Choice in Education – #2: Adam Smith

In the 1700s choice in education meant something different than it does today. At that time choice was not a matter of which school to go to but whether to go to school at all.

In 1696 Scotland passed an act in 1696 providing for the establishment of a school in every parish that did not already have one.* But how to make sure the education provided was a good one.

Adam Smith understood the need for government to play a major role in providing and paying for education. However, he did not think that government should pay the entire cost. Rather, he said this:

"For a very small expence the publick can facilitate, can encourage, and can even impose upon almost the whole body of the people, the necessity of acquiring those most essential parts of education.

The publick can facilitate this acquisition by establishing in every parish or district a little school, where children may be taught for a reward so moderate, that even a common labourer may afford it; the master being partly, but not wholly paid by the publick; because if he was wholly, or even principally paid by it, he would soon learn to neglect his business." **

Smith worried that, if the teachers were totally paid by the public, they would not try as hard. He wanted a part of their compensation to be paid by the parents because, if the parents did not think the teacher was doing a good job, they would send their children to another school and another teacher. That would be an incentive to teachers to do a good job.

Smith’s own experience at Oxford, where the teachers were paid by the college’s endowment, as opposed to colleges in Scotland, where teachers were paid in part by fees they received from their students, was not a happy one:

"The endowments of schools and colleges have necessarily diminished more or less the necessity of application in the teachers. Their subsistence, so far as it arises from their salaries, is evidently derived from a fund altogether independent of their success and reputation in their particular professions. …

In the university of Oxford, the greater part of the publick professors have, for these many years, given up altogether even the pretence of teaching." ***

While Adam Smith’s idea of parents directly paying part of the teacher’s salary would not work today, the reasoning behind Smith’s idea is still true. As E. G. West said of Smith:

"Smith believed that the average parent could detect when his child was receiving an inefficient education. The possibility of his withdrawing his child and transferring the fees to another school enabled the parent to exercise sanctions upon a potentially inefficient school." ****

This reasoning is still true today, and it is a key part of the argument for choice in education. Parents know when their children are not getting a good education, and the best way to make sure children get a good education is for parents to have the ability to withdraw their children from a school that is not doing a good job and to transfer their children and the money to educate them to another school that will do a better job.

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* Arthur Herman, How the Scots Invented the Modern World, p. 19 (2001).
** Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations, Volume II, p. 785.
*** The Wealth of Nations, Volume II, pp. 760, 761.
**** E. G. West, Adam Smith: The Man and His Works, p. 37 (1976).