How's your drink?

Liam Julian

The market's ability to improve school quality has faced growing skepticism lately (see below). And now this.

We learn from a study published Monday in the Proceedings of the National Academy of Sciences that cheap wine tastes better when its drinkers believe they're sipping a Grand Cru. One wonders: Are parents who enroll their children in tony schools perhaps guzzling Two Buck Chuck?

But back to the wine. Twenty (lucky) volunteers, all of whom reported liking and at least occasionally drinking the red variety, were presented with five glasses of Cabernet Sauvignon. They were told that no two glasses contained the same wine, and that each wine they tasted was differently priced, ranging from $5 to $90 per bottle. But the researchers had performed a sly trick. The $90 wine was the same as the $10 wine (actual price: $10), and the $45 wine was the same as the $5 wine (actual price: $5). The $35 Cab was really $35.

When volunteers vetted the vino, they ranked the supposedly pricier wines over the cheaper stuff. And not only did subjects find the expensive wines more pleasant, but their brains did, too. The medial orbital prefrontal cortex, the part of the brain that registers pleasure, showed the greatest activity when subjects drank the supposed $90 liquid and the least when they sipped from the $5 cup. When the trial was repeated exactly, but without the wine prices elucidated, subjects reported being unable to discern a difference between glasses.

If schools are like wine, parents who can swing it (or get the requisite aid) surely derive pleasure from enrolling their offspring in a pricey institution. Their minds very likely correlate a school's educational quality with its lofty tuition. And wine is a useful analogy here, too, because it's as tough for most people to judge the worthiness of a glass of pinot as it is for them to judge the worthiness of a school. Thus, their perceptions of both are susceptible to tingeing by outside factors that have no intrinsic qualitative value, such as price.

A problem arises for universal voucher proponents, who believe that an educational market will take care of its own quality control, regardless of whether the government holds schools to account for raising student performance in academic subjects. Good schools will flourish, they say, because their sterling reputations will swamp them with customers. Bad schools will founder, shrivel, and die.

But when perception becomes the false reality on which reputation is based (as in the wine experiment), the market is corrupted, and schools may become "good" simply because they're expensive. Although voucher schools might be "free" to the consumer, they're certainly not free in reality; some will be more expensive, and thus more desired, than the others.  

Columbia Professor Henry Levin, who studies the economics of education, believes this occurs all too frequently. "People think that if something is priced lower, it's inferior," he said in a Forbes Magazine story. Levin, a scotch drinker, likes to call this the "Chivas Regal effect," a phrase first penned some two decades ago.

Wine producers have long known about the Chivas Regal effect (even before studies showed why it's true), and in many cases they've artificially inflated their prices because of it. Proponents of a universal voucher program have a duty to show why school providers won't learn the same lesson as vintners and hike up prices (especially when parents pay tuition with government funds, not their own). It is true that some existing voucher programs do not allow private schools to "top up" their costs--that is, to charge voucher students more in tuition than their voucher will cover. That does not, of course, mean that a private school couldn't hike up prices for non-voucher students, and raise their perceived prestige thusly.

Such an artificial increase in cost has certainly happened in higher ed. Government money is partly to blame. According to an article in the Chronicle of Higher Education, "since 1980, federal student-loan volume has grown tenfold in constant dollars, while tuitions have increased, on average, at more than double the rate of inflation." In the 1980s, when he was secretary of education, William Bennett likened this scenario, in which student aid enables rising tuitions, to a dog chasing its tail.

George Washington University in D.C. has steadily raised its prices to raise its prestige. Now, its tuition and fees are over $50,000 per year. President Emeritus Stephen Trachtenberg told Washington City Paper, "Nobody cares what the tuition is. Students who pay the full tuition are a small fraction of the student body." Ursinus College, a small liberal-arts school in Pennsylvania, decided that it was losing applicants because tuition was too low. So in 2000, the school raised prices by 17 percent, and within four years the freshman-class numbers had risen by a third (see here).

Today, attending expensive, supposedly "better" universities has become at least partly a government-subsidized competition. So if price is believed to define quality, why would large-scale voucher programs not spur something similar in the k-12 arena, and why would government be able to control costs any better there than it has in higher ed?  

That we pay more for lower quality wine isn't terribly upsetting. That we could pay more for lower quality k-12 education is. Quality in wine, as in many other things, is interwoven with, and less important than, the pleasure it provides. If you swill pricey swill, fine. Your poor taste and coarse palette offends no one but yourself (and perhaps your slightly embarrassed spouse).

But the parent who derives pleasure from enrolling her child in a pricey yet inferior school does present a problem. Here we are on objective ground: Johnny either knows his multiplication tables or he doesn't. And unlike the philistine who gleefully slurps vinegar, the parent's unjustified pleasure comes with a cost: his or her child may receive a lesser education.

Something to ponder over your next glass.

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