Research & Commentary: New Study Determines Public Schools Are Not a Public Good

Published May 21, 2018

A new study published by the Cato Institute examines whether public schools are truly a “public good” and concludes they are not. In Is Public Schooling a Public Good? An Analysis of School Externalities, Corey A. DeAngelis, an education policy analyst at Cato, uses Nobel Prize-winning economist Paul Samuelson’s definition of a public good as something that is “nonexcludable … and nonrivalrous in consumption.” DeAngelis then examines the possible positive and negative externalities of public schools compared to theoretical nationwide, universal school vouchers—specifically their cost to taxpayers, their effects on social cohesion, and how well they educate the populace—to determine whether this is true.

“The results of this study suggest that publicly funded government-run schools, relative to private schools of choice, have substantial negative effects on U.S. society overall associated with a less-educated populace, less social cohesion, and increased taxpayer burdens,” DeAngelis concluded. “In 2017, the most conservative model finds a net negative externality of government schooling of around $1.331 trillion, over 7 percent of the U.S. GDP recorded in 2016, while the alternative specification finds that public schooling results in a net negative externality of about half of U.S. GDP in 2016. Note that these are lifetime estimates of the effects of government schools on 50.477 million children relative to whether they would have attended private schools of choice for 13 years in the United States.”

Based on these findings, DeAngelis believes “we should not subsidize government schooling based on the economic argument that it is a merit good. According to the evidence, we should eliminate the negative externalities of government schooling by allowing families to reallocate their educational resources to the private schools that best serve their children. Specifically, states should pass legislation to enact universally accessible Education Savings Accounts (ESAs) to allow families to customize their children’s educational experiences.” 

With an ESA, state education funds allocated for a child are placed in a parent-controlled savings account. Parents would then be able to use a state-provided, restricted-use debit card to access the funds to pay for the resources chosen for their child’s unique educational program. The ESAs could be used to pay for tuition and fees at private and parochial schools, as well as textbooks, tutoring services, educational therapies, and the fees required to take national standardized achievement tests, such as the SAT and ACT. Unused funds could be rolled over from year to year and also be used to offset the cost of higher education.

In January 2018, a survey published by the American Federation for Children, which was conducted by Democratic polling firm Beck Research, questioned 1,100 likely voters in the 2018 midterm elections. Seventy-five percent of respondents said they are in favor of ESAs, including 73 percent of blacks, 87 percent of Hispanics, 77 percent of Millennials, 78 percent of independent voters, and 70 percent of Democrats.

ESAs are broadly popular because they allow parents to exercise their fundamental right to direct the education of their children. Not only are school choice programs like ESAs popular, they are also effective. In May 2016, EdChoice released a report in which it examines 100 empirical studies of school choice programs. Eighteen of these studies used random assignment to measure outcomes, referred to in academia as the “gold standard.” The overwhelming majority of the available empirical evidence makes it clear educational choice offers families improved access to high-quality schools that meet their widely diverse needs and desires, and it does so at a lower cost while simultaneously benefitting public school students and taxpayers, decreasing segregation, and improving civic values and practices.

The goal of public education in the United States today and in the years to come should be to allow all parents, no matter their income level, to choose which schools their children attend, require every single school to compete for every single student who walks through its doors. By doing so, we can make sure every child has the opportunity to attend a quality school.

The following documents provide more information about education savings accounts.

Is Public Schooling a Public Good? An Analysis of School Externalities
This study from Corey A. DeAngelis of the Cato Institute finds public schooling fails both conditions specified in the standard economic definition of a “public good.” It finds that public schooling in the United States has had a net negative externality of at least $1.3 trillion relative to publicly funded universal school vouchers over the lifetime of the current cohort of children in government schools. DeAngelis concludes the federal government should not operate schools at the local, state, or federal levels on the basis of schooling being considered a public good, nor should taxpayers fund government schooling indirectly through the tax system on the basis of schooling being a merit good. He recommends instead that education should be funded directly to students, not to schools, through a universal education savings account program.

Education Savings Accounts: The Future of School Choice Has Arrived
In this Heartland Policy Brief, Policy Analyst Tim Benson discusses how universal ESA programs offer the most comprehensive range of educational choices to parents; describes the six ESA programs currently in operation; and reviews possible state-level constitutional challenges to ESA programs.

Protecting Students with Child Safety Accounts
In this Heartland Policy Brief, Vicki Alger, senior fellow at the Independent Women’s Forum and research fellow at the Independent Institute, and Heartland Policy Analyst Tim Benson detail the prevalence of bullying, harassment, and assault taking place in America’s public schools and the difficulties for parents in having their child moved from a school that is unsafe for them. Alger and Benson propose a Child Safety Account program, which would allow parents to immediately have their child moved to a safe school – private, parochial, or pub­lic – as soon as parents feel the public school their child is currently attending is too dangerous to their child’s physical or emotion­al health.

A Win-Win Solution: The Empirical Evidence on School Choice (Fourth Edition)
This paper by EdChoice details how a vast body of research shows educational choice programs improve academic outcomes for students and schools, saves taxpayers money, reduces segregation in schools, and improves students’ civic values. This edition brings together a total of 100 empirical studies examining these essential questions in one comprehensive report.

2017 Schooling in America: Public Opinion on K–12 Education, Parent Experiences, School Choice, and the Role of the Federal Government
This annual EdChoice survey, conducted in partnership with Braun Research, Inc., measures public opinion and awareness on a range of K–12 education topics, including parents’ schooling preferences, educational choice policies, and the federal government’s role in education. The survey also records response levels, differences, and intensities for citizens located across the country and in a variety of demographic groups.

Competition: For the Children
This study from the Texas Public Policy Foundation claims universal school choice results in higher test scores for students remaining in traditional public schools and improved high school graduation rates.

The Public Benefit of Private Schooling: Test Scores Rise When There Is More of It
This Policy Analysis from the Cato Institute examines the effect increased access to private schooling has had on international student test scores in 52 countries. The Cato researchers found that a 1 percentage point increase in the share of private school enrollment would lead to moderate increases in students’ math, reading, and science achievement.

The School Voucher Audit: Do Publicly Funded Private School Choice Programs Save Money?
This report by Jeff Spalding of EdChoice provides a program-for-program breakdown of school voucher costs and savings. On the whole, Spalding says these programs have provided a cumulative savings of $1.3 billion since 2007, or roughly $3,400 per pupil.


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit School Reform News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

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