups of applicants:
voucher recipients who use the voucher, voucher recipients who do not
use the voucher, and nonrecipients. (10) Additionally, Cleveland
Metropolitan School District and test score data are available for a
(nonrandom) sample of public school students. (11)
Analyzing data from the cohort of students who entered kindergarten
in 1997, Belfield (2007) compares voucher winners and rejected
applicants with the available sample of Cleveland public school
students. He also estimates the effect of attending private school by
comparing voucher users with the rejected applicants. In the third year
of the program (when the cohort is in second grade), he finds that
voucher winners scored significantly lower in math (-0.08[sigma]) and
lower in reading (-0.05[sigma]) than those in the public school sample.
Further, he finds that voucher users scored significantly lower in both
math and reading (-0.11[sigma] and -0.13[sigma], respectively) than the
rejected applicants. (12) In the fifth year of the program (when the
cohort was in fourth grade), the results are more mixed with estimated
effects ranging from -0.08[sigma] in math to 0.07[sigma] in reading for
the effect of using a voucher, but neither estimate is statistically
different from zero. (13)
While the studies of both Milwaukee and Cleveland attempt to
construct valid comparison groups and thereby identify causal impacts of
the voucher programs on student outcomes, all of them rely on
observational data and therefore may not fully account for preexisting
differences between the voucher and comparison groups. This leads to
biased estimates of the impact of vouchers. In the case of Milwaukee,
the bias could be either positive (in that the students who participated
in the voucher program were more motivated) or negative (in that the
random sample of low-income students in the public schools was too
advantaged relative to the voucher participants). While Rouse (1998)
attempts to determine the extent of any such bias (and concludes it is
likely minimal), it remains an untestable assumption. Belfield (2007) is
subject to the same general research design concern. (14)
This methodological concern could, in theory, be addressed in the
study of the relatively new DC Opportunity Scholarship Program (DC OSP)
in Washington, DC, which is being evaluated using a random assignment
program design. (15) In the first two years of the program (2004 and
2005), 2,038 eligible public school students participated in the
lotteries; 1,387 of them were awarded scholarships, and the remaining
921 students became the "control group." Wolf et al. (2007)
estimate that after one year, intent-to-treat effect sizes for the first
two cohorts of students ranged from -0.01[sigma] to 0.08[sigma] in math
and from -0.01[sigma] to 0.03[sigma] in reading. After two years, Wolf
et al. (2008) report that the impacts ranged from -0.02[sigma] to
0.01[sigma] in math and from 0.05[sigma] to 0.08[sigma] in reading. Not
only do these ranges include negative impacts but none of them are
statistically different from zero at the 5 percent level.
Thus far, the evidence from the publicly funded voucher programs
suggests, at best, mixed improvement among either students who were
selected for a voucher (the intent to treat) or students who used a
voucher (the treatment on the treated). The largest estimates, from the
Milwaukee Parental Choice Program, suggest potential (intent-to-treat)
gains of 0.11[sigma] in math and gains of 0.14[sigma] for those who
actually use a voucher to attend a private school; most of the other
estimates are much smaller or even negative. However, with the exception
of the studies on the DC OSP, the studies suffer from potentially
unsatisfactory comparison groups. As such, we now turn to evidence from
the privately funded programs.
Although a fairly recent U.S. General Accounting Office (2002)
report found 78 privately funded voucher programs to review, only a
handful have been subject to any evaluation. (16) Three privately funded
voucher programs--based in New York City; Dayton, Ohio; and Washington,
DC--had randomized study designs, making them the best suited for
rigorous evaluation. As in the publicly funded DC OSR the privately
funded programs in each city had greater numbers of applicants than
vouchers available: therefore, applicants were randomly selected to
receive or not to receive a voucher offer. For the New York City program
(School Choice Scholarships Foundation), for example, the number of
applicants was so large that the "control group" is made up of
a random sample of applicants not selected to receive a voucher. We
briefly describe each of the privately funded voucher programs with a
randomized study design in table 2.
Across all three cities, Howell, Peterson, et al. (2002) find that
using a voucher has no overall impact on student test scores. Indeed,
after three years the estimated impact of attending a private school is
only 0.02[sigma]. Similarly, both Mayer et al. (2002) and Krueger and
Zhu (2004) report very small impacts (at most a 0.06[sigma] impact for
using a voucher) in any year for the program in New York City, and none
of the estimates are statistically distinguishable from zero.
