The Effects of Economic Freedom on the Quality of Education

In this chapter, Dr. Horst Feldmann presents statistical evidence that economic freedom improves the quality of education. He argues that economic freedom incentivizes parents to invest in the high-quality education of their children and helps them to do so. Moreover, economic freedom incentivizes and helps both governments and private providers to deliver high-quality education. Dr. Feldmann uses data from large samples of countries and two different indicators of educational quality: PISA scores (47 countries) and the World Bank’s harmonized test scores (132 countries). The magnitudes of the estimated effects of economic freedom on both indicators are substantial. They are even larger once the indirect effects of economic freedom via GDP per capita are taken into account.