Marketized education: how regulatory failure undermined the Swedish school system

ABSTRACT

In a radical school choice reform in 1992, Sweden’s education system was opened to private competition from independent for-profit and non-profit schools funded by vouchers. Competition was expected to produce higher-quality education at lower cost, in both independent and public schools. This two-pronged study first examines to what extent the consequences of this reform deviate from the predicted results. It demonstrates increasing discrepancies between absolute test results and grades, suggesting grade inflation. Secondly, the study investigates whether the school choice reform was institutionally secured against school competition based on phenomena that are unrelated with educational quality, such as grading. It reveals that the architects of the school choice reform overemphasized the potential positive implications of market reforms and, therefore, did not deem it necessary to establish appropriate rules and institutions for school competition. Instead, grading and curriculum reforms had unintended consequences such as grade inflation and similar forms of school competition in dimensions other than school quality. The analysis of how the objective of raising the quality in Sweden’s schools through competition and choice was inadvertently undermined contains practical lessons for policymakers with regard to the use of privatization and co-production both in schools and in other fields.

KEYWORDS:

• School choice
• grade inflation
• institutions
• hazardous adjustment

Acknowledgement

The author thanks Magnus Henrekson, Johan Tralau, Elin Wihlborg, Gabriel Heller Sahlgren, Mårten Lindberg, Niclas Berggren, and Dana D. Dyson for helpful suggestions. This article has also benefitted from comments received at MPSA 2016 in Chicago; Roskilde University, Denmark; and WINIR 2016 in Boston.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. Like in Chile, political ideology played a significant role in the enactment of the Swedish reform – more so than in the enactment of longstanding voucher programs elsewhere in Europe at the time, as it was intended to encourage choice among pupils and competition among schools and not settle religious differences in what should be taught (Carnoy 1998). Similar, but less sweeping, market-liberal education reforms have since been enacted in other Nordic countries (see, e.g. Chapter 4 in Verger, Fontdevila, and Zancajo 2016) and the UK.

2. The reform was expanded from primary education to include secondary education in 1993 (Government Bill 1992/93:230).

3. For example, in the UK, all businesses and charities applying to set up a ‘free school’ – a direct translation of the Swedish term friskola – must demonstrate ‘a strong track record’ in education and that the persons involved have ‘the capacity and capability’ to run the school (Department for Education 2018, 37).

4. The aspect of cost is not discussed in this study.

5. A negative externality is a concept from economics referring to a situation where someone’s decision to produce or consume something has negative impacts on others (see, e.g. Claassen 2016, and the references therein).

6. See Betts and Grogger (2003), Figlio and Lucas (2004), and Bonnesrönning (2004b) for studies demonstrating that pupils learn less when grading is not stringent.

7. The same is also true of most studies of school competition elsewhere, according to Levin (2002).

8. It falls outside the scope of the study to fully account for how rules influence actual behaviour in schools. The study examines how rules and policies affect incentives for the relevant agents and to what extent outcomes are consistent with these incentives.

9. Eiken and Hultin are, in addition, two of the ‘Swedish former education policymakers that are currently active as commercial edu-business actors with the ambition to expand in the Global Education Industry (GEI)’ identified by Rönnberg (2017, 234) in her study of ‘edu-preneurs’ who move from shaping national policymaking to being executives within the GEI.

10. For a similar approach, see Ball’s (2007) study of privatization of education in the UK.

11. In 2013, 98 percent of pupils entered voluntary secondary education immediately after finishing year 9 of mandatory primary education (Swedish National Agency for Education 2014a). However, the fact that almost all pupils choose to pursue secondary education indicates that it is expected of them to do so. See also Harling (2017) for a discussion on how the marketization of Swedish secondary education may prompt pupils to enter secondary school.

12. The share of pupils who went to independent schools in 1992 was 1 percent in primary education and 1,7 percent in secondary education (Jordahl and Öhrvall 2013).

13. The law stipulates that admission to independent schools should be strictly based on queue time alone. However, this law can be circumvented with impunity since the records in the queue are not administered by an external agency.

14. PISA is a worldwide study by the OECD. In Sweden, the test is taken in the year the pupils turn 16.

15. See, for example, Murray (2008).

16. TIMSS is a worldwide study by the International Association for the Evaluation of Educational Achievement (IEA). TIMSS 2015, released on 29 November 2016, showed improvement in both mathematics and science. However, Swedish pupils fare below the EU/OECD average in mathematics and Swedish 8th graders are still outperformed by American pupils. The exception is the weakest Swedish and American students, who perform identically (Henrekson 2017). In science, Swedish pupils are still trailing behind the results of TIMSS 1995, in which Sweden was ranked as the top science nation.

17. PISA 2015, released on 6 December 2016, showed improvement in all three subjects. However, a shift to computer-based testing makes comparisons with previous results precarious (see Komatsu and Rappleye 2017; Jerrim 2018).