Nevertheless, a widely publicized result from these privately
funded programs is that there may have been differences across subgroups
of students. Indeed, Howell, Peterson, et al. (2002) and Mayer et al.
(2002) report statistically significant positive effects of private
school attendance on test scores for African American students alone.
Also, after three years, those African American students who used a
voucher are estimated to have experienced a 0.23[sigma] gain in
achievement across the three cities; those African American students who
used a voucher from the New York City program are estimated to have
gained 0.26[sigma]. (17))
However, these results are not robust. In their reanalysis of the
data from the New York City program, Krueger and Zhu (2004) report that
the results by race are particularly sensitive to two analytical
decisions. First, Krueger and Zhu include all students, whereas Mayer et
al. (2002) include baseline test scores in all of their specifications,
which leads them to exclude the students who were missing baseline test
score information; most of the excluded are first grade students who
were not administered a baseline test. Because students were randomly
chosen to receive or not to receive a voucher, baseline characteristics
such as test scores should have been identical for the two groups (on
average). The primary reason for including baseline characteristics
would be to improve the precision of the estimates. However, Krueger and
Zhu find very little difference in the precision of the estimated impact
of vouchers when using the larger sample without baseline test scores.
As a result, they argue that the gain in terms of statistical precision
is not great enough to warrant the cost in terms of not generating
estimates that are representative of the original target population.
The second substantive difference between the studies is how the
researchers define a student's race. Mayer et al. (2002) identifies
a student as African American if the mother's race is reported as
African American and non-Hispanic (irrespective of the race or ethnicity
of the father). Krueger and Zhu (2004) use alternative identifications.
They identify a student as African American if either parent is African
American and non-Hispanic; also, in their definition of African
American, they include the group of students whose parents responded
"other" to the survey but indicated that they (the parents)
were "black" in the open-ended response. With the larger
sample and the broadest identification of students as African American,
Krueger and Zhu report that the estimated impact of being offered a
voucher (intent-to-treat impact) for African American students falls to
0.05[sigma] after three years and the estimated impact of using a
voucher (treatment on the treated) falls to 0.03[sigma]; neither
estimate is statistically different from zero.
In sum, there is little evidence of overall improvement in test
score outcomes for students offered an education voucher from privately
funded voucher programs. Although there may be evidence that some
subgroups of students benefit from being offered a voucher, the evidence
is not robust to sensible alternative ways of constructing the analysis
sample. In addition, the results of these experiments may not be valid
for thinking about the average benefits of offering vouchers to all
students. Namely, all participants in the experiment--both voucher
recipients and non-recipients--had expressed an interest in vouchers.
Evidence of public school response to competitive pressure
As we have emphasized, the studies discussed previously are based
on relatively small voucher programs such that there was likely little
competitive pressure to which the public sector would have responded. As
such, the estimates are primarily of the direct effect of vouchers for
those who use them. However, the true prize of a voucher system--or any
significant increase in the competitive pressure experienced by the
public schools--is overall improvement in the performance of the
affected education system. Unfortunately, to develop a study that would
generate unbiased estimates of any such systemic impacts is extremely
difficult. One cannot simply compare the outcomes of students who use a
voucher (or who were offered a voucher) to the outcomes of students who
remained in the public schools (either by choice or from "bad
luck" in a lottery) as this would likely underestimate the general
equilibrium impact. The problem is that, in theory, the public schools
should improve in response to the increased competition and this
improvement should be reflected in the achievement of the public school
students. As a result, the control (or comparison) students would not
adequately represent what would have happened to the voucher students in
the absence of the voucher program.
Rather, one would ideally gather a large group of education
"markets" (assuming that any general equilibrium impacts
remain within a market and there are no spillovers to others) and
randomly assign some markets to a treatment group--in which the students
would be eligible for school vouchers--and randomly assign the remaining
markets to a control group--in which there would be no vouchers. After
some period of time, the researcher would then compare the average
outcomes of students in the voucher markets with those of students in
the control markets. A simple comparison of the outcomes would yield an
unbiased estimate of the general equilibrium impact of vouchers because,
on average, the markets would have been similar ex ante. While such an
experiment is possible in theory, in practice it would be extremely
difficult to implement mostly because it would require the coordination
and cooperation of so many different stakeholders. As a result,
researchers have turned to other research designs to try to get an
estimate of the potential impact of a large-scale voucher program.
