ABSTRACT
Education can be regarded as either a private or a public good or, possibly, a combination of both. Some of those who think that education primarily benefits individuals rather than society take the view that it is best supplied through a market mechanism. Markets consist of buyers and sellers of commodities, and in an educational market the suppliers of education will sell it as a commodity which provides benefits to individuals. The public benefits of education are, on this view, a by-product of the successful provision of education to individuals. Parents and students will see that education is in their own or their children’s interests and will act accordingly. Furthermore, education provided by markets allows more choice and also the right of exit if a consumer is dissatisfied with what is offered by a producer. A further advantage of market-provided education is that the risk that public providers will do so at their own convenience rather than at that of the consumer is thereby avoided (see A. Smith 1981). Advocates of this approach include Chubb and Moe (1990) and Tooley (1995, 2001). Opponents of markets in education tend to argue (a) that educa-
tion is more of a public than a private good (e.g. Grace 1989), (b) that education is not a commodity and (c) that attempts to provide education through a market mechanism result in failure (e.g. Jonathan 1990). It is difficult to provide public goods through markets because their benefits are distributed to the public rather than to individual purchasers. The fact that the benefits of education are widely distributed leads to a related problem, namely that people may withhold purchasing education in the knowledge that they will be able to
enjoy the purchases made by others. Since everyone will reach the same conclusion, nobody will be inclined to purchase and no one will be educated. This is an example of the free rider problem in game theory. For those who hold that education is a pure private or positional good and is desirable, this does not pose a problem. For those who do not find it desirable, either for themselves or their children, there is no inclination to purchase education. But if this is so, then some will go uneducated. This is a problem for those who hold that the market can do just as good a job as the state in providing universal education. Consideration of education as both a private and a public good leads anti-marketeers to say that the universal provision of education needs both an element of compulsion and a degree of central provision in order to correct the tendencies of markets to ignore non-purchasers or those who are ignorant or shortsighted. However, it does not follow that if one rejects the central role of
markets in educational provision they do not have some role to play. It may be, for example, that post-compulsory education is best provided for by a market mechanism, or that certain kinds of services like advice or catering are best provided in this way. Another approach advocated by some who are sympathetic to the role of markets is to create a quasi-market, in which the state provides funding but obliges suppliers to compete with each other on quality and price. At a certain point in practical policy-making, the arguments shift from ideology to detail.
