Explaining Vouchers to an Eight-Year-Old

So I’m driving my daughters to school, and my eight-year-old notices our next-door neighbor’s lawn sign urging a “no” vote on the upcoming voucher initiative. (It’s a bit silly for our neighbors to put up lawn signs, because we live on a cul-de-sac. But I digress.)

My daughter then announces she’s opposed to vouchers, too. So I ask her why.

She says, “Because the money they spend on a voucher should be spent in a public school instead.”

I then say that vouchers will actually mean more money for public schools, not less. She looks at me like I’m brain damaged. So I proceed to explain the economics, which, granted, are a little confusing, especially to the elementary school set. And at the end of the exchange, she remains entirely convinced she’s taken the right position, whereas I’m suddenly filled with doubt.

Here’s a general approximation of the discussion.

“Your school gets about $7,000 from the state of Utah because you go there,” I explain.

“$7,000?” she repeats. “That’s a lot!”

It’s actually the lowest per-pupil spending in the nation, but I don’t tell her that.

I go on. “Under a voucher law, if you want to go to a private school, then the state would give the private school some of that $7,000 to help pay for it.”

“I don’t want to go to a private school,” she says. “I like my school.”

“Yes, I know,” I say, “but public schools aren’t always the best school for everyone.”

“Then we should make the public schools better,” she says.

“That’s what vouchers will do,” I tell her.

She crinkles up her nose in disbelief. So I continue to explain myself.

“The most a voucher will be is $3,000,” I say. “That leaves $4,000 extra, which will go to the local public school for every kid that goes to a private school. So then a public school will get $4,000 of money they wouldn’t have gotten without vouchers.”

“But that school would have gotten $7,000 without vouchers,” she says.

“No,” I explain patiently, “They wouldn’t. Because now, if you go to a private school, the public school gets nothing. With vouchers, they get $4,000.”

“So people shouldn’t go to private schools,” she says. “Then the school gets the $7,000, and everybody’s happy.”

Yeah, swell, I thought. You win.

I didn’t press the issue beyond that, but I did pass on what I learned when I spoke to my wife later in the evening. As we talked it over, I came away doubting a lot of my initial assumptions.

In the end, it all comes down to an issue of fixed vs. marginal costs.

Economics 101: Fixed costs are those up-front outlays of capital that don’t change based on the amount of business you do. If I run a donut shop, for instance, the rent or mortgage I pay for the actual building in which I sell my donuts is a fixed cost. My mortgage doesn’t go up if I sell more donuts or down if I sell less. However, the amount of money I spend on donut batter is a marginal cost. If I only sell two donuts, I only have to buy two donuts’ worth of donut batter. If I sell a million donuts, I’m going to have to cough up a lot more dough – i.e. money – to buy dough – i.e. dough.

Are you with me?

Anyway, in my analysis with my daughter, I was treating each student as an additional marginal cost, not a fixed cost. If that’s the case, then vouchers make perfect sense. When each student is only a marginal cost, a school of 100 students that loses half of its student body to private schools funded by a $3,000 voucher would see its total income decline, yet the per-pupil marginal spending would increase dramatically. In this scenario, instead of $7,000 per pupil, the state would be spending $11,000 on each pupil left in the public system.

That’s a slam dunk, right?

It is if the scenario is accurate and students are a wholly marginal cost. But are they?

Not really.

In a typical classroom of thirty students, if you lose, say, three of them to private schools, it’s not likely that you’re going to reduce marginal costs by much of anything. You won’t have to pay as much for paper, textbooks, and raw school supplies, but those costs are essentially trivial when compared to salaries and such, which are fixed costs that make up the bulk of a public school budget. Teachers don’t usually get more or less money if their class size fluctuates by a handful of students. So losing a few students in the margins won’t drive down costs unless you lose enough to eliminate an entire classroom and you can fire a teacher.

Then there’s the fixed cost of the public school facility, which is even harder to downsize. If vouchers mean you have fewer students and you don’t need a classroom, you can’t just sell the history building on eBay. True, you can slow the demand for newer school buildings, but in all these considerations, the number of students becomes an unpredictable, aggregate marginal cost, and it’s very likely that the long-term benefit will only come after a series of painful, short-term adjustments.

But I’m not sure that’s a bad thing.

Consider two facts that voucher opponents are constantly citing:

1. Utah has the lowest per-pupil public school spending in the nation.
2. Utah’s public school class sizes are among the largest in the nation.

Because of these facts, opponents say, we need to reject vouchers, because they will mean less total income into Utah schools.

That argument is extraordinarily disingenuous.

If those two facts are really the fundamental reasons driving the opposition, then voucher opponents are being willfully stupid. Because while the impact of vouchers will be unpredictable in many ways, there are two areas in which their effect will be immediately and measurably recognizable.

1. Vouchers will increase per-pupil public school spending
2. Vouchers will decrease public school class sizes.
   

Opponents know that, but they hope you haven’t thought it through. They’re betting on voters having no higher level of economic understanding than my eight-year-old.

If recent polls are any indication, the bet is about to pay off.

The whole per-pupil spending argument is a red herring, anyway. Despite the low raw dollar amounts, Utah has some of the best test scores and highest graduation rates in the country. You want your kids attending a school with the highest per pupil spending? Then enroll your kids in a Washington DC inner city school, and pray every day that they don’t get shot.

In the end, I’m probably going to vote for the voucher initiative, even though I think it’s a tepid, lukewarm proposal that won’t make much difference one way or another. But if it weren’t a step in the right direction, its opponents wouldn’t be working so hard into misleading the public to maintain the status quo.

That’s a hard thing to explain to an eight-year-old on the way to school.