Friedman and school choice
By Samantha ChaFong
web posted September 29, 2025
It is a question that rages across America: what's wrong with the schools? White, black, liberal, conservative – everyone has something to say about education. One answer to the issue lies in the work of economist Milton Friedman. In his 1955 paper "The Role of Government in Education" (PDF), he proposed that the government was over-managing the school system to the detriment of both parents and students. To correct this, he suggested that the US government use educational funds to help parents who wanted to send their children to private schools, opening the field for the benefits of competition. Today, Friedman's idea, commonly referred to as "school choice", has been implemented in thirty states as well as the District of Columbia (Liebermann et al.). Although his system is not perfect, Friedman is correct in principle: government should minimize its involvement in the school system, and free choice leads to positive student outcomes.
Friedman's proposal does face challenges. His proposal relied on the school voucher, the government money provided to help cover the cost of private school. Public schools would still serve families that they satisfied; the vouchers would merely provide options for discontented parents. His belief was that the nature of competition would improve all schools, public and private alike. However, money is a scarce resource, and government money is an especially scarce resource. Since public school and voucher funding would both fall under the same education budget, increasing voucher funds would likely decrease the money public schools get. Once the law of increasing opportunity cost is considered, this means that as more vouchers are given, the greater the cost to give out more vouchers. That cost is reckoned in the dollars lost by the public schools. Depleted resources would exacerbate the challenges faced by underfunded public schools. Thus, encouraging competition risks undermining part of the competition.
Despite these difficulties in implementation, Friedman's proposal points out a real problem in the school system. He concedes that government can mandate an education standard and provide funding to achieve that standard. However, he does not believe the government has a strong argument for directly managing said education. He further posits that direct management may actually hinder the market from adapting to students' needs. Here his argument stands. A government that upholds free-market principles should prevent abuse of the economic system without removing people's freedom or artificially influencing the market. However, the public school system is an example of this type of artificial influence. The law of demand says that if a service is priced at a low cost, demand goes up for that service. In this situation, demand for public schools is high because government funding enables public schools to provide free education. However, this demand has no innate relation to educational quality or parental desires. I have friends whose parents preferred private school but sent them to public school for financial reasons. The monetary advantage leads to public schools gaining an almost complete monopoly on students. With a reliable demand for services and a steady supply of funding, schools face few incentives to change or adapt for individuals. After all, the demand will not disappear. We do not let companies gain monopolies over products; why should the government be any different?
In addition to addressing the problem in principle, Friedman's choice system also produced the positive change predicted. Friedman believed that under school choice people would select the best option for themselves, leading to better educational outcomes. This argument has been supported by data. For example, a 2002 report found that Black students in New York City, Ohio, and the District of Columbia saw an average test score increase of 6.3 points after using vouchers to switch to private schools (Campbell et al.). Extra competition also has shown signs of increasing public school success. In a 2023 study in Florida, researchers found that students who remained in public school when school choice was implemented saw "growing benefits (higher standardized test scores and lower absenteeism and suspension rates)" (Figlio et al). These results lend support to Friedman's belief that the school market would shift for the better once competition was introduced. In the same way that competition between companies leads to better products for consumers, competition between different schools leads to better schooling.
In conclusion, Friedman's system did not give schools in America a golden ticket out of under performance. It did, however, plainly point out the unmentioned issue within public schooling and provided a workable solution. In a free market economy, the ability to choose is paramount. The school choice system gives parents that choice when it counts most. 
S. ChaFong is a high school student currently studying AP Macroeconomics. (c) 2025 S. ChaFong
