Parents choosing high schools for their kids place more value on the students already enrolled than on the school's effectiveness, according to a study by MIT economist Parag Pathak

• MIT professor Parag Pathak, recently published a research paper focused on what parents value when selecting a high school for their kids.
• Pathak's work has found that parents focus more on the quality of the students enrolled at the school then they do on the school's actual effectiveness, which is defined as improving outcomes for students.
• He began researching education specifically around 2003, while working with renowned Stamford professor Alvin Roth to fix New York City's high-school matching system.
• It's a "glorious time" for economics, says Pathak, as the discipline becomes more practical, solving problems in the real world.
• This article is part of our series, Practical Economics.

Parents want to send their children to the best schools. But what does "best" mean, exactly? As educational systems evolve to feature more charter-school options, school vouchers, and new systems for student matching across public-school networks, parental anxiety over making good choices increases.

An economics approach to education shines light not only on what constitutes a great school, but also on the factors impact parental perception about what schools are better than others.

In a recent paper titled "Do Parents Value School Effectiveness?" Parag Pathak and colleagues at MIT found that "parents prefer schools that enroll high-achieving peers," and once the researchers controlled for that fact, its actual effectiveness did not factor.

Pathak, who is a professor of economics at MIT and a director at its School Effectiveness and Inequality Initiative, said, "Look at a New York City elite exam high schools like Stuyvesant, which is highly sought after. For many parents, that's their top choice. So why do they think that's a good school - they look at what happens to those graduate, who go on to places like MIT."

Pathak and his colleagues define an effective school as "one that generates causal improvements in student outcomes." More school choice options should, in principle, lead to schools competing with each other to demonstrate their effectiveness to win students.

There may be significant consequences to this bias. If parents care more about the profiles of the student attending the schools than they do about the school's actual measures of effectiveness, it has the potential to change where education leaders choose to invest finite resources.

Instead of improving instruction at their school, leaders might opt to invest more in student recruitment, and may even create more barriers for entry among the broader population.

"Since peer quality is a fixed resource, this creates the potential for socially costly zero-sum competition as schools invest in mechanisms to attract the best students," the paper states.

Fixing broken school systems through economics

Pathak found his way to education research "randomly," when he was still working towards his PhD at Harvard. His advisor was the renowned economist Alvin Roth, now at Stamford and since a recipient of the 2012 Nobel Prize in Economics.

Around 2003, the New York City Department of Education reached out to Roth for help to fix its broken high-school matching system. Pathak was part of the team that developed the new system, which remains in place today.

Pathak's work with New York City schools, and in subsequent work with Boston, New Orleans, and Chicago, gave him insights into problems he had not previously considered. "In the course of doing this, my eyes were opened to the difficulties of big urban school districts and the potential for the big data toolbox to actually be useful."

A solution to school matching might be attainable, but the bigger challenge remains. "It's a success in terms of matching systems getting out there," Pathak said. "But it shines a spotlight on bigger problem - the scarcity of good schools."

A "glorious period" for applied economics

Pathak, who initially came to economics through an interest in mathematics and social justice, said we are in "a glorious period of economics, because the discipline is becoming more applied. On the data side of things, we are able to measure things we've never been able to measure in the past."

The rise of "market-design economics" has attracted a new type of person to the profession, he said. "Our folks are much more humble. We really like to get our hands dirty from very real problems," he added. "The mindset is more of an engineer - how would we put those ideas to use in actually building something in society?"

Pathak doesn't always apply economic practices to his personal life, however. "My wife is always pointing out the theory of competitive advantage to me - which is, basically, specialize in what you're good at. I don't know how to fix anything, and she'll say, 'Isn't it better to get someone from Task Rabbit to help us?"