Evidence from the expansion of the Milwaukee Parental Choice
Program
After the experimental phase of the Milwaukee Parental Choice
Program ended in 1995, the program was expanded to allow for a maximum
of 15 percent of the public school enrollment; further, in 1998 the
Wisconsin Supreme Court ruled that the vouchers could be used in
religious schools. These two events led to a dramatic increase in
participation in the program by both students and schools. In fact, the
program was so popular that in 2006, participation was expanded to
22,500 voucher students. Researchers have attempted to analyze these
last two expansions to estimate the potential impact of a large-scale
voucher program on student achievement in the public sector (see Hoxby,
2003; Carnoy et al., 2007; and Chakrabarti, 2008). While some of the
details differ, the basic strategy of all three studies is to attempt to
identify those schools within the Milwaukee Public School District that
face differing competitive pressure because of the mix of income levels
among their students. (Those schools with a high proportion of
low-income students who are eligible for the voucher program presumably
face more competitive pressure than those with a low proportion of
low-income students who are eligible.) The basic strategy of all three
studies also identifies observably comparable districts elsewhere in
Wisconsin in which there are no publicly funded vouchers. The following
would be evidence of a positive impact of competition on school
efficiency, as reflected in student test scores: Disproportionate gains
among students attending schools facing competitive pressure compared
with their peers at schools within Milwaukee facing relatively little
pressure and at schools outside of Milwaukee (facing no pressure from
vouchers).
All three studies find evidence that with the expansion of the
voucher program in 1998, student performance improved in the first few
years, especially in schools that were most likely to be affected by the
increased competition. For example, Hoxby (2003) estimates that the
fourth grade test scores of students attending schools likely facing the
most competitive pressure improved by 0.12[sigma] per year in math and
by 0.07[sigma] per year in reading relative to students attending
comparison schools outside of Milwaukee.
While interesting, these results must be interpreted as being only
suggestive. The identifying assumption is that there are no unobserved
changes before and after the voucher program was implemented when
comparing the schools with many voucher-eligible students to schools
with few or no voucher-eligible students. However, within the Milwaukee
Public School District, all schools were potentially affected by the
vouchers. Further, outside of the Milwaukee Public School District, the
demographic composition of the schools is quite different (specifically,
the students are less likely to be minority and more likely to come from
wealthier families) such that it is not clear researchers can adequately
account for differences between the students. In addition, Carnoy et al.
(2007) present some results that are not consistent with a simple
interpretation that performance in the Milwaukee public schools improved
because of increased competition. For example, they also find that there
was little improvement after 2002 despite the fact that interest in the
voucher program increased (as proxied by the number of applications).
Further, they find no evidence of a general equilibrium impact when they
employ other direct measures of competition (such as the number of
nearby private schools or the relative number of voucher applications
from a school).
Evidence from Florida's A + Opportunity Scholarship Program
In order for a voucher program to spur improvement within the
public schools, there need not be a substantial number (or proportion)
of students who use a voucher to attend a private school. Rather, if
public school administrators perceive there is the potential that the
students will do so, they may have an incentive to improve the education
in their schools. Thus, researchers have attempted to gain some insight
into the potential response of public schools to increased competitive
pressure a second way: by studying the schooling outcomes of students
attending schools that were under the "threat" of becoming
voucher-eligible--that is, schools with a high probability of their
students becoming eligible to use a voucher. Researchers have done so by
taking advantage of the design of Florida's school accountability
system--its A+ Plan for Education. Specifically, since 1999, schools in
Florida are given a grade of A through F, largely depending on the
performance of the students. Schools that receive high grades and are
improving receive bonuses. In contrast, low-performing schools (graded
either D or F) are subject to increased administrative oversight. (These
poor performers are also provided with some additional financial
assistance.) In addition, if a school received an F in two out of four
years and had an F in the current year, students became eligible for
vouchers called Opportunity Scholarships. (18) While the other features
of Florida's A+ Plan for Education remain in effect, the voucher
program was declared unconstitutional by the Florida Supreme Court in
January 2006. Thereafter students could no longer use a voucher to
attend a participating private school: they are, however, still able to
use a voucher to attend a higher-graded public school.
