As we’ve reported, the reach of education companies—education management organizations, virtual charter schools, software vendors, supplemental education service providers, publishers, etc.— and the current focus in education on student performance has led to increased scrutiny of for-profit education providers. But still there’s not much incentive for education’s private sector to evaluate its own effectiveness, writes Matthew Riggan in the latest report from the Washington-based think tank the American Enterprise Institute and its “Private Enterprise in American Education” series.

“It appears that while at least some for-profits are adept at exploiting positive evaluation findings when they have them, they do not have an overriding concern with justifying their products or services using third-party evaluation,” Riggan, of the University of Pennsylvania’s Consortium for Policy Research in Education, writes. “This may be because such evaluation is related only loosely to the financial performance of a given product or service.”

The report suggests a number of contributing factors.

• Because for-profit companies are more sensitive to market conditions and must answer to investors, performance data of its users has a direct effect on the bottom line. As in the case of K12 Inc., for instance, poor performance data led to major drops in stock prices and a class-action lawsuit from investors.
• As such, for-profit firms want independent research with positive outcomes, but it’s not that easy. “Rigorous, third-party evaluations are desirable only under ideal conditions,” Riggan writes, “yet those same conditions tend to thwart rigorous evaluation.”
• It’s also not clear that school districts care about performance evaluation, Riggan argues. Many districts don’t know about the federal What Works Clearinghouse and statistics show districts with similar demographics and student performance often vary widely in spending, suggesting even if there were rigorous evaluations, districts wouldn’t know about them or change spending because of them.

Riggan concedes for-profit education firms are very good at using evaluations internally, to improve products and services. And some, such as America’s Choice, its parent company, Pearson, and the READ 180 curriculum, have benefited from third-party studies.

But that doesn’t make the marketplace better informed, Riggan says. He suggests basing more evaluations around parent, teacher, and principal feedback. Other solutions can be reached through policy— school leaders should be given more flexibility in allocating resources based on performance indicators, and states should consider funding based not on a per-pupil basis but on performance, Riggan writes.

We’ve seen product ratings and reviews services emerging to provide information directly to the end-consumers Riggan mentions. And groups like the League of Innovative Schools are trying to initiate research from the bottom-up. But, as this report points out, it may take broader, more difficult efforts to change the entire market.

On a related note, we have a new blog at Education Week, EdTech Researcher, by Justin Reich, a doctoral researcher at the Harvard Graduate School of Education, that should tackle some of these very issues. Check it out.