Panel on the Economics of Education Reform

This paper grew out of the efforts of the Panel on the Economics of Education Reform (PEER), a group of American economists who wanted to bring to light a variety of economic thought and various economic approaches as they relate to school reform. These ideas are elaborated in the panel's report: Making Schools Work: Improving Performance and Controlling Costs.1 This paper, however, does not point to a specific program or method for reorganizing schools to solve the problems associated with school reform, in part because we do not believe that there is a single answer. Instead, the paper advocates an overall concentration on strengthening performance incentives and on comparing benefits with costs--a set of decision rules that have proven extremely useful in enhancing business performance but that have been ignored by schools. The paper also emphasizes the need for experimentation and evaluation--items generally missing from today's schools.