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Legislators considering large scale school choice proposals want information on more than likely schooling outcomes. They look to their fiscal bureaus and economic studies to provide that information. The fiscal notes that must accompany all proposals with revenue or expenditure implications are especially important. Often, fiscal notes must be produced on short notice. The article assesses the fiscal notes that have accompanied the major U.S. charter law and tuition voucher proposals, and to highlight key issues and research needs it assesses fiscal and economic impacts of the proposed Texas (2011-HB 33) tuition voucher program. We assess fiscal notes in terms of research basis for predictions, predicted level of participation (# of choosers), and predicted basis for fiscal impacts, including time trend of effects. Finally, we propose how the fiscal notes might be improved; not just what legislative analysts should do, but also what could be done to make doing a better job easier. (Contains 6 tables and 10 notes.)

A special tabulation of individual student scores from the Texas Assessment of Academic Skills (TAAS) test allowed a ranking of Texas schools according to test score changes ("value added"). The rankings varied greatly by student subpopulation. That is, the vast majority of schools are much more effective with some kinds of students than others. The implied comparative advantages suggest possibly large academic gains just from indicated student movement, even among unchanged, traditional, "comprehensively uniform" public schools, perhaps through well-informed public school choice. Further gains from specialization are also implied by the results. (Contains 6 notes, 2 tables and 1 figure.)

There is widespread concern about differences in the quality of state-run and private schooling. The concerns are especially severe in the numerous developing countries where much of the population has left state-provided schooling for private schooling, including many private schools not recognized by the government. The fees charged by the private schools serving the poor are quite low and they seem to yield better results, but many analysts dispute and insist that private sector quality is unacceptable, and that the only route to universal access to quality schooling is increased investment in state-run provision. Because those claims and counterclaims have seen little scientifically rigorous evidence to support them, this article analyzes data from schools serving the very poor in randomly selected schools in Lagos, Nigeria; Delhi, India; and Hyderabad, India to compare the performance of unrecognized private schools, state-recognized private schools, and zero-tuition, state-run schools. The authors' econometric analysis, which controls for socioeconomic factors and selection bias, shows that children enrolled in private schools significantly outperform children enrolled in the state-run schools despite much greater teacher salary expenditures in the latter. The recognized schools do not consistently fare better than the unrecognized schools. Given those results, and chronic frustration with efforts to improve state-run schools, reform advocates should consider shifting their focus to improvement of private schools, and expand access to them. (Contains 17 notes and 10 tables.)

Freedom of any kind has intrinsic value, and education freedom is controversial, in need of empirical assessment of possible and likely trade-offs between freedom from state control and social goals such as equity and cohesion. Without a reasonable empirical measure of education freedom we can only cite the controversies and choose sides. The growing interest in likely effects of new school system governance structures, especially those that promise increased competition in school systems, would benefit from an objective, quantitative assessment of education freedom, a key element of competitiveness. The key institutional factors that this article measures and combines into an education freedom index are entry barriers, price control, opportunity to specialize (product differentiation), uncertainty about the future scope of the market, and availability of information. Quantification facilitates discussion of the key factors' relative importance, the main components of each, and potential factor interdependence. The formulation of a numerical index raises issues such as the conflicting objectives of index simplicity versus index reality, including proper sensitivity to all of the factors that would theoretically affect the level of freedom and competition, and the nature of market forces and other factors that would dictate schooling practices in the absence of regulation or direct state production. Likewise, the desire to maximize the empirical basis of index components, and to minimize the role of subjective judgment, weighs heavily in the creation of the index demonstrated with data for 2 Canadian provinces. (Contains 3 tables and 10 notes.)

Pressing questions about the merits of market accountability in K-12 education have spawned a large scholarly literature. Unfortunately, much of that literature is of limited relevance, and much of it is misleading. The studies most widely cited in the United States used intense scrutiny of a few small-scale, restriction-laden U.S. school choice programs, and a handful of larger, but still restriction-laden foreign school choice expansions, to assert general conclusions about the effects of "choice," "competition," and "markets." The most intensely studied programs lack most or all of the key elements of market systems, including profit, price change, market entry, and product differentiation--factors that are normally central to any discussion of market effects. The school choice literature is partly driven by a self-fulfilling prophesy. Large steps toward full-blown market accountability are widely seen as too radical to be worthy of study, especially in the absence of directly relevant data. The studies of small-scale school choice programs soft-pedal the large differences between the choices available now and those that could be available under conditions that are the norm in most of the economy and then compound the political feasibility problem by connecting market terminology to the modest effects of the small-scale programs. To address the need for credible evidence of effects of genuine education markets, scholars should look to simulation models, indirect evidence such as outcomes in similar industries, and school systems abroad that enjoy varying degrees of market accountability. (Contains 10 notes.)

