Discussion: (0 comments)
There are no comments available.
View related content: Economics of Education
District of Columbia Public Schools
The program Mitt Romney referred to as a “model for parental choice programs across the nation” was saved from closure by an agreement between the office of the Speaker of the House and the Obama Administration last Monday evening. Since 2004, The DC Opportunity Scholarship program has been distributing vouchers worth up to $7,500 to low income students in Washington to allow them to attend private schools of their choosing. Originally passed as part of a “three sector” solution to the woes of the DC public school system, the funding for the program was paired with increased funding for both traditional public schools and charter schools. Until Monday, the Opportunity Scholarship part of the appropriation had been removed from the President’s 2013 budget.
School vouchers are a contentious issue. Some people see them as a diversion from solving the real problems of public education; others get hung up by government dollars heading to predominantly religious schools. Without wading into these broader philosophical arguments, we can say that we have learned several important lessons from this program.
According to a government-sponsored study, led by Dr. Patrick Wolf at the University of Arkansas, the program increased the graduation rate of students offered vouchers by 12 percentage points (from a rate of 70% to a rate of 82%) and the graduation rate of students that actually used vouchers by 21% (from 70% to a whopping 91%).
Graduating from high school is extremely important in America today. According to a 2005 paper by prominent economist and former member of President Obama’s Council of Economic Advisors Cecilia Rouse, a high school graduate on average makes around $260,000 more over the course of his or her lifetime than a high school dropout. In a 2004 paper, healthcare economist Peter Muenning found that high school graduates live longer, healthier lives, to the tune of around $85,000 in monetized quality-adjusted life years.
Similarly, society writ large sees benefits from additional high school graduates. That $260,000 in increased earnings is taxed, leading to around $59,000 in revenue for the government that would not exist absent high school graduation. Additionally, economists Lance Lochner and Enrico Moretti found in a paper from 2004 that each additional high school graduate leads to approximately a $28,000 decrease in the cost of crime over the course of their lifetime(both from damages caused by crime and the costs of adjudication and incarceration). All told, the public and private benefit of a high school diploma is around $430,000.
The cost of the vouchers and administration of the program came to $14 million per year, or $70 million over the five years in which the program was evaluated. By simply multiplying the increased rate of graduation by the 3,512 students who were offered vouchers in the study, we can conclude that there are roughly 421 more students walking the streets of DC with high school diplomas than there would have been absent the program. Multiplying that number by the value of a high school diploma yields a benefit of over $180 million, a return of a over $2.50 for every dollar spent.
This benefit took place, though, in a system restricted by enrollment caps and participation in a randomized control trial experimental evaluation. Remarking on the new agreement, Secretary of Education Arne Duncan indicated that around 1,700 students per year would be allowed to participate in the program (even though the enrollment cap has been lifted, the overall appropriation limits the number of scholarships that can be distributed). Over the lifetime of their participation in the program, we should expect to see a little over 200 more graduates from amongst these students than if the program did not exist, yielding a benefit of over $87 million.
By playing with the underlying assumptions of the above calculations, we can estimate other (purely speculative) benefits. Say, for example, more students were allowed and chose to participate, which is not unreasonable given the low quality of many DC public schools; in this case we would expect to see even larger benefits. Just as easily, as more students participate in the program, the rate of benefit might decrease as a different type of student would be drawn to the program.
Something makes me think, however, that this is not the type of conversation that drove the compromise on the issue. Even in contentious arguments regarding deep-seated perceptions of how the world should operate, it is always helpful to remain grounded in the world in which things actually do operate, and inform our discourse with what we’ve learned through its observation. Careful observation of the DC OSP found that it had positive benefits that should be seen by participants and the greater community for years to come.
Michael Q. McShane is a research fellow in education policy at the American Enterprise Institute.
There are no comments available.
1150 17th Street, N.W. Washington, D.C. 20036
© 2014 American Enterprise Institute for Public Policy Research