Jay P. Greene’s Blog

Joanne Jacobs has a post today on another bullying incident in Oakland.  This one sounds horrible, as did the Billy Wolfe story (see my earlier post The NYT Bully).  Just because the Billy Wolfe story is more complicated than the NYT reported, doesn’t mean that there wasn’t a bullying problem in his case and shouldn’t cause us to doubt each new story any more than normal skepticism requires. 

Clearly there is a problem out there with violence between students in schools.  Whether that problem has become more common or more severe over time, I don’t know.  Anyone who knows of reliable statistics on this, please pass that along.  The plural of anecdote is not data, so we need more than these compelling stories to get a sense of how widespread and severe this problem is.

An interesting item in this morning’s New York Times – Someone has finally done an experimental study on the math instructional technique that emphasizes the use of blocks, balls, and other concrete “manipulatives” to teach math.  Researchers at Ohio State University created an experiment in which they randomly assigned subjects to be taught a new math concept either by focusing on the abstract math rule, focusing on the use of manipulatives, or combining both techniques.  They then tested how well subjects had learned the math concept by having them apply it to a new situation.  It turns out that students taught with manipulatives did the worst, the ones taught abstractly did the best, and the combined approach performed in the middle.  It appears that those taught math with more concrete examples had a harder time transferring that math concept to a different concrete example.  Kids taught math with tennis balls have a harder time applying the principle to railroad cars.

(Guest post by Larry Bernstein)

The Wall Street Journal and Bloomberg have stories on the student loan crisis.  I presume the articles were in response to my post a couple of days ago.

This is typical. I think the WSJ editorial page gets the issue wrong.  The editors blame the current crisis on new Fed limits on the allowable credit spreads.  In addition, there is a mention of an idea to allow the Federal Reserve to accept student loans as collateral at the discount window. 

I don’t think either of these issues is critical.  The key point is that students are defaulting on their loans at a rate much higher than expected.  With higher default rates and worse than expected recoveries, the loans are worth less than par.  State Street, who had bought billions of securitized private student loans in the secondary market, admitted last week that they may need to take reserves equal to as much as 10% of par.

The current crisis is not a funding crisis, or an ability to use the loans as collateral for secured financing by banks.  The problem is a basic financial problem.  The borrowers are unwilling to pay the lenders back.  There are two typical responses to this sort of problem.  The first is to stop lending until we figure out what the likely default rates are going to be and if the business makes economic sense.  This is the current lender response to the increasing rates of default in the subprime residential market.  The second response is to lend, but at much higher interest rates to cover for the additional expected losses from defaults and to cover additional risks of even greater defaults.  The market is seeing both responses from lenders.

What should public policy be for student lending?  This is clearly complicated and depends on your view of the role of government.  Do you think that the federal government should lend directly to students at a below-market rate?  The answer depends on the public’s willingness to accept substantial losses on the loans.  The market price embodies the market’s view of defaults.  Today, the market is saying that the government will lose more than 10% of the loan size.  There are $70 billion of new federally guaranteed loans each year, and both Democratic presidential candidates want to expand the program.

What is the market failure that requires government action?  Why shouldn’t the interest rates on student loans reflect the risk of the loans?  If we let the market work, banks will demand additional collateral (from the parents) at various interest rates to reflect the individual risk of the borrower.  It cannot be that whenever credit spreads go up to reflect greater risk of defaults that the government needs to step in and lend money at a below-market rate.

(As an aside, the current plan to use the FHA to solve the nation’s residential mortgage crisis will most likely result in government losses in excess of the 1980s thrift crisis.  Sadly, many years from now, Congress will investigate how this could have happened.)

A month ago the New York Times (NYT) carried on its front page the story of “a boy the bullies love to beat up, repeatedly.”  The story was heart-breaking and appealed to everyone who’s been bullied or worried about their children being bullied — that is, almost everyone.  The piece led to appearances on CNN and the Today Show by the boy, Billy Wolfe, countless articles in papers around the country, a flood of sympathetic letters to the NYT, and outrage in the blogosphere.

