Driving Society Forward.
COMPETITION AND MARKETS IN EDUCATION
An essay for EDU3004 Education, Culture & Society Education Studies final year module, School of Education, University of Northampton
10th January 2011
“Competition and markets stimulate improvements, enhance standards and provide dynamism to school life. They should be used wherever possible in our schools system.” Discuss.
In economics competition within markets is desirable. The existence of competition drives down inefficiencies, delivering higher quality goods or services at a lower price. A monopoly exists when there is only one supplier in the market (Sloman, 2007), which can result in an inefficient use of resources. A monopoly supplier can afford to perform poorly as consumers have no alternative, which would be particularly true under a system of compulsory education as in the UK, for whilst there are many schools, geographical limitations such as catchment areas limit school choice, often to only one. This has led researchers to examine whether the kind of competition that exists in business can be used to improve education (Taylor, 2000).
This essay explores the effect of competition in educational systems, drawing on research from studies conducted in several countries, and considers some of the unique issues involved in introducing competition into largely state funded, non-profit environments. Whilst the majority of existing research focuses on results as a means of measuring success, there are other considerations, such as the accessibility of competition and aspects of school experience that are explored below.
To introduce competition into schools, one approach is to allow pupils or their parents a choice of where they want to attend. Lavy (2009) found that in a study of schools in the Tel-Aviv area there was a positive relationship between pupil choice and achievement. Similar effects were also observed by Bradley and Taylor (2009), who found that the changes brought about by The Education Reform Act 1988 and subsequent legislation, which gave schools greater control over budgets and parents more choice over schools, did contribute to improved examination results, however their estimates suggest that the introduction of quasi-markets was responsible for 20-25% of the total increase in examination results observed. They also acknowledged that this figure was likely to be highest in areas where parental choice was also highest (for example, in large cities).
Patrinos (2000) argues that competition can bring about improvements and innovation, and has done just that in several countries, with no obvious correlation between spending on education and results, pointing out that The Netherlands, a country with high choice and relatively low spending achieves better results than the US, which spends more.
Contrary to this Gibbons et al (2008) found only a small positive relationship between choice and achievement in their study of primary school pupils, suggesting that achievement gains from improved choice were limited. They do however speculate that there is a higher positive relationship between choice and achievement in schools that have greater freedom over admissions and practice. Competition is often strongest in those markets with the fewest restrictions on practice, and as such it is possible that this is what Gibbons et al were observing. However as these freedoms only apply to some schools it is more likely that they are able to ‘cherry pick’ their intake to some degree at the expense of other schools.
An integral part of the government’s attempts to inject competition into the education sector has been the use of league tables. A controversial subject, they have induced much debate regarding their usefulness, both in improving standards through competition between schools, and in allowing pupils and parents to make informed choices based on school performance. The debate is particularly fierce in the press with Blake (2010) reporting that children whose parents used league tables to choose their school outperformed those that did not, whilst The Institute of Education online (2010) suggests that using performance tables is significantly better in terms of student achievement than picking at random. This information alone is not sufficient to conclude that competition is increasing standards in general, rather that some parents who live in areas with reasonable access to more than one school are now able to make the logical decision to send their children to the best state school available, whilst others are turned away.
Shepherd (2008) argues that the value of league tables is questionable; with a relatively small difference in performance separating many average schools there can be little to choose between schools that appear hundreds of places apart in the league table. Taking this into account, and even with access to the information, many poorer families do not live close enough to good schools to take advantage of the facts (BBC online, 2008).
The introduction of league tables has placed pressure on schools to achieve and as a result more and more focus is being placed on teaching only that content which is likely to appear in tests. Pupils can be so narrowly prepared that unusual or unexpected questions can cause many more students than usual to fail (Chu, 2000), with some subjects being overlooked altogether as emphasis is placed on those subjects that are examined (Paton, 2008).
It is also worth considering the consequences of underachievement, both in a free market and in education. A business that cannot make a profit will cease trading in a free market, but a state funded school that is not achieving historically has not closed. Tax revenue is still collected and therefore there is no market force applied to the school, no matter how competitive the market has become (Hornberger, 2001), which means that the government has to actively intervene, undermining the very market which they are trying to create. In a free market the closure of one business may be followed by another opening, for any shortage in supply would force up prices, attracting new suppliers into the market. The absence of a price mechanism in the education market prevents this process from happening automatically, but what can be seen is the government undertaking this process manually by threatening to close underperforming schools and re-open them under new management (Garner, 2010) with some having already been closed (Paton, 2010) .
Whilst improvements in achievement may be one of the most apparent determiners of the success of competition amongst schools, there are other factors that carry importance. Lavy (2009) measured several behaviour based criteria and found that improved choice amongst pupils was linked with lower levels of classroom violence and improved pupil-teacher relationships.
There is no official state monopoly on education in England. Choice has existed in the form of private schools and home schooling, and whilst these two options are a real alternative for some, there is an obvious financial barrier to both. These options only exist for those that can afford them, with many families effectively priced out of the market for any alternative to state funded education. For most goods produced in a competitive market this is accounted for with the production of cheaper alternatives, with the purchaser being the consumer, but this does not apply to education. Those that are making the choice are not those that are receiving the education, and there is therefore an inherent unfairness that the child of a poor family is denied the choice. In the case of home schooling Ehow (2010) suggests that there is no financial aid available to parents who home school, whilst Education Otherwise (2010) states that in some cases, particularly for children with special educational needs help is available and that a support package will be forthcoming. The Department for Education (online) have also proposed an increase in access to resources such as access to school sports facilities in order to support home schooling families. This effective exclusion of poorer children is particularly unfortunate as Bradley and Taylor (2009) state that it is those children who were found to benefit the most from the increase in competition that has arisen from legislation over the last twenty years. Though this is the case for school competition, it may not be when it comes to parental choice, as Bradley et al (2000) suggest that there is some evidence that as a result of quasi-market forces the concentration of poorer children in low achieving schools has increased. This supports the theory that those families that are more affluent, and therefore more geographically mobile, are most likely to be able to take advantage of competitive measures, rather than these measures creating general improvements that can be enjoyed by all.