Merrifield (2009) provides a useful polemic about the sad state of data analysis too frequently encountered in the school choice literature. Available data come from limited policy experiments with only modest amounts of choice and competition. The effects of very modest changes in school choice on school performance are, as one might expect, small and often not statistically different from zero. Those who study school reform initiatives mistakenly extrapolate from these null effects of small policy shifts to make sweeping predictions about the ineffectiveness of broader policy shifts aimed at expanding choice and competition through creation of new institutions governing the supply of educational services. In debates about how to interpret the existing evidential record and what our priorities for collecting more empirical information about the performance of different educational institutions should be, it is difficult to cleanly separate theoretical priors from empirical evidence. Virtually all empirical investigations rely on theoretical priors to motivate the design and measurement of particular effects. However, Merrifield's call for improved empiricism is worthwhile because it can accelerate the coevolution of researchers' theoretical priors and the accumulated evidential record. I suggest that the empirics of school choice would benefit greatly from separating the issues of state subsidization of education, regulatory mandates for achieving performance goals, and the institutions--private or public--that actually deliver educational services. Furthermore, a more rigorously empirical research agenda can advance school choice debates by squarely addressing six potential pitfalls based on economic theory that arise when attempting to move toward decentralized private provision of educational services. More detailed definitions of competition together with bold, new empirical evidence are clear priorities for school choice research.

Studies of existing best practices cannot determine whether the current "best" schooling practices could be even better, less costly, or more effective and/or improve at a faster rate, but we can discover a cost effective menu of schooling options and each item's minimum cost through market accountability experiments. This paper describes experiments that would create opportunities for market entry and a price system to signal cost and quality benchmarks (current minimum costs) to families and educators to produce information for policymakers. The entry-price system combination has a great economy-wide track record because it harnesses highly dispersed knowledge about schooling practices and exploits self-interest through opportunities to compete. States or school districts can employ one of four possible market accountability experiments to assess what families want from among the schooling options educators prove to be willing to offer and at what cost: (a) large tax credits or a large universal voucher, (b) school district vouchers, (c) competitive contracting out of school management, and (d) charter law adjustments. This paper describes and compares those four ways to discover a cost-effective menu of schooling options and how much each costs, certainly a key element of one of the biggest policy challenges of our times, drastically improving the performance and efficiency of our K-12 system. (Contains 1 note.)

Benefiting from new data provided by experimental economists, behavioral economics is now moving beyond empirical tests of standard behavioral assumptions to the problem of designing improved institutions that are tuned to fit real-world behavior. It is therefore worthwhile to consider the potential for new experiments to advance school choice debates and the daunting task of institutional reform. Deciding which new institutions to introduce and test is an important scientific question. New institutional alternatives are, however, by definition, untested, and empirical arguments to guide this process are difficult to construct without adding more layers of theoretical assumptions. This article analyzes normative criteria that can be used when introducing new institutions for delivering school services. Because of the long time-frames for testing the effects of new institutions and the extraordinarily high stakes for children and families who participate in such experiments, performance metrics that are normally uncontroversial, such as cost minimization, will likely be insufficient for justifying the introduction of new institutions. (Contains 1 note.)

Pressing questions about the merits of full-fledged market accountability in K-12 education, and more limited choice programs, have spawned a large scholarly literature. This article assesses what we know from the most prominent studies and the importance of those findings to school system reform discussions. The studies most widely cited in the United States based their findings on small-scale, restriction-laden U.S. programs, and a handful of larger, but still restriction-laden, foreign school choice programs. The extensive restrictions and small size of those programs make them virtually irrelevant to the widely acknowledged transformational change imperative. Because the most intensely studied programs lack most, and sometimes all, of the key elements of market systems, such as profit, price change, market entry, and product differentiation, they don't help us determine whether unleashing market forces will produce more desired than undesired effects. However, absence of the key elements of market systems did not stop numerous analysts from stating conclusions about "markets," and "competition." So we know a lot about some of the policy approaches to increased school choice, but little about many policy approaches, and less than many people think we know. We know the most about programs and policies too limited in scope to yield much insight into reform policies capable of addressing the transformation imperative implied by the repeatedly alleged "nation at risk" problem. (Contains 203 notes.)