Billy Wolfe lives in my town, Fayetteville, Arkansas, and some of the incidents described in the article occurred at a school my children attend (although Billy is older and is now at the high school).  The story didn’t fit with what I know about Fayetteville schools. 

Sure enough, a little more than a week after the NYT article, the Northwest Arkansas Times (NAT) disclosed the existence of a police report on Billy Wolfe that suggests that he may have been the bully, or at least played a significant part in instigating the assaults.  The NAT reporting on the police report contains allegations that Billy harassed a student confined to a wheelchair with muscular dystrophy by sneaking up behind him and screaming to aggravate the disabled boy’s sensitivity to noise, by bouncing a rubber ball against the disabled boy’s head, and by calling him “stupid” and a “retard.”  The police report provides further context on the assaults described in the NYT.  One allegedly occurred after Billy called a boy who had just moved from Germany and whose mother had just died of cancer a “”gay [expletive ] German” and then called his “deceased mother a vulgar name. ”  Another incident allegedly occurred after Billy pushed another student.  Billy was accused of picking on other kids, stealing, and intimidating those that he picked on against telling the teacher.

But the NYT article by Dan Barry makes no mention of the police report or the details contained in it.  Nor did Dan Barry’s reporting uncover any of the information from the interviews contained in the Northwest Arkansas Times article.  Instead, Barry simply writes, “It remains unclear why Billy became a target…”  He also declares, “[Billy] has received a few suspensions for misbehavior, though none for bullying.”  It seems the NYT reporter either somehow missed the existence of the police report or decided not to include its contents in his piece.  Either way, it is very sloppy reporting.  I sent an email to the Public Editor of the NYT asking if Barry had seen the police report, and, if he had seen it, why he chose not to include it in his article.  Other than a form letter I’ve received no reply.

Of course, regardless of what Billy may have said to other students, it is wrong for them to hit him.  Furthermore, even if Billy has been a bully of others doesn’t mean that he is not himself being bullied.  And Fayetteville schools deserve some blame for not being on top of this situation better.  But the more complicated picture that emerges after learning of the information in the Nothwest Arkansas Times but excluded from the NYT, is one that looks like school fighting and conflict and not necessarily bullying.  Bullying implies a relatively clear hierarchy of victim and assailant.

But a newspaper article about conflict and some fighting in a small school district in Arkansas wouldn’t have been front page news in the NYT.  Perhaps that’s why Dan Barry preferred his Lifetime Channel movie-version over the more complicated version that the facts seem to support.  Perhaps it wasn’t ambition but laziness that distorted Barry’s article.  Finding the police report and collecting all of the interviews found in the NW AR Times article would have required — uhm — reporting.  It was much easier to take the story that the Wolfes’ attorney was peddling.  And yes, the Wolfes are suing some of the other students and are planning to sue the school district.  Barry’s article may read like a plaintiff’s brief because there actually is a plaintiff’s brief out there.

Others in the blogosphere have covered this story very well.  In particular, see my Manhattan Institute colleague, Walter Olson’s post at Overlawyered.com.  Blogger Scott Greenfield is quoted there with a pretty harsh assessment:

…what is the New York Times thinking? To have its knees cut off by its Northwest Arkansas namesake is humiliating, but to be shown up as deceptive fundamentally undermines its credibility. Without credibility, the Times is just a dog-trainers best friend and a tree’s worst nightmare. …

 The failure of the New York Times to present a full and accurate account of the Billy Wolfe story is disgraceful and unacceptable. … If you’re going to put an article on the front page with a big picture, don’t blow it. The Times did. They should be ashamed.

Unfortunately, the Fayetteville School District is inexperienced with handing national reporters and they are handcuffed in responding to accusations because of student privacy issues and a pending lawsuit.  Dan Barry from the NYT was able to ride roughshod over a small town school district.  Maybe the Gray Lady is the most obvious bully here. 

