Thursday, 1 November 2007

Addressing Voucher Deficiencies

In a previous post, I outlined my two qualms with education vouchers:

1. The flight of the middle classes to better schools, due to reduced deadweight costs.
2. That poorer children require more expensive education, and yet are least likely to get it.

I would like to examine a different idea: reverse-auctioning children to the bidder who offered to teach them for the least amount of money.

You'd need to collect a bit of information about each child and hir parents - household income, geographical location, disabilities and so on, not more than about four variables. Then the children can be collected up into tranches of similar kids for consumption by schools.

The advantages of such a system would be:
1. The most difficult children to teach would get extra money to pay for their education.
2. Schools could specialize in teaching particular kinds of children without fear of collecting 100% difficult children - even if they did, the financial rewards would make it worthwhile.
3. That every child would get an "equal" education.

The disadvantages being:
1. Parents don't get a say in the matter.
2. Presuming there is an open market, new "schools" could easily buy tranches of children and then teach them really badly, skimming the money off for a profit.
3. It's impossible to capture the additional cash that some parents are willing to pay to get a better education for their child, leading to there potentially being less cash in the system as a whole. Simultaneously, parents would still be able to buy home tutoring, etc, for their children, partially defeating advantage(3).

Adding a performance bonus for successfully getting children to target educational milestones would help negate disadvantage(2).

Adding some sort of parental "veto" (which puts the child back into the pool for a second round of auctions) would help with both disavantage(1) and disadvantage(2). Since all schools should become equal over time, there should be little reason to veto a bid eventually. Repeated vetoing could lead to problems.

Anyway, I put the notion out there in the hope of some constructive comments.


ps. it occurs to me that a lot of the problems of vouchers would go away by awarding vouchers to a value inversely proportional to parental income - since poor kids are likely to do less well - however, I further suspect that schools would pick "the best of the worst", further clustering the worst pupils in the worst schools.

pps. a possible alternative to a bid-down auction could be a bid-up auction played in several stages - each child starts out with a ~£3000 fund. Schools make offers for children they think that they can teach for £3000. Any kids not taken up (all of them?) would have £1000 added to their fund. Schools bid again for the kids they want to teach at that price point, and so on up. Parents can either pick a school offer, or they can reject all offers, and accumulate half the £1000 for the next round. Parents can perhaps make 5 refusals. There are probably weaknesses in this approach, it's just something that occurred to me right now.


Mark Wadsworth said...

Nope. Far too complicated. A libertarian solution should try to achieve as much as possible with as few rules as possible and for the lowest price possible.

Even assuming that there is a link between the amount the State spends on state education per pupil and the quality of education they get (which I very much doubt), this is easily fixed: set the value of the vocuhers at 75% or so of average spend per state-sector pupil, in other words about £5,000.

That way, the more kids leave the State sector for the private sector, the more money there is left per pupil in the State sector.


sanbikinoraion said...

Aha. Very clever.