“Healthy market competition is fundamental to a well-functioning U.S. economy. Basic economic theory demonstrates that when firms have to compete for customers, it leads to lower prices, higher quality goods and services, greater variety, and more innovation.”
— Heather Boushey and Helen Knudsen, “The Importance of Competition for the American Economy,” The White House, July 9, 2021
Competition has been central to American life from the beginning. It’s at the core of the American identity. As the Biden administration has stated (in the quote above), competition has proven its public value by stimulating the innovation that improves quality and lowers prices.
Libraries full of economic research bear this out. As a paper for the Organization for Economic Cooperation and Development put it in 2002: “Competition has pervasive and long-lasting effects on economic performance by affecting economic actors’ incentive structure, by encouraging their innovative activities, and by selecting more efficient ones from less efficient ones over time.”
This applies to all industries, including education. School choice is expanding in state after state because the data show that it works. And it works not just for students who enroll in alternative programs but for those whose families choose traditional public schools as well.
“We find evidence that as public schools are more exposed to private school choice, their students experience increasing benefits as the program scales up,” a 2020 study of Florida’s tax credit scholarships found. “In particular, higher levels of private school choice exposure are associated with lower rates of suspensions and absences, and with higher standardized test scores in reading and in math.”
That’s not a fluke.
Of 28 studies that have examined the competitive effects of various school choice programs on students who remain in traditional public schools, two found negative effects, one could find no effect, and 25 found positive effects, as EdChoice details in its compilation of school choice studies titled The 123s of School Choice.
What about educational outcomes, such as graduating from high school or college? No study has found a negative effect, and most have found positive effects.
For example, a 2019 Urban Institute study of Florida’s tax credit scholarship program, the nation’s largest private school choice program, found that it generated a 12% increase in college attendance.
The vast majority of research on school choice finds that the introduction of a choice program tends to improve test scores, educational outcomes, parental satisfaction, integration, and civic values and practices — while saving money.
The financial effects have been studied the most, and their findings aren’t surprising. Of 73 studies of the fiscal effects of school choice programs, five found a net cost increase, four found cost neutrality, and 68 found that the introduction of choice generated cost savings.
School choice works because the competitive forces unlocked by the creation of a robust marketplace generate the same positive effects in education that they do in other industries.
“Students attending schools with more competitive pressure made larger gains as program enrollment grew statewide than did students at schools with less market competition,” the authors of the 2020 Florida study wrote.
Because competition has been proven to generate positive outcomes in education, as in other industries, protecting education from competition can only harm students.
The fastest way to improve outcomes for New Hampshire students is to give them more options. This can be done with a simple change.
Eligibility for both the Tax Credit Scholarship and the Education Freedom Account programs is capped at 300% of federal poverty level. Removing the income cap and making both programs universally accessible would stimulate innovation, and match more students with their best educational environment, more rapidly than any other reform.
Were all students to become eligible for both programs, competition would quickly begin to work its magic. There is no faster, more effective way to improve outcomes for all students.