(Guest post by Greg Forster)

On a much more serious note (see below), the news that America got a new school choice program last month seems to have slipped by under the radar.

On March 24, Louisiana Governor Bobby Jindal signed SB5, providing a deduction off parents’ personal income taxes for qualified education expenses, including private school tuition. The deduction is worth 50% of the total amount spent on qualifying expenses, up to a maximum deduction of $5,000. For more details on the program see here.

The tax deduction became effective as soon as it was signed, so we now have 22 school choice programs in 14 states plus D.C. All eyes are now on Georgia to see if a tax-credit scholarship program passed by the legislature becomes America’s 23rd school choice program; Governor Sonny Perdue has until May 14 to sign it, veto it, or allow it to become law without his signature.

Personal tax credits and deductions for educational expenses are an unusual way to do school choice; Louisiana’s program is only the fourth of this type. But it’s an approach with a long history. Minnesota enacted a tax deduction for educational expenses in 1955; Iowa enacted a tax credit in 1987; Minnesota added a tax credit on top of its deduction in 1997 (the credit excludes tuition but includes other expenses like books and fees – it’s the only program of this type not to include tuition); and Illinois enacted a credit in 1999.

Personal tax credit/deduction programs tend to be broad in scope but miniscule in magnitude. Only the Minnesota program has an income restriction, so the number of people eligible to participate in these programs is typically very large. Almost 650,000 families benefit from the Iowa, Illinois, and Minnesota programs. On the other hand, the Iowa and Illinois programs provide maximum credits of only $250 and $500 respectively. The Minnesota program is slightly more generous, providing a maximum credit of $1,000 and a maximum deduction of $1,625 in grades K-6 and $2,500 in grades 7-12. And the maximum deduction in Louisiana is $5,000. I don’t know what that works out to in tax savings, but since state tax rates are lower than the federal rate it can’t be that much. Moreover, in most cases the taxpayer does not get a dollar-for-dollar credit or deduction for the money he or she spends; for example, in Louisiana you only get 50 cents on the dollar.

One idea behind these programs is to cut out the middleman and provide school choice as directly as possible. For example, the most important drawback of tax-credit scholarships is that they don’t create a parental entitlement to school choice. The scholarship granting organizations act as gatekeepers, generally favoring low-income parents and thus exacerbating the problem of “targeting” in school choice programs. (Of course, a corresponding advantage is that scholarship granting organizations have flexibility in the distribution of resources; one thing I discovered when I did the research behind this report is that scholarship granting organizations will often step up to provide full-ride scholarships to students facing personal crises such as the death of a parent.) By contrast, both vouchers and personal tax credits/deductions create a parental entitlement to school choice.

I have heard some argue that personal tax credits/deductions are better than vouchers because they cut out the middleman even more completely; supposedly it would be harder to add unnecessary regulations restricting the private schools. But I’ve never been able to understand why this is the case. In both voucher and personal tax credit/deduction programs, the legislature defines which private schools are eligible, and in both cases that’s where the unnecessary regulations get inserted. Why is it harder to do in one case than in the other? Is there some political reason why such restrictions are less likely to be written into the tax code than into other laws? That doesn’t strike me as plausible, but I’d be open to correction if somebody could make a case for it.

The major drawback to these programs is in the structure of state income taxes. Until some state enacts a refundable credit,** the benefit families get from these programs is limited to their total state income tax bill. That’s not a lot of money. And fewer dollars means less choice, as this report helpfully reminds us. Of course, you could in theory pass a refundable credit, but the political obstacles to that would be formidable.

For the record, the Friedman Foundation for Educational Choice, where your humble servant is employed, has no position on whether vouchers, tax-credit scholarships, or personal tax credits/deductions are preferable. Our only goal is to provide a full choice to all students, and in theory all three types of programs can do that. They each have their advantages and disadvantages, but we evaluate each program based on how much choice it provides, not its funding mechanism.

