In Short:

The key innovation is to model competition between schools in an environment in which parents have peer preferences.

Abstract

This paper develops a new economic model of public school choice. The key innovation is to model competition between schools in an environment in which parents have peer preferences. The analysis yields three main findings. First, peer preferences dampen schools’ incentives to exert effort in response to competitive pressure. Second, when peer preferences are sufficiently strong, choice can reduce social welfare. This is because choice is costly to exercise but aggregate peer quality is fixed. Third, given strong peer preferences, choice can reduce school quality in more affluent neighborhoods. We conclude that peer preferences weaken the case for choice.

About the author

Levon Barseghyan

professor, school of government and policy

Levon Barseghyan’s work, both theoretical and empirical, is aimed at uncovering mechanisms that shape economic behavior and how such behavior is affected by market structure, economic policies and political institutions.