The Disaster of Centrally Planned Student Accountability

Most of the discussion around public school accountability has to do with school leaders and teachers.  In theory, if we reward or punish school employees for the student outcomes that we care about, the employees will have incentives to improve student level measures.  However, should individual students not also be held accountable for their own performance?  After all, individual students are best able to control their own behavior, so the optimal accountability standard may be set at the student level.  Nonetheless, even an omniscient and benevolent standard setter in the traditional system of schooling would harm many children for the rest of their lives.

In order to graduate high school and obtain a diploma, many students in the United States need to pass a standardized exit exam.[1]  More loosely, all high schools require their students to meet a bundle of standards through 12th grade in order to obtain a diploma.  If standards capture student level productivity, stronger graduation requirements translate to higher diploma value.  If the high school diploma held by the student is valued more by the job market, the student will be able to obtain a higher standard of living.  On the other hand, if standards are raised uniformly for all students within a traditional public school, many children will be harmed as a result of failing to meet the minimum requirements.

Winners & Losers

The beneficiaries of an increase in graduation standards will be those who would have graduated anyway and those who would have not graduated anyway.  The value of the diploma is greater, so those who would have graduated anyway receive a more valuable certificate, and those who would not have graduated can at least say they failed at a prestigious institution.  Those harmed by such a policy change would be those at the margin, who would have graduated with slightly lower standards, but fail to graduate because of the higher standards.  Further, higher standards could discourage some students from putting in extra effort to meet the requirements.

Julian Betts and Robert Costrell (2001) point out that increasing student standards results in groups of winners and losers, just like almost all technological change throughout history.[2]  When the industrial revolution occurred, almost all of society benefitted from technological progress; however, factory workers that lost their jobs to machinery were obviously worse off.[3]  I agree that setting standards in the traditional public school system creates winners and losers, but I believe that the analogy to technological progress is a little far-fetched.

We should not compare central planning optimization, through the choices of elected officials, to the system of voluntary exchange and customer-driven reform that leads to optimal living standards.  A better analogy would be that standard setting in public schools creates winners and losers similar to how democratic institutions create winners and losers in our agricultural industry through price manipulation.  Subsidization of agricultural products obviously helps those employed in the industry, but it harms every single consumer of fruits and vegetables.

Even an All-Knowing Standard Setter Must Fail

In theory, a benevolent and all-knowing dictator could set the optimal standard for each individual school district.  The standard setter would have all of the information necessary to solve the constrained optimization problem of what standard level would generate the largest overall benefit to society.  Even in this scenario, given the constraint of the current educational system, the dictator would have to make a conscious decision about harming many children.  Remember, the official is benevolent as well, so this task would be difficult, but necessary for the greater good, of course.

Betts and Costrell (2001) also argue that a decentralized system of standard setting could produce economically inefficient outcomes if the benefits of valuable diplomas are shared across districts.  After all, if I choose a low standard for my district, I could free ride off the highly valuable diplomas in neighboring districts, assuming that employers view all diplomas equally.  I agree that viewing diplomas equally could exist in the short run; however, it would vanish over time.  Since firms have the incentive to hire the best candidates at the lowest cost, they will notice differences in student productivity across districts.  If a company makes the heroic assumption that all diplomas are equally valuable, they will pay for doing so through lower productivity.  The companies that realize that students from different educational institutions are likely to have different productivity levels will be rewarded by the market.  Similarly, companies all around the world have recognized that successful graduates of Harvard University are typically highly productive and valuable. Therefore, in a system of voluntary exchange, and at least minimal levels of information, decentralized decisions will outperform centralized ones.

Removing the Constraint

If decentralized decisions outperform centralized ones, why should we stop at the district level of planning?  If we prefer localized knowledge sources and stronger incentives to perform well, we should set standards at the individual student level.  Standards should be set for each individual student, and the best way to align incentives and knowledge is to allow family units to decide what graduation requirements ought to consist of.  In this scenario, the standard setters (the parents) would be free of the constraint faced by the central planner.  Since parents would be choosing the standard for one student at a time, they would not have to choose who ought to be a winner and who ought to be a loser.  In this sense, the previously impossible problem could be solved by finding the right fit for each unique child.  In the system of voluntary educational experiences, every single child would have a strong chance to be a winner.

[1] Hemelt, S. W., & Marcotte, D. E. (2013). High school exit exams and dropout in an era of increased accountability. Journal of Policy Analysis and Management32(2), 323-349.

[2] Betts, J. R., Costrell, R. M., Walberg, H. J., Phillips, M., & Chin, T. (2001). Incentives and equity under standards-based reform. Brookings papers on education policy, (4), 9-74.

[3] Sale, K. (1996). Rebels against the future: the Luddites and their war on the Industrial Revolution: lessons for the computer age. Basic Books.


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