Tuesday, May 17, 2005

Envisioning a Market in Education

Markets provide diverse goods to diverse people. A market in education would provide much higher quality education to the poor at much lower prices. And eventually high-end innovations in education would become available at lower and lower cost to all.

Just as the grocery industry is very diverse, so too would an education industry be very diverse.

The second-fastest growing segment of the grocery market, and the one that will soon have dominant market-share, is the Sam's Club/Costco superwarehouse-style grocery. These places provide groceries that are amazingly cheap. They really do sell groceries at wholesale prices; most small retailers buy directly from these wholesalers. And while their selection may not compete with Albertson's or Safeway, they have a remarkable range of very high quality food at such cheap prices. And, of course, there is Trader Joe's, which is almost a mini-Costo for the gourmet, offering Whole Foods-style groceries at much lower prices. Meanwhile the main grocery chains are learning to provide a broader range of health foods, on the one hand, and lower prices, on the other. And we can buy food at 7-11s and gas stations; we can have it delivered to our doors; we can buy some things via mail order; we can eat at restaurants, we can grow some of our own food, etc. The "Whole Foods" analogy was a vignette of just one of many, many different educational niches that would blossom in an education market.


Right now, there is a for-profit chain that provides education for at-risk students (Ombudsman, http://www.ombudsman.com/). Contrary to the claim that private education will "cream off" students, this chain specializes in educating in those students for whom the system has failed: drop-outs or near drop-outs. Often they rent space in a strip mall, install a room full of computers, and run four "school days," one from 8-12, another from 12-4, and a third from 4-8 p.m. Students complete the work for their high school diplomas by working on self-paced instructional materials on-line. A teacher is available to help the students if they get stuck.
At the one that I visited in San Marcos, TX, several years ago, the students were very focused and loved it. They loved the autonomy ("Don't have to do what the teacher tells me to do all the time."). They loved the self-paced aspect ("I can go as fast or as slow as I want.") They loved the schedule ("I have a job - or a baby - and can't go to school all day.") They were less bored and there were no discipline problems (and remember, these are the "at-risk" students who are usually considered trouble-makers in a normal classroom).

I have seen a lot of conventional at-risk programs run by public school districts themselves, and I would say that this bare-bones for-profit program was better than 80-90% of the much more expensive programs that I've seen run by public schools.

At the time that I saw the school in the mid-90s, the curriculum was relatively dull. But improving on-line curriculum is simply a matter of development, which is often limited by the extent of the market. I'm sure that the materials are better now and, if the market was, say, a $20 billion market instead of a $5 million market, one would see much, much better materials being developed. One of the top officers at a leading educational software company told me explicitly once that they did not design self-paced software that would replace the teacher - all of their software was designed to assist the teacher. He pointed out that public school districts wouldn't buy software if the teachers felt threatened.

And with better electronic teaching, human teachers can increasingly focus on the more human aspects of education.

The KIPP chain of charter schools, http://www.kipp.org/, is widely recognized for having created superior academic schools for inner-city neighborhoods. They have longer school years, better discipline, and better academic performance with the same students in the same neighborhoods. They have a distinctive training program for new principals in which the prospective principal is required to spend a full year as a trainee at an existing KIPP school in order to learn from the inside how to re-create the system at a new site.

I do think that it is very, very important for people to learn how to see how markets provide a simply amazing array of ever-improving goods at ever-decreasing cost. Once one learns to see the world in this way (and it is a way to watch the world around us, how to determine salience), one is constantly astounded. There is every reason to believe that a market in education would be as effective at creating an amazing array of educational options of ever-improving types of education at an ever-decreasing cost.

The poor today in the U.S. have refrigerators, televisions, phones, vacuum cleaners, stoves, and a host of other conveniences. Why don't we let the market produce good educations for them?

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