Competition Improves Performance

Published January 1, 2009

A new study released by the C. D. Howe Institute in Toronto shows when schools have to fight for funding, students—and taxpayers—get more for their money in the form of improved scores on standardized tests.

“The study shows that when schools have to fight for public funding by attracting students, those schools compete and students perform better,” said Ben Dachis, a policy analyst at C. D. Howe, which released the study in October.

Canada is a ripe arena for this type of research, as each province oversees its own education system, and four provinces (Alberta, Manitoba, Ontario, and Saskatchewan) each offer two distinct, publicly funded school systems, one secular and the other containing Catholic schools, also known as “separate schools,” which are open almost strictly to children of Catholic families. Both systems receive equal government funding per student.

Measuring Impact

Researchers first determined whether Catholic parents—the only ones with choices about where to send their children to school—are willing to move their students between schools. If they weren’t, school leaders wouldn’t have an incentive to keep or attract students and funding.

Instead of tracking individual students through the school systems, researchers examined how school openings and closings in one system affect the other within a defined geographic area.

They discovered that every time a new public school opens, the impact is felt in the separate school system in the form of decreased enrollment, and vice versa. The effect is magnified in neighborhoods that have a 50 percent or greater increase in new homes from one year to the next or where there is a high proportion of Catholic families.

In such neighborhoods, when a new Catholic school opens, neighboring public school enrollments drop 9.6 percent and neighboring Catholic school enrollments drop by 9.7 percent. When a new secular school opens, by contrast, the enrollments at nearby Catholic schools decline by about 3.9 percent while secular schools lose 9.3 percent of their students.

Better Grades

The study also measured the effects of choice on student achievement, by comparing third- and sixth-grade students’ standardized test scores in reading, math, and writing between 1998 and 2005.

In neighborhoods with few Catholic families, the changes in students’ average test scores were minimal—less than .5 percent in all three subjects. But in areas heavily populated by Catholic families and where new housing is being built, students’ scores improved between 4 and 9 percent.

“The results suggest that if all families—rather than just Catholic families—could exercise choice between school systems, the incentives for public school administrators to improve quality would be stronger yet, with potentially significant impacts on student outcomes,” the authors wrote.

“One thing that distinguished this study from many others is the scope,” Dachis said. “A lot of school choice systems are limited; you can’t extrapolate the results of limited programs the way you can with this large of a study.”

Researchers used data for roughly 325,000 public school students and 165,000 separate school students.

The study divided the students into five cohorts, beginning with those in third grade in the 1997-98 school year and sixth grade in the 2000-01 school year, and ending with those in sixth grade in 2004-05.

Exporting Results

The study also notes fully private schools aren’t a necessary condition for choice to make a difference.

“School choice can exist within a fully publicly funded and operated school system,” the authors wrote.

Since U.S. systems don’t include publicly funded religious schools, the authors’ conclusion supports the expansion of charter schools, says Andrew Campanella, spokesman for the Alliance for School Choice, an advocacy group based in Washington, DC.

“Ideally, parents would have a whole menu of educational options: vouchers and tax-credit scholarships, charter schools, great traditional public schools, homeschooling, virtual schools,” Campanella said.

“This study is a great example not only of how choice works, but it also shows that choice isn’t an American idea,” Campanella continued. “Other nations are finding success, and if our kids are going to compete in the global economy, we need to find it, too.”

Hilary Masell Oswald ([email protected]) writes from Denver.

For more information …

“School Choice and the Benefits of Competition: Evidence from Ontario,” by David Card, Martin Dooley, and A. Abigail Payne, C. D. Howe Institute, October 2008: