Can Schools Compete? Competition among Schools Plays a Small Role in Parental Decisions about Where to Enroll Their Children

The divisive debate on school competition rages on in the U.S. and many countries and is not helped by inconsistent research findings of the effect of competition on schools and students. A new report by the Grattan Institute, The Myth of Markets in School Education, takes a different tack by analyzing school education markets in Australia. The report shows that even in a country that has been a leader on many school competition policies, there is little competition among schools that will actually increase student performance. The reality is that competition does not drive enough parents to schools with higher levels of performance. Evidence of the effect of school competition on performance is highly inconsistent. Most studies find that increasing school competition has a positive, but very small or statistically insignificant effect on school performance. A minority of studies finds much larger effects--positive and negative. Researchers who study the effect on competition in school choice group their research into three categories: #1. How much choice do parents actually have to select a school and move freely from one to another? Competition is often assessed indirectly by measuring school choice. However, this general picture lacks information about what students and their families do. For example, parents may be allowed to choose schools outside their local area but regulatory restrictions and practical constraints may prevent them from actually getting into the school of their choice. #2. How many schools can parents actually choose from? On average across OECD countries, 14% of schools are private, but in most OECD countries fewer than 10% of schools are private. In Australia, 36% are private, and more than half of schools are private in Belgium and Chile. Comparing these figures presents several problems. Differences in funding, governance, and management mean a private school in one country can look very different from private schools in other countries. #3. What is the relationship between parents' perception of choice and the competitive pressure felt by schools? Perception does not always equal reality. Observers must be cautious in drawing definitive conclusions regarding the actual amount of choice and competition from surveys of students and educators in schools. In short, school competition is difficult to measure. Many indicators have been used, but all have substantial failings. There is a gap in the evidence on how much school competition actually exists. Choice in Australia Australia has long pursued policies of school competition. The state of Victoria was a world leader in granting schools autonomy nearly two decades ago, and other states have followed suit to varying degrees. Over one-third of Australian schools are private schools, and current trends will have half of secondary students in private schools in less than a decade. Australian governments also provide considerable funding for parents to send their children to private schools. Given these policies and indicators, we would expect much greater school competition in Australia than, for example, the United States. To measure the number of schools that face competition from other schools, the report measured for each school: #1. How many schools are in its local market? Each local school market was set at just under a 14-mile radius; 95% of the population travels fewer than 14 miles to school. As an example, a randomly selected school in southeast Queensland that sits just outside of the main metropolitan areas has 25 other schools in its local market. #2. How many of the other schools in the local market are performing at a level as high as or higher than the school being measured? Standardized tests were used to measure performance. A school was considered a competitor if it performed at least as well as a given school over time. Fourteen of the 25 schools in the Queensland example were at least as high-performing according to national assessments. …