In conclusion, although it had been demonstrated that in several circumstances competition between schools has been a positive force in terms of improving both teaching standards and student achievement, as well as bringing about behavioural improvements, the issue remains that competition just does not exist to an extent that allows market forces to deliver these improvements. The reality is that a great number of pupils live in a catchment area for just one school, and even in urban areas it is more often the school that chooses the pupil rather than the other way around. Even if competition in its purest economic sense can deliver greater efficiency and drive improvements it remains a very difficult task to implement, especially when the government suggests an ideological system whereby the number of children on free school meals is evenly spread across all schools in an area (BBC online, 2008) without any apparent thought of the logistical problems this may cause. Competition can bring about aggregate improvements, but it seems that even if this square peg can somehow reconcile itself with the round hole that is the state education system, we are in danger of further marginalising those people that require state intervention the most.
 It is worth mentioning at this point that Ofsted (Office for Standards in Education) in England has the power to place schools in ‘special measures’ after which the school has up to year to improve. Failing an improvement, the school may be closed (Ofsted, 2001). However one must consider from a business perspective the ramifications of any company operating in a competitive market announcing to its customers that it was so bad that it had no choice but to change. In a monopoly situation however, customers don’t have a choice.
BBC News (2008, online) School Choice ‘Fuels Segregation’, Available from: http://news.bbc.co.uk/1/hi/education/7270861.stm [Accessed 4th January 2011].
Blake, H. (2010, online) GCSE League Tables Help Parents Pick the Best Schools, Study Finds, The Daily Telegraph, Available from: http://www.telegraph.co.uk/education/educationnews/7960759/GCSE-league-tables-help-parents-pick-the-best-schools-study-finds.html [Accessed 4th January 2011].
Bradley, S. et al. (2000) Testing for Quasi-Market Forces in Secondary Education, Oxford Bulletin of Economics and Statistics, Vol.62 No.3, pp. 657-690.
Bradley, S. & Taylor, J. (2010) Diversity, Choice and the Quasi-market: An Empirical Analysis of Secondary Education Policy in England, Oxford Bulletin of Economics and Statistics, Vol.72 No.1, pp.1-26.
Chu, J.M. (2000) Preparing for the AP Test: Dangers of Teaching to the Test, The History Teacher, Vol.33 No.4, pp.511-520.
Department for Children, School and Families (2007, online) Elective Home Education. Available from: http://www.education-otherwise.org/Legal/7373-DCSF-Elective%20Home%20Education.pdf [Accessed 4th January 2011].
Education Otherwise (2010, online) The Law, available from: http://www.ehow.com/way_5849912_financial-homeschooling.html [Accessed 4th January 2011].
Garner, R. (2010, online) Failing schools 'should be closed and pupils moved elsewhere', The Independent, available from: http://www.independent.co.uk/news/education/education-news/failing-schools-should-be-closed-and-pupils-moved-elsewhere-2007936.html [Accessed 4th January 2011].
Gibbons, S., Machin, S. and Silva, O. (2008), Choice, Competition and Pupil Achievement, Journal of the European Economic Association, Vol.6 No.4, pp.912–947.
Hornberger, J. (2001, online) Monopoly, Competition and Educational Freedom, available from: http://www.fff.org/comment/vouchjgh0901.asp [Accessed 4th January 2011].
Institute of Education (2010, online) Should Parents Use League Tables to Choose Schools? available from: http://www.ioe.ac.uk/newsEvents/43418.html [Accessed 4th January 2011].
Lavy, V. (2010) Effects of Free Choice Among Public Schools, Review of Economic Studies, Vol.77 No.4, pp.1164–1191.
Ofsted (2001, online) From failure to success: how special measures are helping schools improve, Office for Standards in Education, available from: http://www.ofsted.gov.uk/Ofsted-home/Publications-and-research/Browse-all-by/Education/Leadership/Governance/From-failure-to-success-how-special-measures-are-helping-schools-improve [Accessed 4th January 2011].
Paton, G. (2008, online) Ofsted: Schools ‘Teaching to the Test’, The Daily Telegraph, available from: http://www.telegraph.co.uk/education/2440091/Ofsted-Schools-teaching-to-the-test.html [Accessed 4th January 2011].
Paton, G. (2010, online) GCSE League Tables: 250 Schools Threatened, The Daily Telegraph, available from: http://www.telegraph.co.uk/education/leaguetables/6977625/GCSE-league-tables-250-schools-threatened.html [Accessed 4th January 2011].
Patrinos, H.A. (2000) Market Forces in Education, European Journal of Education, Vol.35 No.1, pp.61-80.
Shepherd, J. (2008, online) ’Fairer’ School League Tables Misleading – Study, The Guardian, available from: http://www.guardian.co.uk/uk/2008/jan/07/schools.politics [Accessed 4th January 2011]
Sloman, J. (2006) Essentials of Economics, 4th Edition, Harlow: Pearson Education Ltd.
Taylor, L. (2000) Competition and Teacher Pay, Economic Enquiry, Vol.48 No.3, pp.603-620.
© Bradley Dymond, 16th September 2011
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