Information, Incentives, and Education Policy

by Derek A. Neal

Overview

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 University Press
Publication date:	05/14/2018
Series:	The Sanford J. Grossman Lectures in Economics Series
Edition description:	New Edition
Pages:	240
Product dimensions:	6.12(w) x 9.25(h) x 0.90(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

Editorial Reviews

Information, Incentives, and Education Policy provides an interesting and original overview of some of the most important ideas from economics concerning the design and performance of education systems. Neal’s main contribution is to provide a conceptual framework for thinking about how to best assess the performance of teachers and schools, how to attract, assess, and motivate good educators, and how to design and assess school choice within public school systems as well as charter schools and voucher programs.

Joseph G. Altonji

Derek Neal’s wisdom in returning to first principles in this book generates a unique perspective that ties together economic theory and evidence in a way that will help advance the scientific foundation for education policy and move it in new directions.

Parag Pathak

In this book, Derek Neal lays out an economics framework for constructing and evaluating education policy. I recommend this book to those teaching graduate courses and advanced undergraduate courses. Even established researchers have much to gain from this book, which reminds us to keep economics front and center in the study of the economics of education.

Diane Whitmore Schanzenbach

Most education researchers will find, as I have, that they can learn a great deal from the book.

Journal of Economic Literature - Dennis Epple

Neal has his economist lenses firmly in place as he considers issues in education that range from the fundamental reasons for government investment in schools to the role that parental choice can and should play in determining where kids go to school. He succeeds in showing that the economic perspective offers plenty of instructive insights about American education…A valuable book from which readers stand to learn a lot.

Education Next - Michael McPherson Michael McPherson

Neal has his economist lenses firmly in place as he considers issues in education that range from the fundamental reasons for government investment in schools to the role that parental choice can and should play in determining where kids go to school. He succeeds in showing that the economic perspective offers plenty of instructive insights about American education…A valuable book from which readers stand to learn a lot.

Education Next - Michael McPherson