18. The merit rating in elementary and secondary school is calculated based on the pupil’s grades. Pupils are ranked for admission to the programmes available in secondary school/higher education according to this merit rating. Sweden changed its grading system in the fall of 2012, which makes comparability with previous grades difficult and explains why the figure does not include later years.

19. PISA is not an uncontroversial assessment, particularly with respect to its ranking of countries (Kreiner and Christensen 2014; Bulle 2011). However, other international assessments as well as various domestic tests of knowledge among Swedish pupils show the same declining trend (Henrekson and Jävervall  2017).

20. In this article grade inflation is defined as the difference between teacher-assigned grades and the results in international assessments.

21. PIACC is an international survey by the OECD.

22. Such material and immaterial rewards are commonly offered to pupils, although not in all independent schools. See, for example, Aftonbladet (2007), ‘Schools fight over secondary school pupils,’ Neuding (2017), ‘Junk food a new way for independent schools to attract students,’ and Svenska Dagbladet (2009), ‘Pupils in independent schools have superior computers.’ The author has translated all headlines.

23. Wikström and Wikström (2005) is interesting because these authors study school competition at an early point in time when the independent school sector was still in its infancy. Thus, it is not surprising that they find ‘small and selective’ effects of school competition on grade inflation (317). However, it is noteworthy that as early as 1997, they found that ‘independent schools seriously engage in grade inflation’ and that ‘students in independent schools appear to fare much better under decentralized grade setting than in the public schools’ (317). This suggests that the incentive for parents and pupils to choose an independent school to receive good grades and for public schools to gradually adapt has been strong since the late 1990s, at least in secondary education.

24. Vlachos (2010) studies grade inflation by looking at the difference between grades and performance on Swedish standardized tests, between grades in practical-aesthetic subjects and grades in subjects with standardized tests, and between grades in primary and secondary education. The relationship between grade inflation and school competition is also discussed in Fredriksson and Vlachos (2011).

25. The result was supported by Holmlund et al. (2014) in a study using a similar methodology (grades and Swedish standardized tests). Although the effect was small, the authors found that independent schools are more generous in grade setting than public schools and that grade inflation has been more prevalent in Swedish municipalities with a high degree of school competition measured by the Herfindahl index.

26. Böhlmark and Lindahl (2015) use the same approach as Vlachos (2010) and find no effect. However, since there were two different grading systems in operation during their period of study – one cohort-referenced and one criterion-referenced – the results should be interpreted with caution.

27. Entrance exams to universities are almost invariably never used in Sweden.

28. In a study of Chicago public schools, Levitt and Jacob (2003, 843) found that ‘[teacher] cheating appears to respond strongly to relatively minor changes in incentives.’ This is also suggested by Borcan, Lindahl, and Mitrut (2014, 32), whose study demonstrated that a wage loss for Romanian public sector employees, including teachers, ‘induced better exam outcomes in public than in private schools.’ Using evidence from a natural experiment in Italy, Bertoni, Brunello, and Rocco (2013) found that the presence of an external examiner reduced cheating by teachers and students on standardized educational tests.

29. Prior to the reform, the education system was heavily regulated – perhaps more than any other public institution in the world (Lewin 2014, 57).

30. It may seem reductive to discuss the school reforms in terms of naivety and unintended consequences. However, a recent study from the Swedish Ministry of Finance’s own ‘think tank’ discussing the deregulation of pharmacies, the postal system, telecommunications, railways, and schools in Sweden also pointed to a lack of foresight among politicians and policymakers. The study noted that ‘it is incomprehensible in retrospect that it had not been possible to anticipate and mitigate certain consequences’ (Forsstedt 2018, 17), for example, grade inflation in the area of primary and secondary education.

31. See further on this topic: Henrekson and Wennström (Forthcoming).

32. A factor that one may want to consider is the large immigration to Sweden in recent years. According to one study (Heller Sahlgren 2015a), 29 percent of the overall decline in PISA between the years 2000 and 2012, can be mechanically explained by the change in student composition. However, that study does not heed the fact that immigration has increased in other comparable countries as well during this period, and the point raised here is that Swedish results have deteriorated both absolutely and relative to the results in other comparable countries. Thus, the decline in knowledge cannot be explained away by immigration.

33. Cf. the discussion about government funding of private non-profit agencies in, for example, child and adult protective services, drug and alcohol treatment, services for the mentally ill and developmentally disabled, home care, and early childhood-education in Smith and Lipsky (1993).

Additional information

Funding

This work was supported by the Catarina and Sven Hagströmer Foundation.

Notes on contributors

Johan Wennström

Johan Wennström, Ph.D. (Political Science), works at the Research Institute of Industrial Economics (IFN), Stockholm, Sweden. His recent publications and research have focussed on education policy in Sweden.