Under Florida's A+ Plan for Education, school grades are
determined by assigning "grade points" based on student test
score performance. (19) Grades are then assigned based on whether the
school is above or below the predetermined cut points for each of the
letter grades. Arguably, schools earning just above the number of grade
points needed to receive an overall grade of D are no different than
schools receiving just below the number of grade points needed to
receive a D grade. As a result, many of the schools that received an F
grade are quite similar to many of those that received a D grade. Figlio
and Rouse (2006), West and Peterson (2006), Rouse et al. (2007), and
Chiang (2008) therefore compare student outcomes from schools earning D
and F grades while controlling for the number of grade points earned so
that they can recover the causal effect of the policy on educational
achievement.
All of the papers find that test scores of students improve
following a school's receipt of an F grade. For example, Rouse et
al. (2007) and Chiang (2008) report gains ranging from 0.12[sigma] to
0.14[sigma] in math and about 0.10[sigma] in reading. Further, these two
studies also find evidence that the improvements persist even once the
students leave the voucher-threatened school, particularly in math. In
addition, Rouse et al. (2007) report finding evidence that the F-graded
schools responded in educationally meaningful ways. For example,
following receipt of an F grade, schools were more likely to focus on
low-performing students, lengthen the amount of time devoted to
instruction, and increase resources available to teachers. As such,
these studies may provide some evidence that increased competitive
pressure can generate some improvement in public schools. (20)
One should note, however, that the F-graded schools in Florida were
also stigmatized as "failing" (one of the intents of the
public announcements of the grades). So another possibility is that the
stigma of being identified as a failing school (and perhaps the
subsequent parental pressure to make changes) led the schools to
improve. As such, one cannot strictly distinguish a "voucher
effect" from a "stigma effect." That said, Figlio and
Rouse (2006) indirectly assess the impact of stigma by comparing student
achievement following the implementation of Florida's A+ Plan for
Education--which enlisted both the threat of vouchers and stigma--with
student achievement following the placement of schools on a critically
low performers list in 1996, 1997, and 1998 that involved public stigma
but no threat of vouchers. They estimate that the student gains in
reading were nearly identical under the two regimes and were actually
larger in math following placement on the critically low performers
list, suggesting that the relative improvements among the low-performing
schools may have been due more to stigma than to the threat of vouchers.
There is some evidence from the expansion of the Milwaukee Parental
Choice Program and from the threat of vouchers created by Florida's
A+ Plan for Education suggesting that the achievement of students
attending schools facing increased competition improves. However, the
research strategies do not allow one to definitively rule out other
explanations for the improvements. As such, we conclude that the jury is
still out on the potential for vouchers to spur public schools to
improve.
Other potential social gains from vouchers
There may be other reasons why providing school vouchers may be
appealing from a public policy standpoint. One might argue in favor of
vouchers as a way to increase equity by giving poor families more
opportunities to choose private schools over their neighborhood public
schools. Also, based on parents" reports for the publicly funded DC
voucher program (DC OSP), the schools that are chosen (private schools)
may be safer. Parents of students offered a voucher reported a
significantly lower level of perceived school danger than parents of
students not offered a voucher. (21)
In a related fashion, student achievement may not be the only
criterion by which to judge the success of voucher programs. If school
choice means that parents are more satisfied with the education their
children are receiving and if voucher programs are no more expensive
than our current system, then a voucher program may be a cost-neutral
way to increase social welfare. Importantly, one consistent finding in
this literature is that voucher parents report being more satisfied with
their current schooling than do nonvoucher parents. For example, in the
DC OSP, parents of students offered a voucher gave their children's
schools a significantly higher overall grade on a five-point scale
(grades A through F) and were significantly more likely to give their
children's schools a grade of A or B. Further, they reported
significantly greater satisfaction with their children's schools on
all aspects asked, including location, class sizes, discipline, academic
quality, and the racial mix of the students (Wolf et al., 2007). These
results have generally been reported for other voucher programs, such as
those in New York City (Mayer et al., 2002) and Milwaukee (Witte, Sterr,
and Thorn, 1995). (22)
Yet, the potential net improvement in social welfare depends on
both the general equilibrium effects of vouchers and the cost advantage
over current public schools--two issues that are not well understood.
While small-scale voucher programs indicate that parents offered a
voucher are more satisfied with their children's schools than those
not offered a voucher, a large-scale voucher program might result in
some parents who are more satisfied and some who are less satisfied. In
order for social welfare to be increased with a cost-neutral voucher
program, the gains to the parents who benefit must be large enough to
outweigh the losses to parents who do not benefit.
