Saturday, February 19, 2011

Markets don't solve everything

Or, at least philosophical claims about what the market can accomplish don't solve everything.

The appeal of market logic is compelling. I enjoy the wider availability of good things at low prices because of markets. The logic of free trade is ineluctable. Just read The Choice. But then read Politics and Markets, too, so you can think about the balances we as people strike when we organize our political economic systems.

Yes, I'm a free marketer, but at the same time I'm glad we have labor laws protecting children, and industrial laws protecting adults, for instance. These are choices we make in political society. The market would't 'care' (I use the quotes because the market doesn't have agency, so I don't really like to personify it) whether a child were put into dangerous working conditions, but people can and do care about just such things.

My point is that the claims of market supporters are well-founded--efficiency gains, maximization of production at lower prices, etc. But the moral choices we make as a society are a feature of social or political choices. Markets don't choose because they don't act. People act and choose.

So, all that to say, I find both the left and the right tiresomely ideological about so much of what they say in politics. But I'm most perplexed by the right, because that's the direction I incline. I'm toughest on those who sound and think like I do, or maybe it's that I think like they do, but I don't want to sound like they do at all.

Anyway, the Evergreen Freedom Foundation's market logic applied to schools--My comments in regular font.

Summary of findings
Many school districts could boost student achievement without increasing spending if they used their money more productively. An Arizona school district, for example, could see as much as a 36 percent boost in achievement if it increased its efficiency from the lowest level to the highest, all else being equal.

What is more productive spending? How do we know it when we see it, other than seeing that success measures (scores, presumably) go up. How is efficiency defined in connection to test scores without the whole thing becoming a tautology? We need to have an a priori definition of efficiency and productive spending, and this summary does not provide that.

Low productivity costs the nation’s school system as much as $175 billion a year. This figure is an estimate; our study does not capture everything that goes into creating an efficient district. But the approximate loss in capacity equals about 1 percent of the nation’s gross domestic product.

Again, what is efficient? I suspect they define efficiency (as some have bandied about in blogs and comments) as things like cutting the excess principals in a building. My school is operating with one instead of two principals right now. It makes a lot of things much less productive. Discipline management, for instance, is less clear and cohesive, and that intrudes into every aspect of the school day. Talk about productivity disruptions, but I don't know how to quantify them. Of course, if you want the best test scores for the least spending, you need to figure out how to get rid of the low performing students. They're a horrible drag on efficiency. The struggling learners take up a lot more time and attention than the students who are on grade level.

Without controls on how additional school dollars are spent, more education spending will not automatically improve student outcomes. In more than half of the states included in our study, there was no clear relationship between spending and achievement after adjusting for other variables, such as cost of living and students in poverty. These findings are consistent with existing research: How a school system spends its dollars can be just as important as how much it spends, at least above some threshold level.

Again, seems easy to say, but it remains unclear how a school system should spend its money. And a little understanding of Kenneth Arrow's impossibility theorem would help here. Arrow showed that the collective choice among 3 options might not actually reflect a rationally preference ordered choice of the largest number of deciders in the group. Individual preference orderings don't always coherently transfer to collective choice. Arrow showed this for choices among 3 candidates in an election. Imagine how much harder the collective choosing process is when you're talking about much larger option sets with much more complicated tradeoffs among them. We had this problem just the other day when talking about our master schedule. I don't know what the efficient outcome would be in the case of scheduling. And, frankly, what works effectively for some students won't work as well for others. That second group may need something that turns out to be detrimental to a third group, whose dominant need actually undermines group one...Arrow's impossibility....!

Efficiency varies widely within states. Some districts spent thousands more per student to obtain the same broad level of academic achievement. After adjusting for factors outside of a district’s control, the range of spending among the districts scoring in the top third of achievement in California was nearly $8,000 per student.

What, I wonder, were the factors "outside the district's control." One factor that has a lot to do with success is level of parent involvement and general family stability. My district probably looks pretty efficient--we spend about $6000 per student, and our test scores are pretty good. But I tell all who ask that we've got pretty involved parents and pretty stable families. If parents and families matter, then to maximize efficiency, make sure your district is doing well in this area.

More than a million students are enrolled in highly inefficient districts. Over 400 school districts around the country were rated highly inefficient on all three of our productivity metrics. These districts serve about 3 percent of the almost 43 million students covered by our study.

And, at the same time, The Alliance for Excellent Education reports the following:

Approximately two thousand high schools (about 12 percent of American high schools) produce more than half of the nation‘s dropouts. In these ―dropout factories, the number of seniors enrolled is routinely 60 percent or less than the number of freshmen three years earlier.

Eighty percent of the high schools that produce the most dropouts can be found in a subset of just fifteen states. The majority of dropout factories are located in northern and western cities and throughout the southern states.

Unless those 2000 high schools are all from those 400 districts, efficiency and retention may not be highly correlated. So, which do we, as a society, focus on? Or, to say it differently, how do we get efficient and retain students at the same time?

High-spending school systems are often inefficient. Our analysis showed that after accounting for factors outside of a district’s control, many high spending districts posted middling productivity results. For example, only 17 percent of Florida’s districts in the top third in spending were also in the top third in achievement.

Again, which factors? If those districts were paying for mandated programs to some target population, they may not be able to get out from underneath that spending requirement. A district with a high volume of special needs is going to be much less efficient, whatever way you define it.

Students from disadvantaged backgrounds are more likely to be enrolled in highly inefficient districts. Students who participated in subsidized lunch programs were 12 percentage points more likely to be enrolled in the nation’s least-productive districts, even after making allowances for the higher cost of educating lower-income students.

If low socio-economic status correlates with lower parent involvement, lower reading success at early grades, etc., then those districts will have more special program requirements to meet and will be less efficient. Further, kids who fall behind early will require remediation, and while those programs achieve their curricular goals, without reinforcement and persistence outside of school, the gains are diminished and the student remains somewhat behind, thus requiring more remediation, and so on.

Highly productive districts are focused on improving student outcomes. We surveyed a sample of highly productive districts to learn more about their principles and practices. The districts that performed well on our metrics shared a number of values and practices, including strong community support and a willingness to make tough choices.

This bit is non-sensical. A good district focuses on student outcomes, and they "performed" well on strong community support. An implicit acknowledgment that community/parent involvement is a boon to a school. Of course, in great degree, community support is up to the members of the community, not the school.

States and districts fail to evaluate the productivity of schools and districts. While the nation spends billions of dollars on education, only two states, Florida and Texas, currently provide annual school-level productivity evaluations, which report to the public how well funds are being spent at the local level.

The quality of state and local education data is often poor. In many instances, key information on school spending and outcomes is not available or insufficiently rigorous, and this severely impedes the study of educational productivity. For instance, we did not have good enough data to control for certain cost factors, such as transportation. So a rural district with high busing costs might suffer in some of our metrics compared with a more densely populated district.

The nation’s least-productive districts spend more on administration. The most inefficient districts in the country devote an extra 3 percentage points of their budgets on average to administration, operations, and other noninstructional expenditures.

Some urban districts are far more productive than others. While our main results are limited to within-state comparisons, we were able to conduct a special cross-state analysis of urban districts that recently participated in a national achievement test. After adjusting for certain factors outside a district’s control, we found that some big-city school systems spend millions of dollars more than others—but get far lower results on math and reading tests.

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