Informed Demand

Ed is Watching responded to my recent report about school choice and pointed me to this website from the Education Policy Center - a website designed to inform Colorado parents about available school options. I took a quick look and the website looks helpful, providing a step-by-step guide for parents on enrolling in schools out of their district and finding charter schools. What I'm really interested in, though, is how they market this website to parents - how do they ensure that lower-income parents, who may not have time to surf the web during work, get access to this information? And are they talking to schools about how to reach out to those parents?

There is no doubt--as I found looking at other markets in low-income communities--that having well-informed consumers is critical to creating and maintaining high-quality options in a marketplace. But it takes more than publishing school report cards to create the kind of well-informed parents that will really drive quality in an education market.

Parents (and consumers in general) tend to rely on their social networks for information about schools, and parents without informed social networks are at a serious disadvantage in learning which schools are the good schools. Overcoming this disadvantage requires more than just making information available to parents, it requires an active, coordinated information campaign using multiple outlets--the internet, radio and television, and going door-to-door. And schools need to be a prominent part of the information campaign, by reaching out to parents and encouraging them to participate in school choice.

In my report, I look at the banking industry and efforts to increase the number of low-income households with checking or savings accounts. Mainstream banks face several hurdles when reaching out to low-income customers, including mistrust of banks, a misunderstanding of the costs of checking and savings accounts, and a lack of awareness of the account options available. To overcome these hurdles requires a lot of outreach and aggressive information campaigns. When the City of San Francisco, for example, decided to promote an initiative to make low-cost bank accounts available to low-income residents, it ran ads throughout the city about the high cost of using check cashing outlets and promoted the city's new program with the slogan, "Everyone is Welcome". The city also provided banks with information to help them reach out to low-income customers and better meet their needs.

Banks in other cities have reached low-income customers by being flexible in how they provide their services - instead of only operating in stand alone branches, banks meet customers in the places they already go, like grocery stores and pharmacies. And some have also partnered with check cashing and payday loan outlets to offer traditional checking and savings accounts along with the check cashing services customers already use.

A 'build it and they will come' attitude does not work in banking, or in education. If we truly want a dynamic marketplace in which all parents are well-informed and actively choosing, it will take a lot more outreach and a lot more flexibility than we typically see today.