In addition, there is not much information about whether a
well-developed voucher program would, indeed, be cost-neutral. On its
face an education voucher system should be no more expensive than the
current system as the state (or some other public entity) would simply
send a voucher check to participating schools for each participating
child rather than to the local public school or district. However, if
truly implemented on a large scale, there may be other, less obvious
costs that would depend critically on the actual design of the program.
Levin and Driver (1997) caution that, depending on a number of factors,
the cost of a voucher system could actually exceed those of the current
geographically based system. These factors include the transportation of
children to and from school, recordkeeping, and the monitoring of
student enrollment. Two additional concerns are how a program deals with
students currently attending private schools and how disputes are
adjudicated (particularly if there are differing voucher amounts). While
Levin and Driver's estimates are rough, based on hypothetical
voucher programs and crudely estimated costs, their analysis suggests,
at a minimum, that we should not assume a voucher program would be
cost-neutral. Further, there may be large costs associated with the
transition to a voucher system that should be considered.
Finally, the studies to date necessarily focus on short-run effects
of vouchers when in fact there may be longer-run impacts on high school
graduation, college enrollment, or even future earnings. For example,
Altonji, Elder, and Taber (2005a) study the effect of Catholic education
on a variety of outcomes and find little evidence that Catholic schools
raise student test scores. At the same time, their results suggest that
Catholic schools increase the probability of graduating from high school
and potentially the probability of enrolling in college. These
longer-run effects have yet to be credibly examined in studies of school
vouchers.
Conclusion
The best research to date finds relatively small achievement gains
for students offered education vouchers, most of which are not
statistically different from zero, meaning that those gains may have
arisen by chance. Further, the very little evidence about the potential
for public schools to respond to increased competitive pressure
generated by vouchers also suggests that one should remain wary that
large-scale improvements would result from a more comprehensive voucher
system.
So why has it been so difficult for researchers to observe large
improvements in student achievement with school vouchers in the U.S.?
One explanation may be that schools already compete for students through
residential choice such that the public sector does not operate as
poorly as perceived by many. Another explanation may be that the
education sector does not meet the conditions for perfect competition
(Garner and Hannaway, 1982). For example, information on school quality
may be costly and difficult for parents to obtain, so having more choice
may generate less additional competitive pressure on schools than one
would expect in a perfect information environment. Further, education is
not a homogenous good. Therefore, while competition for students may
make schools more responsive to parents, this may be achieved through
changes in other areas of school life, such as religious education or
sports, rather than academic achievement.
Despite the heretofore lackluster empirical findings, the
theoretical rationale behind school vouchers remains compelling: If
parents choose schools based on academic performance and if we allow
them more choice, then the schools will need to improve academically in
order to attract students. In addition, others have endorsed vouchers to
promote greater equity: If rich families have the means to opt out of
the public school system, should not poor families have a similar
opportunity? It is perhaps for these reasons--combined with frustration
that other approaches to improve the U.S. education system have proven
weak or futile--that school vouchers remain high on the agenda for many
policymakers. (23) However, expectations about the ability of vouchers
to drastically improve student achievement, at least as measured by test
scores, should be tempered by the results of the studies to date, and
arguments for vouchers as a cost-neutral alternative should be subject
to more careful analysis of the full costs.
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NOTES
(1) The National Assessment of Educational Progress is the only
nationally representative and continuing assessment of what students in
the U.S. know and can do in various subject areas, such as mathematics
and reading The commissioner of education statistics, who heads the
National Center for Education Statistics in the US Department of
Education, is responsible by law for carrying out the NAEP project: for
further details, see http://nces.ed.gov/nationsreportcard/. See also
Hoxby (2003).
(2) The Florida A+ Opportunity Scholarship Program--a publicly
funded voucher program initially created for students to attend private
schools--was declared unconstitutional by the Florida Supreme Court ill
January 2006. After this ruling, students could no longer use the
voucher to attend a participating private school; they are, however,
still able to use the voucher to attend a higher-rated public school For
further details, see the discussion on the Florida A+ Opportunity
Scholarship Program later in the text and in table 1.
