whythawk ratings: measuring effective development

Moral hazard is what happens when I spend other people’s money on myself. I don’t care too much about what things cost, or how profligate I may be. But at least I get what I want. Things get much worse when I spend other people’s money on other people. Then I really don’t care what happens and my spending may take on biblical proportions.

Public schools are a public good where politicians spend taxpayers’ money on other people’s children. Schools, frequently, don’t achieve the objectives for which they were set up. Good schools have no way of being rewarded and bad schools no way of being shut down. A recent innovation has been to present parents with vouchers that allow them to pay their children’s annual fee at school directly. That way the same money is being spent on education but parents now get to choose the schools they feel best serve their interests. That vouchers take the place of cash is to avoid the moral hazard of parents spending their money on themselves instead of their children’s education.

This does, however, imply that parents must pay attention to the quality of different schools and that an objective measurement of different schools is possible. Some means of evaluating and rating schools must be present. In general this is achieved through newspapers publishing the annual graduation scores of each of the different schools. That way parents can see which schools are better.

Teachers’ Unions have become quite powerful and are extremely unhappy with these types of metrics and choices. They have convinced governments to prevent publication of individual schools’ results and that a straightforward list is approved. Top schools still get round this by publishing their own tallies.

Vouchers are a significant improvement on ensuring competition between development service providers. However, it will only work where an objective, public and simple method is available for recipients to compare and choose who will serve their needs.

Keywords : schools, money, parents, vouchers, choose, education, moral, objective, care, hazard, unions, individual, government