Study: Competition from Private Schools Boosts Achievement and Lowers Costs

New findings by Harvard Graduate School of Education Assistant Professor Martin West and University of Munich Professor Ludger Woessmann show that competition from private schools improves achievement for both public and private school students, and decreases overall spending on education.

The study, which was featured in the August 2010 issue of the Economic Journal, systemically measured the causal impact of private school competition across countries. The researchers found that students in countries with higher proportions of children enrolled in private schools score higher on internationally comparable exams.

"Our results suggest that students in public schools profit nearly as much from increased private school competition as do a nation's students as a whole," West and Woessman note. "Competition from private schools improves student achievement, and appears to do so for public school as well as private school students. And it produces these benefits while decreasing the total resources devoted to education, as measured by cumulative educational spending per pupil."

In order to determine whether competitive pressures from private schools increase the productivity of the school system as a whole, West and Woessmann analyzed Programme for International Student Assessment (PISA) data on the mathematical, scientific, and reading literacy of nearly 220,000 students in 29 Organization for Economic Co-operation and Development (OECD) countries. They also used PISA data on students' background and the characteristics of each student's school, including resource levels and whether the school is public or private.

The results showed that a 10 percent increase in enrollment in private schools improves a country's mathematics test scores on PISA by almost half a year's worth of learning. A 10 percent increase in private school enrollment also reduces the total educational spending per student by over 5 percent of the OECD average.

The size of the private school sector ranges widely across countries. In the Netherlands, more than three quarters of 15-year-olds attend privately operated schools. Private school shares in Belgium, Ireland, and Korea are well above one half. By contrast, the share of students in privately operated schools in Greece, Iceland, Italy, New Zealand, Norway, Poland, Sweden, and Turkey is below 5 percent. Just over 6 percent of 15-year-olds in the UK and United States attend private schools.

The researchers' approach to measuring the causal effect of competition between private and state schools uses the fact that the amount of competition in education today has in large part been influenced by the Catholic church's efforts in the nineteenth century to construct an alternative school system wherever the state religion was not Catholic.

This historical period created a 'natural experiment' that led to varying degrees of state and private schools in contemporary educational systems. The researchers estimate the statistical relationship between the size of the Catholic population in 1900 and the extent of private schooling today and use this estimate to isolate the causal effect of private school competition on contemporary student achievement.

Their results confirm that countries with larger shares of Catholics but without an official Catholic state religion in 1900 have significantly larger shares of privately operated schools in 2003 and their students perform significantly better on the PISA test.

"Catholic resistance to public-run schooling in many countries helped create institutional configurations that continue to spur student achievement," said the researchers.