(3) A less efficient public sector and a less competitive (public
schooling) environment may explain the larger impacts of school vouchers
that have been estimated in other countries, such as Columbia (see, for
example, Angrist et al., 2002). In the U S., elementary and secondary
public schooling has largely depended on local financing, meaning that
choice between local school districts may already generate strong
competitive pressure As a result, there may be less potential for
vouchers to generate large efficiency gains (see, for example, Barrow
and Rouse. 2004)
(4) See, for example, Coleman, Hoffer, and Kilgore (1982a, 1982b);
Evans and Schwab (1995); Neal (1997); and Altonji, Elder, and Taber
(2005b).
(5) See, for example, Goldberger and Cain (1982), Cain and
Goldberger ( 1983), and Altonji, Elder, and Taber (2005a).
(6) Of course, even if vouchers improved outcomes in the long run,
there might be a transition period in which the lull benefits were not
realized. A more complex version of this hypothetical experiment would
be needed to identify both the transitional costs and long-run effects
of a voucher program
(7) Ironically. this also means that this literature bears striking
similarity to that of the differential effectiveness of private and
public schools
(8) The range reflects estimates from different model
specifications Other studies using these early data from Milwaukee
include Witte (1997) and Witte, Sterr, and Thorn (1995), as well as
Greene, Peterson, and Du (1999) Using only the sample of low-income
students from the Milwaukee Public Schools as a comparison group, Witte
(1997) and Witte, Sterr, and Thorn (1995) estimate no impact of the
program on student achievement. Greene, Peterson, and Du (1999) only use
the unsuccessful applicants as a comparison group and estimate a
positive impact in both math and reading See Rouse (1998) for further
discussion of the differences between the studies
(9) The voucher is also progressive in that it pays 90 percent of
tuition up to $3,450 for those with family income below 200 percent of
the poverty line and only 75 percent of tuition up to $3,450 for those
from families earning above 200 percent of the poverty line. The
original program paid tuition up to a maximun of $2,250 (Metcalf et al.,
1998). The Cleveland Metropolitan School District changed its name from
the Cleveland Municipal School District in 2007
(10) The nonrecipient group potentially contains both students who
did not win the voucher lottery and students not entered into the
lottery due to the preference given to students from low-income families
(Metcalf, 2001).
(11) The public school sample was generated by using the first
grade classmates of voucher recipients who did not use their voucher, as
well as the first grade classmates of program applicants who were not
awarded a voucher (Metcalf, 2001)
(12) Although Betfield (2007) only reports results for the third
and fifth years of the program, he notes that the results are similar
for the fourth year when the cohort was in third grade.
(13) Belfield (2007) finds a statistically significant -0.06[sigma]
difference in math between voucher winners and the public school sample
(14) In addition, Belfield (2007) includes some measures in his
empirical specifications that are arguably outcomes of the voucher
program, namely, class size and teacher's years of experience That
said, his results are largely similar when these controls are excluded
(15) See Wolf et al. (2007) for more details Students attending
lowperforming public schools were given a better chance of winning the
lotteD,. Although private school students were eligible for the
vouchers, they were excluded from the study
(16) The U S General Accounting Office's legal name became the
U S Government Accountability Office on July 7, 2004. For further
details, see www.gaogov/about/namechange.html.
(17) In contrast, Howell. Peterson, et al. (2002) estimate a
negative impact tbr African American students after three years in the
privately funded voucher program in Washington, DC, although the impact
is not statistically different from zero Results for the third year of
the privately funded programs apply only to those in Washington, DC, and
New York City because the Dayton. Ohio, program was evaluated for only
two years
(18) Currently Florida has two other voucher programs as well: an
income tax credit for corporations to fund vouchers for low-income
students and the McKay Scholarship for Students with Disabilities
Program Greene and Winters (2008) study the impact of the McKay
Scholarships on the achievement gains of students with disabilities who
remain m the public schools Because their estimation strategy identifies
the general effect of vouchers by using students whose disability status
changes, the extent to which these results generalize to overall
improvements in the public schools is unclear.
