June, 2011

The Political Economy of D.C. School Choice: An Institutional Analysis of the Washington, D.C., Opportunity Scholarship Program

  • Allison Kasic

    Associate Director of Research, Charles Koch Foundation
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Economic theory gives us many reasons to think that school choice programs would address several problems plaguing our nation’s public-school system. This thesis examines one attempt—the Opportunity Scholarship Program (OSP) in Washington, D.C.—to implement that theory to see how the positive predictions of school choice theory play out in practice. The economic case for school choice rests on three related factors: knowledge, incentives, and competition. School choice should facilitate better school–child matches than geographically assigned government-run public schools, as parents can act on their intimate knowledge of their children’s educational needs. School choice should also incentivize parents to be more informed educational consumers and incentivize schools to improve their services in an effort to attract or retain voucher students. These incentives would lead to a more competitive educational marke with improved student performance.

The OSP succeeded in some of these areas but not in others. Evidence from the OSP suggests that at least some students benefited from participating in the program, either by improving their standardized test scores in reading and/or by graduating. There is no evidence that any participants were worse off for having participated in the program. Further, most participants were highly satisfied with their experiences in the program in a wide variety of categories, including safety and school quality. The program was less successful in sparking widespread competition among schools, though some public- and private-school principals did report making changes in the hope of either retaining or attracting OSP students.

The OSP’s features and institutional constraints were key in shaping these outcomes. The wide range of options available to OSP students increased the possibility of finding good school–child matches, though matches were harder to achieve at the high-school level, where there were fewer options. Also key to finding good school–child matches was the wide range of information available to parents, from formal guides to personal connections. Evidence suggests that parents acted as informed consumers, examining substantive school qualities over superficial attributes, when choosing a school. They also improved as educational consumers over time, as school choice provided the incentive for them to become more involved in the educational process. A deciding factor in the OSP’s inability to effect system-wide change in D.C. schools was likely the program’s funding structure, which did not financially punish public schools that lost students to the OSP. If policy makers wish to improve the performance of school choice programs in the future, they should more carefully consider the financial incentives that schools face.