Well, yes, markets do work you know


It would appear that the fact that markets do in fact work is getting through even into our educations system. For which, of course, great thanks and hurrah!

Parents who move house and shell out for private tutors are paying as much for their child's education as those who send them to private school, says a top headmaster.

The cost of a good education is the cost of a good education. And we're two, maybe three, possible methods of achieving that aim.

The first is simply to gird the loins and go and pay for one out of post tax income. We can see the money going out for that and boy, doesn't it sting.

The second is to move to an area where the State, remarkably, is actually able to provide a good education out of those taxes already paid. But such areas have higher house prices (it's very noticeable indeed that house prices, the prices of houses that people with children might like to live in, vary by school catchment area) and thus more must be paid for a house in such areas. We can still see the money rolling out here and boy, doesn't it sting.

The third is of course home schooling. In which case we don't see the money rolling out: but we do rather see it not rolling in as one of the possible two household incomes is likely to be sacrificed to produce it. Given that there's no tax wedge here this might in fact be the cheapest option.

However, all three are substitutes for each other and there's really no surprise at all that close substitutes have roughly the same price. Because, you know, markets work and close substitutes tend to converge in price.