1. School Choice in the USA: Policy Questions and Evidence from Social Experiments Justine Hastings, PhD Brown University Economics Yale University ISPS National Bureau of Economic Research

2. Motivating US Public Education Facts Spending has more than doubled in real terms; achievement has remained constant Over 40 percent of minority students attend high schools with graduation rates under 60 percent “drop out factories” - Balfanz and Legters 2004 Improving quality of education is a key potential driver of economic growth and equal opportunity More so with current growth in light of the increasing wage returns to higher education (Turner 2004; Dynarski 2008; Heckman and LaFontaine 2010; Acemoglu and Autor 2010)

3. Two views Low educational achievement is caused by poverty Conversely, poverty is caused by low educational achievement Suggests a testable hypothesis Can educators and policy makers impact achievement and poverty? “Education is the civil rights movement of today” – Dacial Toll, Achievement First Schools

4. No Child Left Behind Act Student growth must be measured (most districts did not keep data) Student growth must be achieved across the board (subgroup requirements); 100% on grade level in reading and math by 2014 Consequences for not meeting growth targets: School choice Private tutoring set aside funds Restructuring Current administration: Stimulus dollars liked to data; validation

5. Choice Provisions in NCLB “When all students … are provided high-quality educational options, and when parents receive enough information to make intelligent choices among those options, public school choice can increase both equity and quality in education.” - - Dept. of Ed. NCLB Public School Choice Guide Increase in equity and quality generated from Short term ability to attend higher achieving school and benefit from it Long term demand-side pressure for underperforming schools through threat of losing students Both implicitly assume all parents choose for academic achievement when given the opportunity to do so If disadvantaged families place less weight on academics; schools serving them have little pressure to improve (position 1) If proximity is important and capacity constraints binding, competitive pressure may be muted in urban areas of dense poverty (LA Unified)

6. What have we learned? The ‘choice gap’ can perpetuate the achievement gap Information can erase the choice gap Incentives for information provision are not automatic Schools matter; poverty does not cause poor achievement Charter school entry is important in areas of urban poor density Vouchers have not been politically viable in the US Teachers are an important factor in education Developing alternative compensation models is important for educating urban poor.

7. Choice gap perpetuates the achievement gap Results from policy experiment from public schools North Carolina Estimate mixed logit demand for schools High income parents of high achieving students place largest weights on academics African American parents face trade-offs between social match and academic performance Proximity is a key determinant of choice for many parents; narrowing the effective competitive market among public schools Use demand estimates to simulate demand response if a school were to raise test scores, holding all else constant High-performing schools face strong increase in demand, low performing schools gain little demand from improving Analogy to product markets - Walmart vs. the Mom-and-Pop store

8. Distribution in Difference Between 1st-Choice and Home-school Scores

9. Simulated demand response

10. Information erases choice and achievement gaps Why the gap in preferences for academics? Low intrinsic value (position 1) High information costs (McFadden (2006), Winter et al. (2006)). Analyze data two experiments to test these two hypothesis 2004 implementation of NCLB in North Carolina Field experiment in transparent information within the school choice plan Compare choices of parent for schools before and after NCLB-mandated information on school academic performance Conducted a field experiment with transparent information on school test scores distributed with choice forms to randomly selected. In both cases, demand for outside schools and quality of choices increases substantially Increased weight placed on academics ~ 75,000 in income

11. Distribution of Gains in Score of School Chosen: Received Information vs. Control Group Note: We use the Epanechnikov kernel and the optimal width as computed by default in Stata.

12. Impact on Student Outcomes Attending a school with 1 student-level st.dev. Higher test score leads to a 0.37 to 0.41 increase in own test. Equivalent to observational impact of moving from bottom quartile teacher to top quartile teacher Similar to test score gains for students with highest preferences for academics in prior paper. Opening choice leads with information leads to lowering of achievement gap in the short run.

13. However, issues still remain Proximity is important especially for elementary and middle school students. What do you do with empty schools? What do you do with large urban districts? Enter Charter schools - growing body of research using lottery admissions that show big impacts: Hoxby and Murarka 2009 (New York); Wolf et al. 2008 (DC Vouchers); Abdulkadiroğlu et al. 2011 (New York); Dobbie and Fryer 2011 (New York); Angrist et al. 2011 (Boston); Hastings, Neilson and Zimmerman 2011 (New Haven) Most find substantial positive impacts on math and reading for urban students from disadvantaged backgrounds. What is different about charter schools that fill the void in traditional public schools? Location Teacher compensation (evidence from NC as well) Class hours (substitution for home inputs) No-excuses policy (no excuses why schools can’t raise achievement) Is this a scalable solution?

14. Closing thoughts Achievement is possible for students from all backgrounds Likely not a one-stop solution, however a few guiding principles: Increased choice and compensation reform are likely to help; However, simple economic models are likely to fall short in big ways when implemented in practice, and particularly for those who need social safety nets the most Market design is an important aspect of public and private markets (read Nudge) As with industry Know your customer Test policies empirically using randomized control trials guided by theory Age of data facilitates this

15. And beyond standardized test scores? First cohorts of charter and public school students are of college going and graduation age Evidence from NC (Deming, Hastings, Kane and Staiger 2011) Students coming from lowest performing schools choosing to attend schools with higher college graduation levels Experience significant gains in high school graduation, college enrollment and degree completion. Closes 75% of black-white HS graduation gap, 23% of gap in BA degree completion