The Market Value of Education

By: Jarrett E. Chapin

Last November, the New York City Department of Education’s new letter grading system for New York City schools was hot—as hot as things get in the world of education writing. A new means of oversight, the system of letter grades had been in the oven for about a year while it absorbed its first wave of criticism from school officials throughout the state.

I hear the gilded beast, Stuyvesant High School, received a B grade when the initial scores were released—oh the horror. I suppose similar cases had well-to-do principals from all over New York City flying to the Department of Ed, their unfairly scored tests in-hand, demanding a recount or at least extra credit. That must have been so annoying. If I were Joel Klein, DOE Schools Chancellor, I’d have them write reports about grade inflation. Anyway, that’s not what happened. What happened was grade inflation and Stuyvesant went from a B to an A.

So New York City schools have letter grades from here on out. I’m for it. Without letter grades, I’d argue, there is no way to determine the value of education in such a free market system. In New York City, going to High School is little like buying a car; it’s a commitment and an investment in your future. You want to get the most value and the most mileage out of your investment and you don’t want something that’s going to break down all the time, you don’t want to be walking to work. As value prior to letter grades was carried by word-of-mouth, value became a function of rumor and image alone. People would say that getting into a good high school will get you that banking job down the line or guaranteed entrance into a good college.

For instance, as Hunter College High School is known for sending the most students to Ivy League colleges, incoming students may believe to some degree that they are guaranteed an Ivy League education on their way out. I’m not sure if Bronx Science kids think they’ll all get their Nobel Prizes at the end of their senior year, but the idea that Bronx Science turns out more Nobel Laureates than any other high school definitely figures into the value students ascribe to it. Furthermore, in a free market where prices are fixed by word-of-mouth and reputation alone, schools like Stuyvesant, “known” to be “the best and most exclusive in the nation,” necessarily hold all the resources. The effect is that every other school’s value is only ever expressed as fractions of Stuyvesant’s. Stuyvesant has become a pure measure of value. The DOE’s new system, among other things wrests this value from the mouths of Stuyvesant alumni and nails it to a letter between A and F.

There have been murmurs that the letter grades are too ambitious and reductive: how can a school be reduced to a letter? I think the only people who begin this line of questioning are principals at B-ranked schools like Randy Asher from Brooklyn Tech who tells the New York Times that the letters are “ridiculous.” Personally, I don’t think the letters are any more reductive or ridiculous than, “sends more kids to Ivy League schools,” or “the best.” What does all that mean?

Let me put it this way, if you are a New York City middle school or high school student you know which high schools are the best high schools, you know the name of Stuyvesant. This is because, if you are a New York middle school or high school student, you are a consumer. Similarly, as a New York City student you know how education looks immediately below the Stuyvesant mark, you know the names of most middle tier high schools, and you also know—perhaps you dread—the names of zoned schools like John Jay, Prospect Heights, or Boys and Girls. In short, New York City students are expected to be savvy consumers; it’s a seller’s market after all.

The price of Stuyvesant and that of a few other exclusive high schools cashes out as a few years of intensive study and personal tutors. This in preparation for the SHSAT, a rigorous examination invented specifically for this group of high schools and mandated as admission criteria by Article 12 of the New York education law. For many, and I mean just about everyone, a couple of years of focused study and tutoring for one test is way too expensive, and by expense I mean to say wealth, money, coinage, you get it.

Letter grades produce a better market for consumers, and consequently the New York City school system should have more students applying to alternate and less exclusive grade-A high schools. Students in other A-grade high schools may soon begin to ask of Stuyvesant, “what’s all the big talk about?” And B schools may start to work on their product, perhaps giving A schools a run for their money down the road.

The consumer reports that substantiate the DOE’s letter grades provide some success criteria for failing schools. In this vein, student consumers will now have the chance to properly vet the constant tide of new schools in the ever-changing New York City School market.

The letter grades are a good move for NYCDOE, and, as other states adopt similar school choice school systems, it might be a good idea to think about the value of education. New Jersey already has a similar reporting system which can be found on the NJDOE website. However, as New Jersey is so district oriented it would be difficult to come up with an accurate rating system with so many statistically different schools. New Jersey, in such a situation, may have to become more “school ruled” like New York. This will certainly be necessary if New Jersey adopts a choice system.

A free market school system would force some serious changes in the way we do things in New Jersey. Such a system would definitely be too limited in an environment that has little or no urban transit and therefore it might help push the development of our urban spaces by posing transit problems for us to solve. Also, school rule would clean out lots of useless money-sucking administration at the district level and thus relieve some of the property tax burden.