The Market for Schools

There has been an interesting exchange of views this week on Twitter following a post from Professor Becky Allen (@profbeckyallen) titled The Ungameable Game (which would be a good name for a Queen song by the way). In the blog, Professor Allen playfully suggests a system for school performance measures which is, by design, ungameable.

‘Ungameable’ is an economists term which means that the ‘players’ (schools) in the ‘game’ (appearing successful) cannot anticipate which measures will be applied and published. As a result, schools would be unable to game the system by focusing to an unhealthy extent on performing well in a narrow set of measures (as, it is alleged, they do at present). The intention behind such a system is to discourage gaming behaviour, thereby encouraging schools to just focus on being the best they can be in relation to a range of educational outcomes.

Gaming is an unintended consequence of the high-stakes educational system we have in this country (UK). The argument for designing a system which prevents gaming is appealing. However, one of the key purposes of school performance measures is to provide parents with information about school quality. In response to Becky’s blog, Ofsted’s Director for Research and Evaluation, Professor Daniel Muijs (@profdanielmuijs) made this point in the following way:

Professor Muijs sets up his argument on the assumption that parental choice of school is a good thing, which I suspect most people would agree with. It is hard to imagine the removal of this choice, with children being obliged to attend the school whose catchment area they fell within.

However, Muijs goes on to infer that the ungameable system proposed by Allen would make it ‘almost impossible for parents to easily compare school quality’, therefore is undesirable. The implication is that the current performance measures (e.g. Progress 8, Attainment 8, EBacc and so on) do ‘make it easy’ for parents to judge school quality. I will return to this questionable assumption later.

I find Muijs’ last statement the most interesting – ‘Without information school choice markets cannot deliver improvements’.  My economist-whiskers could not stop twitching by this point. Here is the elephant in the room: the belief that the market-mechanism will drive improvements in school quality. This belief has so many holes in it, you could paint it yellow and put it in a Swiss mouse-trap.

The power of choice

Choice is, indeed, powerful. In a consumer market it is what drives innovation and higher standards. Let’s take biscuits as an example.  Everyone knows what biscuits they like, and they will choose to buy the best, affordable biscuit. If a new biscuit enters the market, consumers will try it, decide if they like it more than their usual biscuit, then either switch allegiance or never buy it again! Biscuit manufacturers are incentivised to supply the best biscuit, at the lowest possible price. As a result, the biscuit market works pretty well – delivering a wide range of high quality biscuits at low prices.

Markets work fairly well for most consumer goods, although there are exceptions. One famous example of a market not working so well was put forward by economist George Akerlof in a paper titled A Market for Lemons. ‘Lemons’ refers to the duff cars which are for sale in the second-hand car market. The problem, Akerlof argued, is that consumers can’t tell which cars are superior (“a peach”) or inferior (“a lemon”). This uncertainty reduces the price consumers are willing to pay, therefore selling ‘peaches’ becomes unprofitable, and the market fills up with lemons.

Attempts can be made to overcome the problem of the ‘uninformed buyer’. In the car market, consumers might purchase the service of those who can provide better information about the quality of the goods on offer, like the AA, or the seller may offer warranties to allay fears that consumers are being sold a lemon. Never-the-less, the fact that these patches are needed shows that the market does not work as well as intended – an economist would call this market failure.

So, in the ‘market’ for schools, how effective is consumer choice in incentivising schools to be the best they can be?

For choice to drive standards in schools, we need at least the following conditions to be met:

1. Parents must be sufficiently knowledgeable to choose the school which is best for their child
2. Parents must have a range of schools to choose from and have free choice
3. The indicators of quality (the information available to parents) must reflect actual quality, so that the easiest way for schools to look good is by actually being good
4. All consumers (pupils) must be equally welcome and valued by the supplier (schools) – in other words, we are happy for anyone to ‘buy’ the product because customers are customers
5. The system must work so that popular schools get even better and unpopular schools raise their game.

Let’s consider some of these.

Problematic signals

For parents to make good choices, they need to have a clear conception of what they want and enough information about the schools on offer to be able to judge which will meet their child’s needs. This is straight forward when buying biscuits, a little more problematic when buying cars, and very difficult when choosing a school. This is partly to do with the complexity of the product, and partly to do with repeated consumption.

To work out if you like a biscuit, you eat one. The biscuit market works well because it is a product which is purchased and consumed frequently – customers are exercising choice every time they buy biscuits. Cars, of course, are purchased much less frequently. Buying a car is a high-stakes purchase. If you buy a ‘lemon’, a long time will pass before you make another consumer choice – you can’t use your error immediately to adjust your choices. Choosing a school is even higher stakes, and if you choose a ‘lemon’ you often have to suck it up. Mostly, therefore, this is a once-in-a-lifetime choice (at least for each child you have). Schools only need to convince you to buy once, therefore the quality of the sales pitch becomes more important than the quality of the product.

Given the high-stakes nature of school choice, parents must be as informed as they can be about the product. This is where complexity gets in the way. How should parents judge the quality of schooling provided?

The solution to this is to provide ‘simple’ metrics to make the complex reality of school quality understandable. These are the performance measures being argued over by the likes of Allen and Muijs. Remember that, for the market logic to work, the performance measures must be a reliable indicator of school quality.

The Progress 8 score is the latest attempt to provide parents with information about school quality. The problem with Progress 8 (P8) is that it is a ‘poor signal’ of school quality. There are two significant problems with the measure:

1. It is more indicative of demographic than school quality i.e. there is a strong correlation between deprivation levels and a school’s progress 8 score.
2. A higher P8 score can indicate features of a school which may be undesirable to parents, but which they interpret as being desirable.