One of the key claims of choice advocates is that it will take diverse schooling options to engage all children in learning. In a school system truly open to new providers of instruction and diverse schooling options, private schools and public schools of choice can vie for customers by trying different subject themes and pedagogies. If a school's products are inferior, poorly targeted, or if its procedures or themes are considered objectionable, parents are free to put their children elsewhere. The program described in this paper, "Core Knowledge," has seen considerable success, but since it may not be everyone's cup of tea, it may be politically challenging to implement it in schools filled through assignment. But, for the same reason, opportunities to offer it selectively through schools of choice may cause much more widespread use of the Core Knowledge curriculum. So, the immediate "news" events are the decisions to use the Core Knowledge curriculum in many New York City schools, and the "news" that will gradually unfold will be the size of the various thematic and pedagogical niches that evolve in New York and elsewhere. (Contains 19 notes.)

There is much interest in the effects of a larger parental role in schooling issues. That role can exist through voice--direct parental involvement in schools and participation in the political process that dictates schooling policies--or through choice from a menu of schooling options. This article addresses the limited understanding and confusion about the latter. The availability of genuine choice varies greatly with the policies (or lack thereof) aimed at expanding it. This article identifies the twelve ways to increase the availability and the affordability of schooling options and discusses the significant attributes of each. (Contains 56 notes.)

Charter laws have been the reform debate's path of least resistance. But the combination of regulatory barriers, open admissions, lack of consumer sovereignty, preferential funding of traditional public schools, and political control of prices means that charter laws may be irrelevant as reform catalysts, or worse. Even the strongest charter laws may offer a tempting, but ultimately unproductive, avenue of system change. Some critics argue that a charter option will expand the public sector, but not improve it much, and decimate the tiny, frail private sector. This article examines what charter laws have in common-concerns about "strong" charter laws. (Contains 1 figure.)

Reviews the many dramatically different forms of school choice proposals, warning against implementing sharply limited and regulated school choice plans and arguing that if the failure of school choice is wrongly attributed to too much choice rather than too little, broader and freer experiments in choice could be politically doomed. Focuses on child centered public funding and privatization. (SM)

Economic downturns expose unsustainable fiscal practices. Widespread fiscal crises create opportunities to compare policy options that address especially adverse circumstances, especially pro-growth fiscal constraints that can stabilize state budgets over [...]

"Measuring Competitive Effects from School Voucher Programs: A Systematic Review" by Ann G. Egalite (p443-464, this issue) concludes that, "overwhelming [U.S.] evidence supports the development of market-based schooling policies as a means to increase student achievement in traditional public schools." Here, John Merrifield writes that, while he would agree there is strong evidence that market-based schooling policies could yield significant school system improvements, the evidence he is referring to is not the studies of U.S. school choice programs assessed by Anna Egalite's article. Merrifield states that this is because U.S. school choice programs did not generate any evidence of full-fledged markets in action (Merrifield, 2008). He says that something as common as genuine market forces needs to be more thoroughly assessed. He warns against making the assumption that there exists a solid body of evidence on the productivity of market-based educational reforms, where none exists, and fears that assumption could lead to numerous, and difficult-to-reverse policy errors. Merrifield posits that school choice program effects examined by Anna Egalite qualify as "quasi-market" (Barber, 2012, p. 215) outcomes; government-controlled entry, government-set prices, often a ban on profit, and programs that do not create a level playing field (or close) between public and private schooling options. With entrepreneurs entering or exiting regions on the basis of tuition-price signals indicating profit-loss potential, Merrifield comments that since we can only measure quasi-market effects from contemporary U.S. evidence, we need to turn to historic and foreign (Coulson, 2009) evidence to gain some insight on the differences between market and quasi-market outcomes. The article then asks the question: "Are quasi-market settings good market experiments, or are they dangerously misleading?"

On April 22, 1998, the Children's Educational Opportunity Foundation announced the availability of CEO Horizon Scholarships to residents of the Edgewood Independent School District (EISD) in San Antonio, Texas. The [...]