That said, until we achieve universal choice, we’re stuck with limited programs, and in that context each of the three types has its own advantages and disadvantages.

Louisiana is a lot better off for having this program as opposed to no program. It will help a substantial number of families send their children to the school of their choice more easily, and it’s a universal program, establishing the important principle that school choice is good for all, not just for some.

That, and the passage of yet another school choice program is further proof, if further proof were necessary, that school choice is politically stronger than ever.

**CORRECTION: George Clowes has reminded me that the Minnesota tax credit is in fact refundable. That doesn’t really affect my point much, since the Minnesota credit doesn’t include tuition (only other education expenses like books and fees) and this is an even bigger limitation than the “unrefundability” (to use a totally real and not-made-up word) of the credits in other states. Tax credits for private school families won’t provide much choice until we get one that 1) is refundable, 2) isn’t restricted to a small amount of money, and 3) includes tution. Nonetheless, I apologize for the error, and I thank George for bringing it to my attention.

(Guest post by Greg Forster)

                                                                                                                                             George Clowes

Connoisseurs of the art of the smackdown will not want to miss the richly deserved spanking George Clowes administers to two representatives of the blob in the letters section of today’s Wall Street Journal.

Two public school teachers had written in to peddle the Myth of Helplessness*, blaming poor public school performance on what they called “inferior raw material,” i.e. low-income minority students.

Clowes pulls no punches. As the great school reformer Mr. T once said, “Allow me to introduce you to my good friend pain!“

Enjoy.

*If you don’t know what the Myth of Helplessness is, for goodness’ sake move out of your mother’s basement and start hanging out with the cool kids.

(Edited to fix the quote from the teachers. The actual quote is even worse than what I had originally put!)

Some folks wanted to see more data on my earlier post, Proximity and Power.  In that post I described how Jonathan Butcher and I have actually measured the distance between interest group state headquarters and state capitol buildings.  Our argument is that interest groups want to inflate the perception of their power  by having offices that are very close to the capitol. 

The groups that we normally think are the most powerful are, in fact, the ones regularly closest to the state capitol.  The teacher union excels at proximity, followed by the Trial Lawyers, AARP, and AFL-CIO.  I’m somehow reminded of the MOD Squad in the movie Thank You for Smoking.

I’ve reproduced the results for those four organizations below for each state. The rank is among the 25 most powerful interest groups as identified by Fortune Magazine.  The teacher union is a prince among princes.

(Guest post by Matthew Ladner)

Like Greg, I have also been looking at Florida lately. My interest was prompted by Sol Stern’s notion that we ought to give up on school choice and focus on instructional reforms. In City Journal’s debate on Sol’s article, I and others essentially argued that we could walk and chew gum at the same time, pushing both incentive and instruction based reforms. Florida under Jeb Bush and Charlie Crist in fact did this, and the results are breathtaking.

In 1998, the year Bush won election, a stunning 47 percent of Florida fourth-graders scored “below basic” on the NAEP reading test, meaning they couldn’t read at grade level. By 2007, 70 percent of Florida’s fourth graders scored basic or above — a remarkable improvement in less than 10 years.

Best of all, improvements among Hispanic and African-American students helped to drive the overall results. Florida’s Hispanic students now have the second-highest reading scores in the nation; and African-Americans score fourth-highest when compared to their peers. Both groups have a great deal of momentum on their side.

The average Florida Hispanic student score on NAEP 4th grade reading tests (conducted in English mind you) is now higher than the overall average scores of all students in Alabama, Alaska, Arizona, Arkansas, California, Hawaii, Louisiana, Mississippi, Nevada, New Mexico, Oklahoma, Oregon, South Carolina, Tennessee and West Virginia. Florida’s African Americans outscore the statewide average for Louisiana and Mississippi, and are within striking distance of several of these others.