(19) Literally speaking, school grades were not assigned using
"grade points" before 2002 when Figlio and Rouse (2006)
studied the system Nevertheless, their strategy is quite similar in
spirit
(20) A statistical issue with which all of the researchers wrestle
is whether the disproportionate gains by students in the F-graded
schools resulted from mean-reverting measurement error or reflected
actual changes m response to Florida's A+ Plan for Education
Mean-reverting measurement error occurs when gains the year alter a
school scores unusually low--and is thereby labeled as F--reflect the
measurement error in test scores. That is, the test scores of students
might have increased in many of the F-graded schools even in the absence
of Florida's education plan simply because they were transitorily
low in the prior year. The reliance on a regression discontinuity design
(one that compares the D-graded and F-graded schools while also
controlling for the grade points) helps to mitigate against the presence
of mean-reverting measurement error, although the researchers employ
other strategies as well
(21) See Wolf et al (2007), table H-3. While student perceptions
also suggest that the chosen schools are safer on average, the
difference was not statistically significant (see table H-4 of the same
study).
(22) At the same time, not all parents are satisfied with the
voucher schools. Focus groups among parents of DC OSP participants found
that they believed a few schools misrepresented aspects of their
programs and that there was a need for an evaluation of participating
schools (Stewart et al., 2007). Similarly, in the early years of the
Milwaukee Parental Choice Program, 43 percent of the parents who took
their children out of the voucher schools cited the poor quality of the
voucher school as one of the primary reasons they withdrew their
children from the program More specifically, they cited being unhappy
with the staff, the education their children were receiving and the lack
of programs for special needs; they also noted that the teachers were
too disciplinarian. Thirty percent cited the poor quality of the overall
Milwaukee program--including hidden school lees, difficulties with
transportation, and the limitation on religious instruction--as the
primary reason for withdrawing their children (Witte, Sterr, and Thorn,
1995).
(23) Most recently the George W. Bush Administration proposed the
strengthening of the choice provisions in the reauthorization of the
federal No Child Left Behind Act, and there were (unsuccessful) ballot
initiatives in California and Utah to create statewide voucher programs
open to all students.
Lisa Barrow is a senior economist at the Federal Reserve Bank of
Chicago. Cecilia Elena Rouse is director of the Education Research
Section, director of the Industrial Relations Section. and Theodore A.
Wells '29 Professor of Economics and Public Affairs at Princeton
University; she is also a research associate at the National Bureau of
Economic Research. The authors thank Clive Belfield, David Figlio,
Bhashkar Mazumder, Patricia Muller, Anna Paulson, and Jonathan Plucker
for helpful comments and conversations. Emily Buchsbaum and Mitta Isley
provided expert research assistance. They also thank the Ohio Department
of Education and Washington Scholarship Fund for responding to their
queries. Parts of this Economic Perspectives article are drawn from the
authors' forthcoming article in the Annual Review of Economics.
TABLE 1
Description of publicly funded voucher programs in 2007-08
Number of
scholarship
Start of students in
Voucher program program 2007-08 Other information
EdChoice 2006 6,580 Students are eligible to apply
Scholarship if they currently attend or
Program (Ohio) will be entering an EdChoice-
designated public school in
the upcoming year or if they
currently attend a charter
school but would otherwise be
assigned by the school
district to an EdChoice-
designated school.
There is currently a maximum
of 14,000 scholarships that
can be awarded across the
state, and there are no income
requirements to receive a
scholarship. If more than
14,000 students apply, then
students who are renewing
their scholarships followed by
students who are at or below
200 percent of the poverty
level receive priority.
The program pays the minimum
of a school's tuition or
$4,375 per student from
kindergarten through eighth
grade and $5,150 per student
from ninth through 12th
grades.
Cleveland 1996-97 6,017 Any student living within the
Scholarship boundaries of the Cleveland
and Tutoring Metropolitan School District
Program (Ohio) (CMSD) and entering
kindergarten through eighth
grade is eligible to apply.
Low-income students are given
priority, and scholarships are
awarded by lottery drawings.
A student is not eligible to
apply once he or she has
entered high school, although
scholarships have been made
available to program
participants once they reach
high school.
All children currently
attending Cleveland
Metropolitan Schools in
kindergarten through 12th
grade are eligible for the
tutoring program.
The scholarship program pays
either 75 percent or 90
percent of a school's tuition
(depending on family income)
not exceeding $3.450 for the
2007-08 school year.
A+ Opportunity 2000 1,305 Students are eligible for the
Scholarship in public A+ Opportunity Scholarship
Program schools Program through the highest
(Florida) (see next grade of their public school
column) if their school is currently
"failing" (graded an F) for
its second year in a four-year
period. The scholarships could
continue into high school if
the high school was assigned a
grade below C.
