Sweden Introduced School Choice—Then Things Got Ugly

The search for better economic policy.
July 15 2014 11:48 PM

Sweden’s School Choice Disaster

Advocates for school choice might be shocked to see how badly the country’s experiment with vouchers failed.

High school students at Bokenskolan in Jokkmokk, Sweden, participate in a woodwork and handicraft class as part of an upper-secondary program on Nov. 6, 2013.
High school students at Bokenskolan in Jokkmokk, Sweden, participate in a woodwork and handicraft class as part of an upper-secondary program on Nov. 6, 2013.

Photo by Jonathan Nackstrand/AFP/Getty Images

Every three years, Americans wring their hands over the state of our schools compared with those in other countries. The occasion is the triennial release of global scholastic achievement rankings based on exams administered by the Program for International Student Assessment, or PISA, which tests students in 65 countries in math, science, and languages. Across all subjects, America ranked squarely in the middle of the pack when the tests were first given in 2000, and its position hardly budged over the next dozen years.

The angst over U.S. student performance—and its implications for the American workforce of the near future—is inevitably accompanied by calls for education reform: greater accountability, more innovation. Just as inevitable are the suggestions for how more accountability and innovation could be realized: more charter schools, more choice, less bureaucratic oversight.

Advocates for choice-based solutions should take a look at what’s happened to schools in Sweden, where parents and educators would be thrilled to trade their country’s steep drop in PISA scores over the past 10 years for America’s middling but consistent results. What’s caused the recent crisis in Swedish education? Researchers and policy analysts are increasingly pointing the finger at many of the choice-oriented reforms that are being championed as the way forward for American schools. While this doesn’t necessarily mean that adding more accountability and discipline to American schools would be a bad thing, it does hint at the many headaches that can come from trying to do so by aggressively introducing marketlike competition to education.

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To the extent that Americans think about Sweden at all, it usually conjures images of gibberish-speaking Muppets, Ikea furniture, and, when it comes to government policies, the welfare state. So it’s something of a surprise that more Swedish students go to privately run (and mostly for-profit) schools than in any other developed country on earth. The system was put in place in the early 1990s by a center-right (by Swedish standards) government, inspired by the ideas of the godfather of free market economics, Milton Friedman. In a 1955 article titled “The Role of the Government in Education,” Friedman advocated for a system in which governments would issue vouchers to parents that would be redeemable toward tuition payments at a private school of their choice. This voucher system would allow market pressures to work their magic, as schools would be forced to improve their quality in order to compete for students and their voucher dollars. (Even if governments remained in the education business, public schools would face the same market pressures to maintain enrollment as private schools.)

There are differences between the libertarian ideal espoused by Friedman and the actual voucher program the Swedes put in place in the early ’90s. Friedman would have allowed schools to charge parents more in tuition than what a voucher could cover, potentially allowing rich parents to send their kids to better-resourced schools than poor parents could. Friedman’s system also allowed for choice on both sides of the market: Just as parents got to pick where to send their kids, schools had the right to accept some applicants and reject others. In the name of equal access, Sweden forbade nonvoucher tuition payments and permitted only limited screening (based on scholastic performance) for high school admission.

But Swedish school reforms did incorporate the essential features of the voucher system advocated by Friedman. The hope was that schools would have clear financial incentives to provide a better education and could be more responsive to customer (i.e., parental) needs and wants when freed from the burden imposed by a centralized bureaucracy. And the Swedish market for education was open to all, meaning any entrepreneur, whether motivated by religious beliefs, social concern, or the almighty dollar, could launch a school as long as he could maintain its accreditation and attract “paying” customers.

For a while, at least if media accounts of the reforms are any indication, things looked like they were going pretty well. Voucher school students consistently outperformed their counterparts at government schools; in 2008, the London Telegraph described the reforms’ impact as “tremendous.” The number of private schools increased tenfold in less than a decade, with a majority run as for-profits.

But in the wake of the country’s nose dive in the PISA rankings, there’s widespread recognition that something’s wrong with Swedish schooling. As part of ongoing efforts to determine the root cause, the Swedish Schools Inspectorate (the equivalent of the U.S. federal government’s Department of Education) called for a regrading of a subset of standardized tests administered during 2010 and 2011. In total, nearly 50,000 students at all grade levels from more than 700 schools had their tests in English, Swedish, science, and math re-evaluated.

Two Stockholm University economists, Björn Tyrefors Hinnerich and Jonas Vlachos, have been analyzing the data, and their findings to date demonstrate the many ways that things can go wrong under a market-driven education system. As in many countries, Sweden has standardized tests that are administered to all students nationwide. Performance matters for both students and the schools they attend. Students who do well will have brighter admission prospects. Schools that do well attract more (and perhaps better) students; the ones that perform poorly risk losing accreditation. However, unlike, say, the SAT, which is sent off to be graded at the testing service’s headquarters, in Sweden grading is done locally, often by teachers, often at the school where the test-takers are enrolled. (This setup is not uncommon in the U.S. as well: The New York state Regents Exam is administered to all students and graded by each student’s own teacher.)

It’s easy to imagine teachers going easy on their own students, possibly unconsciously, motivated by nothing more than a desire to help them—a study co-authored by my colleague, Jonah Rockoff, found exactly this result in an analysis of New York Regents Exam grading. In Sweden, according to the study by Hinnerich and Vlachos, the scores issued by external evaluators were indeed harsher than those assigned by internal graders. And after accounting for things like a school’s location, along with basic student characteristics, it turned out that the external evaluators had downgraded the scores for students at voucher schools much more than for students at government ones. In fact, a sizable portion of the much-vaunted outperformance of voucher school students could be chalked up to nothing more than easy grading. More surprising still, the voucher school grade inflation is almost as high for math and science (where you’d think an answer is either right or wrong) as it is for Swedish. By contrast, Rockoff et al.’s Regents Exam analysis found very little evidence of test score manipulation in quantitative subjects.  

It’s the darker side of competition that Milton Friedman and his free-market disciples tend to downplay: If parents value high test scores, you can compete for voucher dollars by hiring better teachers and providing a better education—or by going easy in grading national tests. Competition was also meant to discipline government schools by forcing them to up their game to maintain their enrollments, but it may have instead led to a race to the bottom as they too started grading generously to keep their students.