Public School Choice: An Economic Analysis

Abstract Public school choice programs give households a free choice of public school and provide schools incentives to compete for students. Proponents of these programs claim that by the usual market logic, the forces of choice and competition will improve the quality of the education provided by public schools. Critics counter that the usual market logic does not translate easily to schools, since households' perceptions of school quality depend not only on the efforts of school personnel but also on the composition of the student body (i.e., households have peer preferences). To advance this debate, we develop and analyze an economic model of public school choice. A distinctive feature of the model is that households have peer preferences. We show that peer preferences have significant implications for the effects of public school choice and for policies designed to make such programs more effective