Free and Reduced lunch eligible Hispanics in fact outscore the average for all students among some of these states, including California.

I can’t tell you precisely how much of these gains can be attributed to testing and other such reforms, and how much to choice and other incentive based reforms. What is very obvious is that some of these gains are the result of choice- that much is clear from Jay’s study, Greg’s new study, and from the Urban Institute study. There are also a number of states that have instituted testing and have flat NAEP scores.

The lesson of this is clear- far from being in competition with each other, tough minded testing and choice reforms are quite complimentary to each other.

(Guest post by Larry Bernstein)

When you hear about the current financial crisis, most of the focus is on foreclosed subprime loans.  But, the financial crisis has spread to all financial products as delinquencies have increased for credit cards, auto loans, and other secured and unsecured borrowings.  Direct lenders and securitization lenders are now demanding more spread to compensate for the perceived increased risk of default. 

Student loans are no different from any other form of debt.  Defaults have surged in the past few months.  Despite the fact that most loans are guaranteed by parents of the students with terrific FICOs (credit ratings), many more loans are delinquent.  How bad is it?  One of the largest insurance companies that guarantee private student loans filed for bankruptcy last week.  First Marblehead, which securitizes private student loans, stock price is down more than 90% from its highs of last year as investors rightly perceive that First Marblehead’s residual claims on student loan securitizations may not be very valuable.  Bank of America which is one of the largest direct lenders in private student loans announced last week that they will discontinue making private student loans, and Bank of America will only make Federally Guaranteed student loans.

Based on these three events described above, the number of private student loans will decline dramatically in the week’s ahead.  There are financial and social consequences to this problem.  Students with limited access to financial means will not be able to attend their school of choice next semester.  For most students, if you cannot pay, you cannot attend.  I suppose, some students will go to school part-time, or will work part-time to make ends meet.  But for many students, they will either choose a less costly collegiate experience, defer, or will discontinue their college education. 

I expect for-profit colleges’ earnings to suffer with fewer students.  I have not yet shorted these company’s shares, but I will be looking into it in the days ahead.   We should expect not-for-profit college institutions to suffer as well.  Clearly Harvard will be fine.  Harvard’s endowment and student body can afford the education.  It is the poorer schools with a limited endowment and a student body that depends on private school loans to be truly hurt during this financial crisis.

Whenever the financial markets curtail borrowers, there will be those that cry out for additional government assistance.  We are seeing this particularly in the residential home loan market.  The government cannot make the defaults disappear.  The government will be making loans to those citizens who the market believes are not creditworthy or at a rate of interest that is insufficient for private actors to lend.  I fully suspect that if the government increases the loan sizes that it is guarantees, then we should expect substantial losses on the government’s loans.  There is no free lunch. 

The time of reckoning for private and public actors is next semester.

(Guest post by Greg Forster)

Florida’s A+ program, with its famous voucher component, has been studied to death. Everybody finds that the A+ program has produced major improvements in failing public schools, and among those who have tried to separate the effect of the vouchers from other possible impacts of the program, everybody finds that the vouchers have a positive impact. At this point our understanding of the impact of A+ vouchers ought to be pretty well-formed.

But guess what? None of the big empirical studies on the A+ program has looked at the program’s impact after 2002-03. That was the year in which large numbers of students became eligible for vouchers for the first time, so it’s natural that a lot of research would be done on the impact of the program in that year. Still, you would think somebody out there would be interested in finding out, say, whether the program continued to produce gains in subsequent years. In particular, you’d think people would be interested in finding out whether the program produced gains in 2006-07, the first school year after the Florida Supreme Court struck down the voucher program in a decision that quickly became notorious for its numerous false assumptions, internal inconsistencies, factually inaccurate assertions and logical fallacies.

