Information, Incentives, and Education Policy

Information, Incentives, and Education Policy

by Derek A. Neal


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How do we ensure that waste and inefficiency do not undermine the mission of publicly funded schools? Derek Neal writes that economists must analyze education policy in the same way they analyze other procurement problems. Insights from research on incentives and contracts in the private sector point to new approaches that could induce publicly funded educators to provide excellent education, even though taxpayers and parents cannot monitor what happens in the classroom.

Information, Incentives, and Education Policy introduces readers to what economists know—and do not know—about the logjams created by misinformation and disincentives in education. Examining a range of policy agendas, from assessment-based accountability and centralized school assignments to charter schools and voucher systems, Neal demonstrates where these programs have been successful, where they have failed, and why. The details clearly matter: there is no quick-and-easy fix for education policy. By combining elements from various approaches, economists can help policy makers design optimal reforms.

Information, Incentives, and Education Policy is organized to show readers how standard tools from economics research on information and incentives speak directly to some of the most crucial issues in education today. In addition to providing an overview of the pluses and minuses of particular programs, each chapter includes a series of exercises that allow students of economics to work through the mathematics for themselves or with an instructor’s assistance. For those who wish to master the models and tools that economists of education should use in their work, there is no better resource available.

Product Details

ISBN-13: 9780674050907
Publisher: Harvard
Publication date: 05/14/2018
Series: The Sanford J. Grossman Lectures in Economics Series
Pages: 240
Product dimensions: 6.12(w) x 9.25(h) x (d)

About the Author

Derek A. Neal is Professor in Economics and the Committee on Education and the College at the University of Chicago.

Table of Contents

Preface xi

Introduction 1

I.1 Humans as Machines 2

I.2 Learning and Producing 3

I.3 Earnings Inequality 7

I.4 A Role for Government 12

I.5 Appendix: Learn to Learn. Learn to Earn. Then Earn 15

Exercises 22

1 Resources and Outcomes 25

1.1 Waste and Calls for Reform 26

1.2 Time Series Evidence 30

1.3 More Court Orders 31

1.4 Cost-Benefit Analyses Are Not Our Focus 33

1.5 The Education Production Function 34

1.6 Salary Schedules 42

1.7 Class Size 46

1.8 Evidence from Developing Countries 49

1.9 Approaches to Education Reform 51

1.10 Appendix: Tables Concerning Scandals and Class-Size Effects 53

Exercises 58

2 Assessment-Based Incentives 61

2.1 Defining Terms 64

2.2 An Empirical Regularity 65

2.3 Economic Theory and Campbell's Law 66

2.4 Parallels to Education 68

2.5 Optimal Incentive Design 68

2.6 Alignment Problems 70

2.7 Solutions to Alignment Problems 76

2.8 Pay for Percentile 81

2.9 Two Tasks Require Two Measurement Systems 86

2.10 Who Teaches 88

2.11 The Limits of ABI Systems 91

2.12 Appendix: Empirical Work on Educator Quality 92

2.13 Appendix: Multitasking for Beginners 96

Exercises 101

3 Letting Parents Choose 103

3.1 Attendance Zones 104

3.2 Deferred Acceptance 106

3.3 Top Trading Cycles 112

3.4 DA vs. TTC 115

3.5 The Importance of Being Earnest 118

3.6 Recent Empirical Work 122

3.7 Rearranging the Deck Chairs on the Titanic 124

Exercises 125

4 Charter Schools 127

4.1 Lottery Results 130

4.2 Studies without Lotteries 140

4.3 Competitive Pressures on Public Schools 142

4.4 Competition Is Not a Magic Bullet 143

4.5 Appendix: Experimental Data and LATE for Beginners 145

5 Vouchers 149

5.1 Baseline Model 150

5.2 Public vs. Private School Comparisons 155

5.3 Public School Responses 163

5.4 Too Focused on Saving Money 164

5.5 Voucher Systems Need Accountability Systems 166

5.6 International Evidence 167

5.7 Political Barriers 169

5.8 Design Details, Segregation, and Inequality 172

5.9 Peer Effects and Complications 173

Exercises 174

6 Putting the Pieces Together 175

6.1 Work to Be Done 176

6.2 Moving Forward 182

Notes 185

Bibliography 199

Index 215

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