Should public schools be privatised? Day 4

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Dear A.N.,

Let’s be careful about what we claim for private schools. The fact that private school attendance is positively correlated with civic activity doesn’t tell us anything about the causal impact. It could be that private school kids have rich parents, don’t move house as often, or any of a dozen unobservables. Just as the positive correlation between AWAs and wages doesn’t provide any useful causal evidence, so too correlation doesn’t mean causation in the case of public and private schools. My guess is that if we take a given child, she would be no more civically active if she attended a private school than if she attended a public school.

While I don’t think private schools have a special gift for turning kids into what Robert Putnam would call “social capitalists”, neither do I think that the typical private schools does a worse job of teaching tolerance than the typical public school. That’s basically why I support private schools getting government dollars: the per-child government funding to private schools is only about 55% of the per-child funding to a public school, so the taxpayer saves 45%. It may be the case that private schools have some positive externality (Caroline Hoxby argues that competition from private schools has the potential to ‘lift all boats’), or negative externality (if private schools skim the cream, the peer effects in public schools may go down), but I basically think that the best thing about private schools is that every kid who goes there saves you and me about $5000 ($11,000-$6000).

As I understand it, you’d now like to fund private schools on the same basis as public schools. The problem with this is that it takes away the best argument for private school funding. You now have to debate in an area where we have very little evidence either way. So far as I’m aware, there’s not a single Australian study that estimates the competitive benefit of private schools on public schools; not a skerrick of research that tries to value the lost peer effects for public schools. So all one can then do is to fall back on general principles, claiming that the private sector works better than the public sector. Well, maybe it does, but if you’re arguing that we should transform school funding, it would be nice to have more than theory on your side. Given the current level of private sector investment in Cape York, it’s hard for me to have much faith in private school entrepreneurs to set up and run schools there.

But let me return to the one point on which I agree with you: making the SES funding formula more progressive. At present, private schools are funded based on the average income of the postcodes where the parents come from. But there are plenty of rich parents living in poor neighbourhoods. So in Imagining Australia, we argued that a better-targeted scheme would be to ask parents for their taxfile numbers, and target private school funding based on a five-year average of parental income. We could make the ‘voucher amount’ transparent to parents (as we don’t at the moment), so as to encourage schools to charge differential prices to low-income parents. Your proposal would take private schools in affluent areas out of the government funding system. Mine would take schools with rich parents out of the government funding system. The difference is subtle, but important, methinks.

My own work has been pretty critical of what economists call ‘school productivity’. It worries me that education policymakers in Australia tend not to report outcomes, are reluctant to deviate from uniform salary schedules, don’t look at empirical evidence when it comes to choosing the right curriculum, and in many cases seem wedded to class size cuts (a policy outcome I think has minimal benefit once class sizes get below 30). I suspect you would agree with me on the diagnosis, but unlike you, I’m pretty optimistic about the ability of public schools to reinvigorate themselves. When it comes to delivering educational opportunity to the most disadvantaged, the private sector doesn’t have much of a track record.

Yours, in solidarity,


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