The Exit Problem: Why School Choice Doesn’t Fix Schools

Malcolm Gladwell has written a very good piece for the New Yorker about Jeremy Adelman’s biography of Albert O. Hirschman. Below, I provide a thought provoking quote and contrast how a Chicago economist thinks versus how Dr. Hirschman approaches the same question.

“The closest Hirschman ever came to explaining his motives was in his most famous work, “Exit, Voice, and Loyalty,” and even then it was only by implication. Hirschman was interested in contrasting the two strategies that people have for dealing with badly performing organizations and institutions. “Exit” is voting with your feet, expressing your displeasure by taking your business elsewhere. “Voice” is staying put and speaking up, choosing to fight for reform from within. There is no denying where his heart lay.

Early in the book, Hirschman quoted the conservative economist Milton Friedman, who argued that school vouchers should replace the current public-school system. “Parents could express their views about schools directly, by withdrawing their children from one school and sending them to another, to a much greater extent than is now possible,” Friedman wrote. “In general they can now take this step only by changing their place of residence. For the rest, they can express their views only through cumbrous political channels.”

This was, Hirschman wrote, a “near perfect example of the economist’s bias in favor of exit and against voice”:

In the first place, Friedman considers withdrawal or exit as the “direct” way of expressing one’s unfavorable views of an organization. A person less well trained in economics might naively suggest that the direct way of expressing views is to express them! Secondly, the decision to voice one’s views and efforts to make them prevail are contemptuously referred to by Friedman as a resort to “cumbrous political channels.” But what else is the political, and indeed the democratic, process than the digging, the use, and hopefully the slow improvement of these very channels?

Hirschman pointed out the ways in which “exit” failed to send a useful message to underperformers. Weren’t there cases where monopolists were relieved when their critics left? “Those who hold power in the lazy monopoly may actually have an interest in creating some limited opportunities for exit on the part of those whose voice might be uncomfortable,” he wrote. The worst thing that ever happened to incompetent public-school districts was the growth of private schools: they siphoned off the kind of parents who would otherwise have agitated more strongly for reform.

Beneath Hirschman’s elegant sentences, you can hear a deeper argument. Exit is passive. It is silent protest. And silent protest, for him, is too easy.”

Hirschman is arguing that the exit option allows people with resources to shirk on their civic responsibilities. As Gladwell said, if educated people know that they must send their kids to center city public schools then they will invest their time and effort to improve those schools. But everyone (including Bill Clinton, Al Gore and President Obama) does have the option to exit the public school sector if they can pay the market price for private education.

In the language of economics, Hirschman thinks that society would be better off by closing some markets and limiting personal freedom of choice. This is an interesting claim but it requires some evidence. Denying personal freedom is a dangerous path. In China today, the domestic passport system of Hukoo is being relaxed allowing more Chinese urbanites to “vote with their feet” and migrate (exit) to cities offering better opportunities. Given that “voice” is not an option in China, I have argued in my 2014 University of Chicago Press (“Blue Skies”) book that China’s growing number of urbanites need more “exit” options. Would Hirschman agree? Or would he say that if the Chinese urbanites cannot “vote with their feet” that the rise of democracy will come sooner to China’s cities because people power will seize the day? Is he right or is there another ugly potential outcome of bloody civil war? Multiple equilibria raise troubling issues. I believe that the “exit” option defuses what could be a very nasty situation.

Returning to public education in the U.S, if parents know that they do not have the opt out option of “exit” and they believe that their kid is receiving a bad education, then they would start to lobby the other parents and make appointments with the Principal. Hirschman appears to believe that “voice” can influence political outcomes. I wish this was the case but is it the case? In the 2013 Mayor’s election in Los Angeles roughly 20% of the electorate voted. Is that “voice”? That’s standard free riding. In small groups, an individual’s voice could matter but in larger organizations each individual’s impact shrinks to zero.

[Cross-posted at The Reality-based Community]

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Matthew Kahn

Matthew Kahn is a professor at the University of California, Los Angeles's Institute of the Environment. He specializes in the environmental consequences of urban growth and related quality-of-life issues.