A key insight from economics is that incentives matter. Policies for clean air, biodiversity, and marine conservation with the proper incentives help foster environmental improvements at reasonable cost, whereas regulatory mandates can create perverse incentives and effects. Similarly for public education, policies that incentivize administrators and teachers to act as owners of local schools hold the most promise. These include reforms that enable public school choice.
Key Takeaways
- We need to evaluate policies “in terms of the incentives they create rather than the hopes that inspired them” (Thomas Sowell). Policy mandates create incentives to comply but not necessarily to work toward the broader goals of improved environmental health at lower cost.
- Lessons from environmental policy apply to public education, where regulatory mandates can create perverse incentives and fail to reward educators for innovating.
- Market-based policies create a decentralized incentive system to reward entrepreneurs who discover news ways to enhance environmental health. The same applies to schools: Incorporating market incentives, such as public school choice, into regulatory structures tends to create better results when compared to command-and-control mandates.
Environmental Incentives vs. Environmental Mandates: Lessons for Educational Policy by Hoover Institution
