Research, not ideology, should guide the for-profit school debate

Gabriel H. Sahlgren

16 August 2012

In a reply to my note on last week’s IPPR report, Rick Muir maintains his position that for-profit schools should be banned. He does so by ignoring some of my critique, while misunderstanding some of it. My conclusion remains: there is no evidence-based argument against for-profit schools.

As a response to my arguing that Muir cites evidence selectively, Muir claims I do the same thing. This is a strange accusation. In a short comment, while noting the overall conclusion based on all research, I can naturally only refer to research that alters the picture compared to the report’s review. But to show that I take intellectual honesty seriously, I give Muir a freebie and point to another study he missed. It finds a small negative effect of Swedish for-profit schools – which I also noted in a speech at Policy Exchange earlier this year. Readers might also be interested in my takes on it.

Muir also notes Elacqua’s study as evidence of selective reading. Why? Because Elacqua suggests that the positive impact of for-profit chain schools in Chile perhaps is due to their benefiting from scale. But this is partly my argument. If for-profit schools scale up and perform better than other school types, this indicates something about the profit motive. In Sweden, for example, ten large for-profit companies run 30% of all Swedish compulsory free schools – whereas non-profit schools remain small and local. Scale, therefore, is clearly important in the debate on profits in education.

Furthermore, Muir does not mention other research of relevance here: in Chile, only for-profit schools enrolling poor pupils increase in size as a result of improving academic results. This indicates that quality induces for-profit schools to scale up among pupils who most need them. Neither does Muir mention Böhlmark and Lindahl’s new study – which finds no differences between the effects of Swedish for-profit and non-profit school competition on overall achievement– nor the results in my paper ’s preferred model. After evaluating all studies, and taking into account that some methodologies are preferred, the picture is not that mixed: there are basically no general quality differences between for-profit and non-profit schools.

And my argument has never been that for-profit schools per se are better than non-profit schools. Rather, the point is that competition can improve achievement, and that for-profit schools produce a supply-side dynamic we cannot achieve without them. Muir claims that ‘Sahlgren quotes some further studies which he claims support his case [for competition]’. This is an understatement. I cite a review article covering all PISA/TIMSS research in which a consistent finding is that private-school competition raises international test scores. This research is not mixed. Although most studies use relatively unsophisticated methodologies, I highlight a paper using a more careful research design. It finds that private/independent-school competition increases PISA scores –among pupils in state and private/independent schools – as well as decreases costs. Since international tests are important in today’s education debate, and since cross-national studies can capture system-level effects better than most within-country analyses, these results are conspicuous.

Instead, Muir repeatedly writes that the official PISA report does not find that competition improves achievement. But all research is not good research– and one has to understand what makes the difference. The PISA report is not an academic paper, and there is no reason why we should discard all proper studies for a report that merely evaluates cross-national correlations. It proves nothing.

It is true that country-specific research on competition and achievement is mixed. Firstly, it is important to note what ‘mixed’ means in this context, namely no or positive results. There are extremely few methodologically sound studies finding negative achievement effects of school competition. Note that even if a policy produces null effects on one metric, it could still maximise welfare. A null impact, as opposed to serious negative effects, is therefore not sufficient to oppose a policy.

Secondly, Muir largely ignores my argument that one has to understand what research analyses and how – while insinuating that I prefer confirmation bias if it favours my argument. This is not true. My upcoming 50,000-word paper evaluates basically all research on school choice and educational achievement, irrespective of results, while also discussing methodologies and analysing system design in different contexts. It also makes the case for comprehensive reform in a way that maximises evaluation opportunities – as I have argued previously, for-profit schools are not enough. Instead, they must be complemented by a coherent reform package that transforms the incentive structure in education.

Overall, the evidence suggests the following: (1) for-profit and non-profit schools perform on a par; (2) for-profit schools scale up more often for the right reason; (3) private-school competition generates better school productivity in international comparison tests; (4) a significant part of within-country research indicates that school choice and competition, properly designed, can improve outcomes; and (5) extremely few studies find negative effects. This does not mean that we should automatically discard (6) research that displays null effects. But we must carefully evaluate systems and studies to understand why there are consistently positive findings in some countries/regions – and on international tests – but more mixed results elsewhere.

Overall, therefore, the case for an outright ban on for-profit schools is simply not grounded in research. My claim against Muir’s ‘normative argument’ was hardly ideological, as he contends, but rather based on my belief that any argument should be backed up by evidence. A key feature of policymaking in my home country has been its reliance on social scientific research – it is time that UK education policy makers, and wonks, also adopt this approach.

Gabriel H. Sahlgren is Research Fellow at the Institute of Economic Affairs. Follow him on Twitter.

Tags: free schools, Gabriel H. Sahlgren, IPPR, Rick Muir, Sweden, Education and health

Submitted by Whig on Thu, 16/08/2012 - 15:38.

Well done for such a powerful defence of your arguments. From a purely common-sense position, it's fair to say that the arguments for and against for-profit 'free' schools are somewhat inconclusive, both in terms of cost and quality - in part because of the small number of them (I realise that's a gross simplification, to me it seems fairly conclusive that there are definite cost and probably quality improvements available). Certainly, they do not seem to produce any negative effects. Therefore it seems incredible to recommend 'banning' for-profit schools on such a basis. More broadly, many people seem to oppose the idea of 'profit' on a purely kneejerk reaction - both politicians and in the broader public discourse. This is partly due to ignorance, a belief that such schools would be run by McDonald's or some such nonsense - although schools run by McDonald's might actually be very good, who knows? But it is also down to a belief that profit is 'bad' per se as it 'withdraws' funds from education and places them in the hands of those greedy entities known as shareholders (ie. most people with pensions or insurance). This view prevails even in free markets and is a very worrying feature of contemporary political discourse. From an economic standpoint, it's hardly surprising that for-profit schools perform better given what economic theory and practice show us is the case. It would be more surprising if the reverse were true and the burden of proof ought to lie on those who propose 'banning' such schools, especially as they have no evidence from the UK to go upon (the only evidence the UK presents is that private schools perform far better than state schools as a whole). My concerns about for-profit schools are, however, rather different. Firstly, if a particular for-profit school were to perform badly, this would doubtless be used as evidence that they are a bad idea - despite the countless number of poor state schools we currently see. Secondly, as you point out, for-profit schools will only have a truly beneficial effect within a wider reform of education, but such systematic and widespread reform is unlikely in the UK, with powerful vested interests in opposition and widespread public ignorance. The fear for any market reform is that it may not create a real market which, when it fails to produce favourable results, is held up as a failure of free markets: witness the banks or the railways.

Submitted by HJ on Fri, 17/08/2012 - 08:05.

Whig is absolutely correct. Opponents of for-profit schools not only do not want to choose for-profit schools for themselves, they want to prevent other people from having the option of choosing them. Therefore, quite apart from the libertarian argument, they would need to demonstrate that ALL for-profit schools must always be inferior to non-profit schools in order to justify not allowing them. Otherwise it is clear that they must, in some instances at least, be advocating preventing parents from choosing a for-profit school that is superior to the non-profit alternative.