Yet as far as I can tell, nobody has done any research on the impact of the A+ program after 2002-03. Oh, there’s a study that tracked the schools that were voucher-eligible in 2002-03 to see whether the gains made in those schools were sustained over time. But that gives us no information about whether the A+ program continued to produce improvements in other schools that were designated as failing in later years. For some reason, nobody seems to have looked at the crucial question of how vouchers impacted Florida public schools after 2002-03.

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That is, until now! I recently conducted a study that examines the impact of Florida’s A+ program separately in every school year from 2001-02 through 2006-07. I found that the program produced moderate gains in failing Florida public schools in 2001-02, before large numbers of students were eligible for vouchers; big gains in 2002-03, when large numbers of students first became eligible for vouchers; significantly smaller but still healthy gains from 2003-04 through 2005-06, when artificial obstacles to participation blocked many parents from using the vouchers; and only moderate gains (smaller even than the ones in 2001-02) after the vouchers were removed in 2006-07.

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It seems to me that this is even stronger evidence than was provided by previous studies that the public school gains from the A+ program were largely driven by the healthy competitive incentives provided by vouchers. The A+ program did not undergo significant changes from year to year between 2001-02 and 2006-07 that would explain the dramatic swings in the size of the effect – except for the vouchers. In each year, the positive effects of the A+ program track the status of vouchers in the program. If the improvements in failing public schools are not primarily from vouchers, what’s the alternative explanation for these results?

Obviously the most newsworthy finding is that the A+ program is producing much smaller gains now that the vouchers are gone. But we should also look more closely at the finding that the program produced smaller (though still quite substantial) gains in 2003-04 through 2005-06 than it did in 2002-03.

As I have indicated, I think the most plausible explanation is the reduced participation rates for vouchers during those years, attributable to the many unnecessary obstacles that were placed in the path of parents wishing to use the vouchers. (These obstacles are detailed in the study; I won’t summarize them here so that your curiosity will drive you to go read the study.) While the mere presence of a voucher program might be expected to produce at least some gains – except where voucher competition is undermined by perverse incentives arising from bribery built into the program, as in the D.C. voucher – it appears that public schools may be more responsive to programs with higher participation levels.

There’s a lot that could be said about this, but the thing that jumps to my mind is this: if participation rates do drive greater improvements in public schools, we can reasonably expect that once we have universal vouchers, the public school gains will be dramatically larger than anything we’re getting from the restricted voucher programs we have now.

One more question that deserves to be raised: how come nobody else bothered to look at the impact of the A+ program after 2002-03 until now? We should have known a long time ago that the huge improvements we saw in that year got smaller in subsequent years.

It might, for example, have caused Rajashri Chakrabarti to modify her conclusion in this study that failing-schools vouchers can be expected to produce bigger improvements in public schools than broader vouchers. In this context it is relevant to point out that many of the obstacles that blocked Florida parents from using the vouchers arose from the failing-schools design of the program. Chakrabarti does great work, but the failing-schools model introduces a lot of problems that will generally keep participation levels low even when the program isn’t being actively sabotaged by the state department of education. If participation levels do affect the magnitude of the public school benefit from vouchers, then the failing-schools model isn’t so promising after all.

So why didn’t we know this? I don’t know, but I’ll offer a plausible (and conveniently non-falsifiable) theory. The latest statistical fad is regression discontinuity, and if you’re going to do regression discontinuity in Florida, 2002-03 is the year to do it. And everybody wants to do regression discontinuity these days. It’s cutting-edge; it’s the avant-garde. It’s like smearing a picture of the virgin Mary with elephant dung – except with math.

You see the problem? It’s like the old joke about the guy who drops his keys in one place but looks for them in another place because the light is better there. I think the stats profession is constantly in danger of neglecting good research on urgent questions simply because it doesn’t use the latest popular technique.

I don’t want to overstate the case. Obviously the studies that look at the impact of the A+ program in 2002-03 are producing real and very valuable knowledge, unlike the guy looking for his keys under the street lamp (to say nothing of the elephant dung). But is that the only knowledge worth having?

(Edited to fix a typo and a link.)