2010 July 01 Thursday
School Vouchers In Chile Yield Modest Improvements

Small improvements but that beats the vast bulk of educational policies.

RENO, Nev. With the effectiveness of school vouchers a hot topic of debate, researchers from the University of Nevada, Reno, the University of Pennsylvania and the University of Chile have completed a lengthy study on the effects of Chile's school reforms in 1981. Along with other school decentralization efforts, the reforms included making Chile the only nation in the world to have a nationwide school voucher program.

Most notably, the study, which looked at students who began school in the early 1970s all the way up through students who began school in the early '90s, showed that the reforms increased high school graduation rates by 3.6 percent, and increased college-going rates by 3.1 percent. It also increased the rate of those completing at least two years of college by 2.6 percent, and the rate of those completing at least four years of college by 1.8 percent. The voucher program also significantly increased the demand for private subsidized schools and decreased the demand for both public and nonsubsidized private schools.

Think of it this way: Chile implemented many a free marketer's dream for how to fund education and the result was a small increase educational attainment. This is not radical improvement. Though it is more improvement than the results of standard left-wing proposals for education: more money focused on paying teachers more and throwing more teachers and bureaucracy at the least intellectually able students.

Earnings reductions due to delayed entry into the workforce canceled out any hoped for gains in income due to higher levels of education.

In addition, although opponents of school voucher programs have long theorized that vouchers would mostly benefit the rich, this study showed that individuals from poor and non-poor backgrounds in Chile, on average, experienced similar educational attainment gains under the voucher program. And, there was also a modest reduction in earnings inequity once the voucher reforms were enacted. However, overall, the reforms did not lead to increased overall average earnings.

"The reform reduced the number of people ages 16 to 25 in the workforce by about 2 percent," explained Sankar Mukhopadhyay, assistant professor of economics at the University of Nevada, Reno, "because more people were staying in school longer. So, the earnings benefits of having greater educational attainment were at least partly offset by the delay in entering the workforce."

Colleges offer far too many majors that do little to nothing to increase productivity. In a rational system where policy was set by a wise and benevolent dictator most college majors would not be eligible for any taxpayer-funded aid.

If governments really want to fund education in a way that would raise living standards then let me make a modest proposal: scale the level of support for college majors based on average starting income of graduates of majors in each subject. Offer no financial aid for majors that get paid the least and the most financial aid for majors that get paid the most. Engineers would get the most financial aid. Not coincidentally, engineers add more economic value to the economy than the vast majority of other occupations.

Share |      By Randall Parker at 2010 July 01 09:24 PM  Education

Black Death said at July 2, 2010 2:35 PM:

It's mildly dissapointing that vouchers didn't produce a greater effect, but at least the effect was positive, unlike most liberal education "reforms," which generally have zero to negative effects. Clearly vouchers aren't the panacea for all educational woes that some libertarians like to think, but they do help. Moreover, it's foolish to believe that any single program will deal with all the educational problems we face, including declining IQ's, cultural biases against learning, family dysfunction, obstructionist educational bureaucracies and teachers' unions. Most parents of poor kids in urban ghettos may not care about the kind of eduucation their kids receive, but for those that do, they should be offered the opportunity to get their children out of the rotten public schools, especially if it doesn't cost anything.

I like your suggestion to tie financial aid to graduates' starting salaries. We clearly need more engineers, scientists and healthcare graduates. Ethnic studies, gender studies and art history majors need not apply. Subsidizing such useless fields of study is a bad deal for the students, who get stuck with mountains of nob-dischargable debt, and taxpayers, who ultimately foot the bill.

Scott said at July 3, 2010 5:27 AM:

The most important item within the report was the fact that students who were grouped by ability did better than those who were mixed. This is particularly important since public schools have implemented differentiated instruction which is a farce that combines students of various abilities together and expects a teacher to cater to them individually. It makes social engineers feel good, but dilutes the overall rigor of the class. Those who can won't, and those who cannot will.

The Sanity Inspector said at July 3, 2010 7:21 PM:

Somewhere on the web there's a bitter spoof about graduate school, likening it to a living body's metabolism. Candidates (and their money) are ingested as raw material. They are transformed into low paid graduate assistants, metabolizing the workings of the school. They are then excreted as unemployable PhDs.

Randall Parker said at July 3, 2010 9:10 PM:


Thanks for pointing that out about students grouped by ability doing better. I missed it. Of course, it makes perfect sense. Highly correlated skill sets among students allows a teacher to teach at a pace that maps well to all the students in the room.

Sanity Inspector,

Higher education is a huge source of waste in the American economy. It cries out for economic rationalization. I expect a declining economy to force some of that rationalization.

Mike said at July 4, 2010 1:21 AM:

"Ethnic studies, gender studies and art history majors need not apply."

Any thing with "studies" at the end isn't an actual subject but a jumble of various others subjects, so little will be lost by removing these majors.

In said at July 6, 2010 11:27 AM:


In principle, I'm opposed to the idea that education is primarily about producing the most productive drones for the economy. I think there is a huge cultural problem (not reduced much by this blog I'm afraid), an over importance put on achievement and an ideological obsession with economics (race to nowhere). People have come to serve the economy more and more rather than the other way around. This is why we can't talk about difference in ability, let alone touch the subject of race and IQ without offending somebody. Status doesn't need to be based as much on economic attainment as it is. Education is also (ideally) about preserving our heritage and making people virtuous and no doubt other benefits.

So at first I recoiled at your recommendation, but the more I thought about it, the more I think it would could be beneficial. It would take money from rent seekers by shrinking humanities and other departments. More significantly I would expect as you starve arts and humanities departments at universities, something purer, better, untainted by grant money would arise in its place. For example we could see more amateurs producing better quality arts and literature.

bill said at July 7, 2010 8:43 PM:

"Thanks for pointing that out about students grouped by ability doing better. I missed it. Of course, it makes perfect sense. Highly correlated skill sets among students allows a teacher to teach at a pace that maps well to all the students in the room."

Peer effects matter more. Teenagers want to fit in. They neither want to be nerds nor fall to the bottom of the class (the former is worse). By grouping them according to ability you remove the social penalty for being a good student.

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