The program made an average
scholarship payment of $4,206
per student in 2005-06.
These scholarships (vouchers)
for private schools were
declared unconstitutional by
the Florida Supreme Court in
January 2006. Thereafter
students could no longer use
these vouchers to attend
participating private schools;
they are, however, still able
to use the vouchers to attend
higher graded public schools.
McKay 1999-2000 19,439 To be eligible for this
Scholarships program, students must have
for Students been part of the Florida
with public school system for at
Disabilities least one year, have been
Program counted in the prior school
(Florida) year's October and February
enrollment surveys, and have
an individual education plan.
For the 19,439 students
currently enrolled, there has
been a total payment amount of
$99,212.622.04 so far for the
2007-08 school year. There was
a total payment amount of
$119,092,631.54 across the
state for the 2006-07 school
year, assisting 18,273
students. Scholarship amounts
are awarded on an individual
basis.
Milwaukee 1990 18,882 Milwaukee Parental Choice
Parental Choice Program students have family
Program incomes at or below 175
(Wisconsin) percent of the federal poverty
level ($35,843 for a family of
four in 2007-08). Once a
student is in the program,
family income may rise to 220
percent of the federal poverty
level ($45,057 for a family of
four in 2007-08). The voucher
was worth a maximum of $6,501
in 2007-08.
DC Opportunity 2004 1,903 Eligibility requirements give
Scholarship preference to students in
Program kindergarten through 12th
(District of grade who are eligible for
Columbia) free or reduced lunch and who
are enrolled in public schools
that fail to make sufficient
yearly progress as defined by
the No Child Left Behind Act.
The program offers
scholarships for up to $7,500
to cover the costs of tuition,
fees, and transportation for
students to attend
participating DC private
schools. Scholarships are
renewable for up to five years
as long as students remain
eligible and in good academic
standing at their private
schools.
Sources: Ohio Department of Education, http://EdChoice.ohio.gov
and www.ode.state.oh.us/gd/gd.aspx?page=2&TopicRelationlD=672;
Florida Department of Education, www.floridaschoolchoice.org:
Wisconsin Legislative Fiscal Bureau, www.legis.state.wi.us/lfb/
Informationalpapers/29.pdf; Washington Scholarship Fund,
www.washingtonscholarshipfund.org; and Wolf et al. (2007).
TABLE 2
Description of privately funded voucher programs
Number of
scholarship
students in
Evaluation program
Voucher program period evaluation Other information
School Choice 1997-99 1,200 Students were eligible to
Scholarships apply if they were
Foundation (New entering first through
York City, NY) fifth grades, currently
attending a public
school, and qualified for
the National School Lunch
Program.
The program began in
1997, paid up to $1,400
annually, and initially
guaranteed three years of
receipt. The scholarships
were later extended
beyond the initial three
years.
Parents 1998-99 530 Students in kindergarten
Advancing through 12th grade whose
Choice in family income was less
Education, or than 200 percent of the
PACE (Dayton, federal poverty line were
OH) eligible. (Students
currently enrolled in
private school were
eligible for the program
but not included in the
evaluation. The
evaluation focuses on
students in the first
through seventh grades at
baseline.)
At most, the scholarship
was worth $1,200 or 60
percent of tuition,
whichever was less.
However, voucher awards
were smaller for higher
income families. The
program began in 1998,
and while the evaluation
followed students for
only two years, PACE
continued to award new
scholarships through
2008. In 2008 the average
scholarship is worth
$1,800. and students are
guaranteed a scholarship
for at least four years.
Washington 1998-2001 1,000 Students entering
Scholarship kindergarten through
Fund eighth grade whose family
(Washington, income was less than 270
DC) percent of the federal
poverty line were
eligible. (Students
currently enrolled in
private school were
eligible for the program
but not included in the
evaluation. The
evaluation focuses on
students in the first
through seventh grades at
baseline.)
At most, the scholarship
was worth $1,700 or 60
percent of tuition,
whichever was less.
However, voucher awards
were smaller for
higher-income families.
The voucher program began
in 1993 and continued to
offer scholarships in
2008. In 2008-09, the
scholarships are worth up
to $3,000 per child each
year.
Sources: Howell, Wolf, et al. (2002); Parents Advancing Choice in
Education, www.pacedayton.org; and Washington Scholarship Fund,
www.washingtonscholarshipfund.org.
