Betsy DeVos Doesn’t Understand How Markets Really Work

The flaws in her vision of an education marketplace aren’t just a matter of politics—they are a matter of fact.

The school choice movement has had stunning political success over the past thirty years. Charter schools and voucher programs, mere ideas when Ronald Reagan took office, are now major features of the public education landscape—today, all 50 states offer some mechanism for enrolling children in schools outside their neighborhoods.

Still, the choice movement has unfolded largely at the margins of American public education. That isn’t to say that school choice is a fringe issue. Anyone attuned to education policy debates knows that isn’t the case. But the charter sector comprises only a fraction of total public school enrollments, and voucher programs remain relatively uncommon. In large part, this is because the mainstream school choice movement recognizes that choice, alone, is not enough to ensure better outcomes. As a substantial body of research confirms, the impact of charter schools and voucher programs on student learning is not consistently positive, and often it’s quite negative. Certainly, there are positive stories to tell in particular cities or particular charter networks, but on the whole, it’s hard to argue that the school choice movement has been driven by demonstrably encouraging results. Consequently, most school choice advocates have been content to win small victories—adding charter schools or voucher programs into the existing education system.

Donald Trump’s appointment of Betsy DeVos as secretary of education changed that. For DeVos, choice isn’t a desirable feature, or even a necessary prerequisite for successful school outcomes. Instead, she sees choice as a sufficient condition. Guaranteeing every child a great education, in other words, requires only a robust free market in which parents can make choices and government stays out of the way.

This vision has been most bluntly outlined through a series of analogies that DeVos has drawn in public events. Speaking recently at Harvard, for instance, she advocated for school choice by discussing the challenge of finding lunch near her office in Washington, D.C. “Near the Department of Education, there aren’t many restaurants,” she observed. “But you know what—food trucks started lining the streets to provide options.” In other words, a monopoly became a competitive marketplace and, as hungry staffers flocked to nearby food trucks, the overall food improved for everyone. Even local restaurants, DeVos noted, “have added food trucks to their businesses to better meet customer’s needs.” The moral of the story: everyone wins in a system where people can choose.

This was not an off-the-cuff remark. DeVos was delivering a prepared speech at a high-profile event, and it echoed previous comments of hers. In March, for instance, DeVos said that “the entrenched status quo” in public education “has resisted models that empower individuals.” Government, she argued, should shift its funding from schools to students, allowing families to make choices in a free market.

This is an extreme interpretation of school choice, in which charter schools and voucher programs are mechanisms for tearing apart the public education system and replacing it with a choice-based marketplace. So, previous arguments against expanding school choice—arguments largely focused on what choice will do to the existing system—are largely irrelevant. After all, DeVos has no interest in the public education system. As she put it: “This isn’t about school ‘systems.’ This is about individual students, parents, and families. Schools are at the service of students, not the other way around.”

Perhaps, then, it is time to highlight a different set of critiques, which accept the premise of education as a marketplace and schools as consumer goods. Progressives may feel uncomfortable with the exercise, since it fundamentally conflicts with the idea of education as a public good. But what it reveals is that, for a free market devotee, DeVos maintains a relatively unsophisticated view of how markets actually function. The flaws in her vision aren’t just a matter of politics; they are a matter of fact.

Start with the fact that school quality cannot be evaluated through a single experience—the way a food truck can be. Products that can be evaluated this way are referred to by economists as “experience goods.” How much do I like this grilled cheese? Give me one minute and I’ll tell you. Education, on the other hand, is largely invisible and reveals its efficacy over time, making it a “credence good”—more like a surgical procedure than a sandwich. It can often take several months just to get a sense of a new school. In fact, some of us who are decades out of school are still sorting through our thoughts about how much we learned, how positive the social experience was, and whether we benefited in the ways we might have wished.

Scholars are also quick to point out that education is far more complex than most of the goods we shop for. As David Cohen has argued, education is a socially-supported process for cultivating human improvement—an ambitious and multifaceted enterprise that takes place over many years. This grand scope presents a measurement challenge, because it is impossible to distinguish the changes in a person due to schooling from the changes due to other factors—a problem that economists describe in terms of “attribution.” With simple products like food, attribution is easy: the taste of a sandwich can be attributed to its maker. But in complex goods like education, it can be much more difficult. To whom can we attribute a child’s love of reading? Her parents, who read to her nightly? Her preschool teachers, who emphasized phonemic awareness? Her local library, which stocks interesting new titles? Her book-loving friends? Her school?

