Private school competition, student achievement, and education spending across countries Martin West Harvard Graduate School of Education Prepared for “Learning from the International Experience: Lifting U. S. Students to World Class Levels of Performance” August 18, 2011

2011: The Year of School Choice? A few indicators: -18 voucher, tuition tax credit, or education savings account policies enacted or expanded by US states -465 charter schools opened, bringing the total to 5,400 schools enrolling 1.7 million students -Continued proliferation of virtual schooling options -EdNext-PEPG Survey: support for vouchers rose 8 points to 47 percent, with just 27 percent opposed

The Debate over School Choice and Competition Proponents: -Competition from privately operated schools creates incentives for innovation within the public sector, lifting student achievement and improving productivity system-wide -Expanded school choice enhances equity by providing low-income families with more and better options Skeptics: -Educational benefits of competition are unproven -Expanded school choice may reduce equity and segregate students by ability, class, or ethnicity Advantages of international evidence: -More variation in the degree of school competition -Ability to examine long-term effects

NCEE’s view of the international experience “Neither the researchers whose work is reported on in this paper nor the analysts of the OECD PISA data have found any evidence that any country that leads the world’s education performance league tables has gotten there by implementing any of the major agenda items that currently dominate the education reform agenda in the United States. We include in this list the use of market mechanisms such as charter schools and vouchers, the identification and support of education entrepreneurs to disrupt the system, and…” – Mark Tucker, “Standing on the Shoulders of Giants” (2011).

OECD’s Interpretation of the PISA Data “School choice and competition is sort of a mixed picture. It looks as if more competitive systems do better, but when you actually adjust for social background, you see that that’s actually largely an artifact of socioeconomic segregation. And you see it has a negative effect on equity. Same for private schools, charter schools [which] don’t do necessarily better when you adjust for social background.” – Andreas Schleicher (2010)

OECD’s Evidence

My Agenda 1.What is the effect of private school competition on the level of student achievement across OECD countries? 2.What is the effect of private school competition on the level of education spending across OECD countries? 3.How are funding policies for private schools related to the equity of student achievement within OECD countries? Sources: West and Woessmann, “Every Catholic Child in a Catholic School,” Economic Journal (2010). Woessmann, Luedemann, Schuetz, and West, School Accountability, Autonomy and Choice around the World (Edwin Elgar, 2008).

Private School Competition and Student Achievement: Background International data (TIMSS and PISA 2000/2003) show a modest positive correlation between the share of students in private schools and student achievement across countries But is this relationship causal? -Omitted variables: countries with more resources or cultural commitment to education may have more demand for private schooling  bias in favor of finding positive effects of competition -Reverse causation: low-quality public schools may increase demand for private schooling  bias against finding positive effects of competition

19 th -Century Catholic Doctrine on State Schooling Syllabus Errorum = list of common beliefs condemned by Pope Pius IX (1864): -“Catholics may approve of the system of educating youth unconnected with Catholic faith and the power of the Church.” Encyclical On the Religious Question in France (1884): -The Church “has always expressly condemned mixed or neutral schools; over and over again she has warned parents to be ever on their guard in this most essential point.” Leo XIII Pius IX

Studying the Causal Effect of Private School Competition 19 th -Century Catholic resistance to state schooling  Private school competition today  Student achievement  History used as a “natural experiment” -Catholic share in 1900 (in non-Catholic countries) used as an “instrument” for the share of students now attending privately operated schools -Key assumption: historical Catholic shares have no direct effect on contemporary student achievement

International Data Programme for International Student Assessment (PISA) Representative samples of 15-year-olds in 29 OECD countries tested in math, science, and reading  220,000 students -Detailed background information in student and school questionnaires Measure of competition: the share of PISA students enrolled in private schools (i.e., managed directly or indirectly by a non- governmental organization) Extent of competition varies widely (SD = 21%) -Less than 5%: Greece, Iceland, Italy, New Zealand, Poland, Sweden, and Turkey -Greater than 50%: Netherlands, Belgium, and Ireland

Catholic shares in 1900 predict private school shares in 2003 Added-variable plot of regression of share of PISA 2003 students enrolled in privately operated schools on Catholic population share in 1900 (interacted with indicator for no Catholic state religion) and all control variables. Based on a student-level regression that is then aggregated to the country level.

Private school competition leads to higher student achievement in 2003 Added-variable plot of IV regression of PISA 2003 math achievement on share of students enrolled in privately operated schools (instrumented by Catholic share in 1900) and all control variables. Based on a student-level regression that is then aggregated to the country level.

The Effects of Private School Competition: Student achievement and education spending Competition leads to higher student achievement -A 10 pct. point increase in private school share raises achievement by 0.09 SD in math and 0.05 SD in science/reading (over the long run)  math result equates to years of school schooling -Much of this improvement accrues to students attending publicly operated schools, confirming the role of competition Competition reduces spending on education -A 10 pct. point increase in private school share reduces cumulative education spending (public and private) per student through age 15 by $3,200  5.6% of OECD average of $56,947 -Combined with the achievement results, this suggests competition has a strong effect on system productivity

Private Schooling and Educational Equity “Choice may stimulate quality, but with risks for equity” (OECD, 2006). One measure of educational equity: dependence of achievement on socio-economic status (SES) -Are SES-based gaps larger in countries with more private schools? -Are SES-based gaps larger in countries that provide public funding for private schools? SES Measure: PISA’s Index of Economic, Social and Cultural Status (based on parents’ occupation and employment status, parents’ education level, and household resources)

Private Operation and Educational Equity: PISA 2003

Private-Public Funding Gaps and Educational Equity: PISA 2003

1.Competition from private schools can have a positive effect on student achievement and system productivity 2.More equitable funding for private schools is associated with a reduced dependence of student achievement on family background Caveats: Evidence is based on a small sample (OECD countries) Private schools in many OECD countries are heavily regulated (more like American charter schools) Policy design is critical: more school choice does not always mean more competition, markets need information to work well, and public schools need flexibility to respond in productive ways Conclusions

Private school competition, student achievement, and education spending across countries Martin West Harvard Graduate School of Education Prepared for “Learning from the International Experience: Lifting U. S. Students to World Class Levels of Performance” August 18, 2011