A great deal has been written about point 1, so I will focus my attention on point 2.

Most parents I know care about whether a school gets good results, but not at any cost. A high P8 score might indicate that the school has a rigorous and well-sequenced curriculum, that students are consistently taught well, and that students are motivated and studious. It might indicate that the school has a positive culture and high expectations of behaviour.

However, a high P8 score might also indicate a school steering students’ subject choices to fill the P8 slots, that students are drilled with exam technique, required to sacrifice after-school clubs to attend revision sessions, or to give up their Easter holidays, that staff are over-worked and put under relentless pressure to ‘drive up results’.

The latter approach is the one that Professor Allen’s proposal seeks to avoid. Taking away such simplistic measures will not undermine the quality of information for parents, because the P8 score does not reliably inform parents about the quality of education provided – it is a poor signal.

Ofsted have positioned themselves to counter-balance the perverse incentives built into our performance measures system. The new inspection framework sets out to uncover unprincipled practices, excessive workload and the various ‘shortcuts’ to raising results. This is welcome, and should provide parents with some warning signals if there is a ‘results at any cost’ culture in a school. However, we must be mindful that a two-day Ofsted inspection is no better than a quick check-over by the AA when you buy that second-hand car.

Fortunately, parents do have more reliable information about school quality in the form of word-of-mouth by parents with children at the school. This is a powerful signal of school quality, and one which incentivises better behaviour by schools than league tables. For parents to say positive things about the school, the focus must be on being good over looking good.

The illusion of choice

Our second condition for an effective school market is that parents must have a genuine choice. In some areas, this is the case. However, there is an urban-bias in school-choice ideology which assumes that there are a variety of schools which pupils can realistically travel to. For those parents who cannot afford to pay transport costs to send their child to a school other than the one they are in the catchment area for, there is no choice. The same applies for parents who cannot move near enough to the over-subscribed ‘Outstanding’ school.

Multi-Academy Trusts (MATs) may also effectively limit choice if many of the schools in a local area are under the same management. It is no use having  5 primary schools to choose from if all these schools operate according to the same values, policies and operating principles. Not all MATs quash autonomy and difference between their schools, but if they do the effect may be to diminish real choice.

Does choice drive standards?

The market logic says that if people don’t buy your biscuit, you’ll raise your game and make a better biscuit. The school market is set up to replicate this incentive as schools receive more income for every pupil they attract. However, biscuit suppliers are driven by a profit motive, whereas schools spend all the income they receive on educating the students on roll. The incentive to attract students, and therefore more income, is to avoid a reduction in funding, which would mean cost savings have to be made. The motive becomes the avoidance of pain, rather than the achievement of greater reward. It is a dispiriting game to play.

Most schools will feel pressure  from parental choice, but it is dubious that schools need this pressure to encourage them to provide a good education. This pressure can also cause a distraction, with schools aiming to ‘get’ a better Ofsted grade to gain a competitive advantage, rather than be driven by a moral purpose of educating their students well.

The pressure is also not distributed evenly. The dominant brands in a local market (those with the ‘Outstanding’ label, privileged intake or ability to select) are to a greater extent protected from competitive forces. They may exhibit monopolistic behaviours – little effort to market the school, or a lesser tendency to seek out and respond to parental preferences. We strengthen the status of these schools further but affording them exemption from inspection (once great, always great), bestowing additional status signals (such as Teaching School), and directing further funds under the guise of promoting that they share the secret of their success.

Conversely, those with the wrong label, disadvantaged intake  or falling pupil numbers, are locked into the marketing scramble. In the biscuit market, the do-or-die nature of markets is a positive. If a biscuit falls out of favour with consumers, the manufacturer either needs to make a better biscuit, or it will go out of business. Another biscuit manufacturer will take its place. This cycle of death and rebirth is a healthy feature of a market for consumer goods, but schools cannot be allowed to implode. Instead, we continually re-brand and re-launch schools, in an attempt to re-position them in the market.

Hiding behind the myth of a well-functioning schools market is the fact that not all customers are treated equally. Over-subscribed schools will be incentivised to control demand by signalling what kind of students they would most like to attract. This takes the form of uniform policies, strong messages on discipline, letting parents whose children have particular learning needs know that they might be catered for better at the school down the road, and over-emphasis on ‘achievement’, ‘results’, and a high take-up of elite university places. The brand created sends a clear signal that only certain types of consumers are wanted. Ask a biscuit manufacturer whether they care who eats their biscuits.

Where does this leave ‘choice’?

Choice is not a bad thing, but it is a big leap from believing that parents should have choice over which school their child attends to believing that this is a powerful force for school improvement.

If we are to persist with a market for state education, we must at least be realistic about the failures of this market and to take steps to minimise the unintended consequences created by school choice. When the pursuit of performance measures and Ofsted labels becomes an aim in itself, and an aim to be achieved at any cost, the damage to our education system becomes unacceptable. The information we provide to parents should be holistic and ungameable. It should open a window to the unique profile of each school, not rank and label. Parents are sophisticated customers. Those I speak with are increasing savvy about the games being played. They are looking for authenticity, nuance and integrity. Why would they demand anything less?

We need to make school choice a meaningful choice. This means ensuring that every school is a school parents would be happy to send their child to. In this way, the choice parents make is which school suits their child, not a game in which they might end up with a peach or a lemon. For these reasons, I am in favour of the ungameable game.

As for the belief that school choice is the solution we need to improve our schools, I just don’t buy it.