A third difficulty facing DeVos’s choice-based model of education is what economists call a “principal-agent problem.” Such a problem occurs when one person (the agent) has the power to decide on behalf of another person (the principal) who will bear the impact of that decision. In a choice-based model, parents are the agents, acting on behalf of the child. Yet it is important to recall that parents do not spend their days inside schools—they rely on children for second-hand information about the value of the education they’re receiving—what economists call a problem of information asymmetry. And, in sharing what they know, young people might be compromised by a conflict of interest. Recall, for instance, that great schools can sometimes feel like a grind, and that weak schools can sometimes be wonderfully social places. Alternatively, young people might simply not be able to adequately describe the many different components of school quality. No wonder, then, that the classic parent question “how was your day today?” is usually met with a one word answer: “Fine.”

All of this makes families extremely vulnerable to marketing. Unable to tell the true quality of a school without actually sending their children there, parents rely on word-of-mouth, reputation, and proxy measures. Schools of choice—like charter schools and private schools—are well aware of this, and can spend thousands of dollars per student on unregulated advertising campaigns. But even if parents ignore marketing, they still can be taken in by unimportant factors like the gleam of a school’s computer lab or the language used to describe its teaching philosophy. Such factors may seem important, but a school can be stocked with new technology and short on creative teaching, and educators can talk endlessly about “project-based learning” or “student-centered pedagogy” without actually engaging in it.

To complicate matters, there is the fact that education is a positional good. While some of the fruits of education are absolute—students either know how to read or do not—its usefulness in promoting social status is completely relative. As a result, parents can be drawn into anxious competition against each other for comparative advantage, and in the process may overlook the issue of school quality entirely. To make matters worse, this competitive approach ensures that however many winners the system produces, there will be far more losers, even if quality is the same across all schools.

Finally, there is the issue of a ticking clock. If a parent is unsatisfied with a school, he or she might choose another one in the educational marketplace envisioned by Betsy DeVos. But how many times might a parent do this? Whereas, say, a Department of Education staffer might try a different food truck each day with no obvious negative consequences, children cannot change schools on such a regular basis. School calendars and enrollment policies complicate matters, certainly. Yet the bigger issue is social adjustment for a child entering a new school community. There may be benefits to switching schools, but there are also real costs.

Choice is something Americans value, and research in consumer psychology reveals that people are more attached to the things they have willingly opted into. Choice can also allow people to seek out the best fit—something that in education has for too long been undervalued. In a system with greater choice, more schools can pursue unique missions that appeal to different kinds of students. But, choice, is in no way a panacea. And introducing it in a constructive way would require careful policy planning to avoid segregation, more comprehensive information about school quality, and a slew of other supports. Still, there is reason to think that carefully managed school choice might play a positive role in the future of American public education.

But this is not what Betsy DeVos is promoting when she talks about the future of school choice. In the future she envisions, there is no education system. Instead, there is a choice-based marketplace in which the only role of government is to empower families to choose. Yet we must ask: How empowering is it to make a choice when you have incomplete information? How empowering is it to think you’ve made a good decision, only to find out that you haven’t?

Betsy DeVos may be portrayed by critics as an ill-informed billionaire naïf. True, her knowledge of the public education system is incomplete, and she has revealed her ignorance on more than one occasion. But it must be remembered that DeVos is a hardnosed adherent to free market ideology. When she compares schools to food trucks, she isn’t committing a gaffe—she is communicating her dogma to non-believers. Thus, as DeVos continues to make her appeal, we have a duty to take her seriously and to think critically about what she’s selling. A choice is coming, and the future of public education hangs in the balance.

Jack Schneider

Jack Schneider is an assistant professor of education at the College of the Holy Cross, the director of research for the Massachusetts Consortium for Innovative Education Assessment, and the author of Beyond Test Scores: A Better Way to Measure School Quality. He co-hosts the education policy podcast Have You Heard