In this article, the author answers Mark Holmes's comments on his article "Imagined Evidence and False Imperatives." Certainly, readers can see in Holmes's comment the prevailing disagreement about the importance of existing data sets to an assessment of the effects of competition and other aspects of genuine markets. Holmes acknowledges the limitations of the school and school system settings generating data studied to assess the effects of school system competitiveness but then argues that the findings are generally significant, citing many of them. The author argues that the widely cited findings are only narrowly significant, that small size of programs, or highly prescriptive regulation, or both, preclude observation of effects of anything more than modest rivalry in action, not the competition present in most of the economy. With this in mind, the reader would be well advised to frequently return to the Holmes comment and thereby benefit from enough solid investigative ideas and issues to comprise the life's work of many scholars.

Numerous empirical models connect individual student test scores or average test scores to theoretically plausible policy and socioeconomic variables. Although the models were created to test for the effect of [...]

Choice and Competition in American Education Edited by Paul Peterson Lanham, Md.: Rowman and Littlefield, 2006. Pp. vii, 274. $21.95 paperback. Paul Peterson's Choice and Competition in American Education, a [...]

Even in relatively backward societies, extensive division of labor and specialization of function is required to make effective use of resources. --Milton Friedman (1962: 12) In most of the economy, [...]

The present U.S. education system is shaped by a political process in which constituents collectively determine how to produce education. Political campaigns, lobbying, and voting establish schooling options, how to [...]

This special issue of the Cato Journal explores the nature of a competitive education industry (CEI) by examining the key ingredients of and minimal requirements for a true education market. [...]

In 1998, a unique voucher program began in the Edgewood District of San Antonio, Texas. Unlike the other privately funded programs, the Children's Education Opportunity (CEO) Foundation will pay the [...]

The problem of reservoir construction and water allocation is addressed by using an optimal timing model

By Terry Moe Washington, D.C.: Brookings Institution, 2001. Pp. 350. $29.95 cloth, $22.95 paper. In a timely work, Schools, Vouchers, and the American Public, Terry Moe considers a number of [...]

One of society's most important, and difficult, tasks is to change institutional arrangements when an existing one is no longer appropriate. It is especially difficult when the status quo has worked well for a long time, and is deeply entrenched legally, economically, and socially. Free capture is the best 'allocation' (implicit) scheme as long as pumping plus desired springflow (PPDS) is below recharge. If PPDS overtakes recharge, free capture is no longer acceptable. A new institutional arrangement recognizing the scarcity of the common pool resource should be implemented. Scholars have devoted much effort to the design of alternative allocation schemes for scarce common pool resources. Because of inattention to transition issues, institutional change becomes more costly, and it is delayed, sometimes for a long time. With some examples from the struggle to allocate the water of the Edwards Aquifer of South Central Texas, this article explores the economic and political issues, and suggests ways to address the major implementation problems and still end up with an efficient allocation mechanism.

Sensitivity analysis (SA) is often absent, and when present, it is under-utilized. SA can do more than illustrate the implications of uncertainty. SA can make a Benefit-Cost Analysis (BCA) much more informative, can discourage abuse, and can make inadvertent bias more transparent. SA makes it harder for public officials to ignore BCAs that get in the way of special interest politics. Those features are especially important for environmental policymaking. SA could help change the environmentalist attitude about BCA that has produced outright prohibitions of economic analyses such as can be found in the Water Pollution Control Act, the Clean Air Act, and the Endangered Species Act. SA is a non-confrontational way to handle controversy about key assumptions, calculation methods, and projected data. SA can make public officials more accountable, and SA makes their decision making criteria more transparent. SA lengthens the shelf-life of a BCA, and within a draft BCA, SA can help allocate research resources and narrow the range of relevant alternatives. A case study of a proposed reservoir illustrates many of the benefits of using SA more extensively., I. INTRODUCTION Nearly everyone generally agrees that decision making is a comparison of benefits and costs. Beyond the abstract, there is much controversy, especially about giving benefit-cost analysis (BCA) a [...]

A model of optimal harvest path for resource stock recovery and efficiency is presented. The model takes into account the transition to an efficient allocation method of environmental management and in doing so points out the shortcomings of contemporary environmental policy. The transition towards an optimal harvest path method of allocation is the single most neglected aspect of any environmental policy, and is addressed.