Does Competition Improve Public Schools?

Cassandra M.D. Hart & David Figlio
Education Next
Winter 2010

This study by Northwestern University economists—published in Education Next—teases out findings to a “notoriously difficult” question: do public schools improve when they face the threat of losing students to nearby private schools (in this case, precipitated by tax credit scholarships)? This theoretical “competitive effect” is a main tenet of the school choice movement, but it’s difficult to substantiate that the education market actually works this way. Figlio and Hart’s study bolsters this school choice principle, as it finds that the availability of tax credit scholarships in Florida led to improvements in the average performance of “at-risk” public schools (those that would lose eligible students).

Figlio and Hart examined Florida state test results (FCAT scores) from 1999 to 2007 as well as student demographic variables, and geo-coded data for public and private schools so as to measure the distance, density, and concentration of private school options within a five-mile radius of Florida’s public schools. (They also measured private school diversity, naming ten different types on a religious-secular spectrum.) Next, they measured the effect of “scholarship-induced private school competition” on nearby public schools by comparing student performance before and after the scholarship program was enacted. Meanwhile, they controlled for demographic variables like race and poverty, as well as state-given grades to schools, thus isolating the effects of private school competition and disentangling it from, say, schools’ behavior to avoid accountability sanctions.

The four measures of competition in the study – distance, density, concentration, and diversity – enabled a comparison between schools with varying levels and diversity of private school options. Remarkably, all four measures were positively correlated with student performance in reading and math. Public schools with more, and more varied, private school options nearby experienced small but consistently positive achievement gains in both subjects after the scholarship program was launched in 2001. Further, the performance gains were lasting, and most pronounced in elementary and middle schools (more likely to lose students than high schools) and in schools wherein losing low-income students to tax credit-receiving competitors would put Title I funding at risk.

The study has limits, namely that the school choice market has evolved much since 2001, and Florida-specific findings may not be generalize-able to other states. But the report’s findings have important implications for Florida, for states looking to recreate tax scholarship programs, and for the choice movement itself. Read it here.

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