The Equity Implications of Pricelessness

Free-Only, Subsidized Schooling: A Priceless Equity Disaster || John Merrifield || April 22, 2014

Like so many other well-intentioned government rules, mandating free-only (no tuition charge) public schooling, and perhaps also free-only publically subsidized schooling options, arguably achieves the opposite of the intended result. It likely has a net negative effect on equity rather than the widely assumed significant net benefit to the lowest income families.

Insisting upon ‘free-only’ can seem to yield greater low income family access to the menu of schooling options. But reduced access may be the actual result. With the price control implicit in ‘free-only’, the menu is smaller, lower-quality, less dynamic than it would otherwise be. Because of price control-created shortages, the true menu – what is actually available with ‘free-only’ – may be much smaller than the potential number of suitable schools. Only if the charitable foundations fail to adequately fund shared financing costs for low income families do we have to make a policy choice between better access to a small menu for low income families and increased access to a much bigger and higher quality menu for the vast majority. The Edgewood Voucher experience demolished the presumption that low income families cannot pay some tuition. Many low-income Edgewood families found the money for co-payments, including from philanthropic sources.

So, free-only will yield a benefit that is likely to be tiny in most places – I’m confident that, with shared financing allowed, foundations will shift their subsidy dollars from schools to low income families – and tiny at a very high cost, especially in the long-run. With a free-only schooling subsidy policy we’d forego the dynamic menu of diverse schooling options needed almost everywhere; especially desperately in the U.S. It should also be noted that we don’t help low-income families by taking the shared financing option away from the families with the means to use it; a corollary of President Reagan’s assertion that, “you cannot strengthen the weak by weakening the strong.” In fact, restraining the strong would hurt families of lesser means. Banning shared financing hurts low income families by stifling some development and introduction of instructional approaches that might initially cost more than the per-pupil annual subsidy amount, but eventually fall in price and become widely available. An initial high price paid by high income early adopters, then a falling price until what started as a luxury is available to everyone is the norm for ‘product’ development. Schooling would be no different if price control implicit in free-only did not short circuit the process at the front end; much less innovation because many products do not get off the drawing board.

Furthermore, because insisting on free-only reduces private spending on schooling, which reduces total spending on schooling, we hurt choiceworthy educators and ultimately children by reducing the incentive to become an educator.

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