NCPA - National Center for Policy Analysis

The Benefits of School Choice: Higher Achievement, Higher Incomes, Higher GDP

January 26, 2015

The Texas legislature is currently considering a school choice program known as the Taxpayers Savings Grant Program (TSGP). Under the TSGP, public school students would qualify to receive a grant equal to the tuition at a private school of a student's choice or 60 percent of the state's average spending per student, whichever is less.

Anew study by economist Arthur Laffer estimates that the TSGP would save the state of Texas billions (because the state pays just 60 percent of its previous costs for the students who exercise school choice), while at the same time improving education performance for all students -- those who remain in public schools, as well as those who exercise school choice. The Texas Education Agency projects that over a five-year period, the TSGP could save taxpayers $1.76 billion.

Laffer estimates that Texas' GDP would increase by 17 percent to 30 percent over the next 25 years with the TSGP, adding a whopping $260 billion to $460 billion to the economy annually -- the equivalent of adding the economies of Vermont, Wyoming, Montana, South Dakota, North Dakota, Rhode Island, Maine, Alaska and Idaho to Texas.

Why the economic growth? The school choice program would reduce dropout rates and improve academic performance, translating into jobs and higher incomes. And studies not only show that school choice benefits the students who choose their schools, but it also improves public schools by creating competition -- public schools who lose students to choice programs are forced to improve their performance in order to win back enrollment. This is not just a theory: public school systems across the country have attempted to compete in response to school choice.

Broad, universal school choice like the TGSP, would:

  • Close the educational achievement gap between races, between students from lower and higher income families and between the United States and other countries.

  • Slash the number of dropouts statewide from 130,000 to less than 65,000 (in half). The rise in the high school graduation rate would mean $800 million in additional earnings for these graduates, which ultimately translates into higher GDP growth.

When parents have choices about where to send their children for school, schools pay more attention to student needs because families can pull their children out and send them to better schools. A decentralized market in education allows students to choose schools that best meet their needs and preferences.  For more information on introducing private school choice to Texas, see this NCPA report.

Source: Arthur Laffer, "The Texas Economy and School Choice," Texas Public Policy Foundation, January 7, 2015. 


Browse more articles on Education Issues