Reading, Rockets and ‘Rithmetic (Ep. 9)

Listen now:

Space shuttle Discovery sits at Kennedy Space Center earlier this year awaiting its last scheduled launch in November 2010 as the program winds down. (Photo by Joe Raedle/Getty Images)

Reading, Rockets, and ‘Rithmetic: When is the federal government not like the federal government? When it launches a Race to the Top.

Our latest Freakonomics Radio podcast looks into the Race to the Top education-reform program. (You can subscribe at iTunes, get it by RSS feed, read the transcript, or listen live via the box above.) We argue that the U.S. Department of Education is acting a bit more like a venture capitalist than we’re used to — and that that’s probably a good thing.

Race to the Top is awarding $4 billion in prize money to state education departments to reward reform but also to seed further innovation. It thrives on two elements that government bureaucracies don’t usually employ: competition and experimentation.

Arne Duncan Arne Duncan

So we ask Arne Duncan, the Secretary of Education, where the idea came from — and whether it was a tough sell, and what kind of results he’s seen so far.

You’ll also hear from some private-sector folks who paved the way for Race to the Top. One of them is Craig Nevill-Manning, an engineering director at Google New York. He’ll tell the story of one of Google’s most interesting (though not widely known) practices called “20 percent time,” and how it led to Google breakthroughs that might otherwise have lain unborn. You may even be typing into one of them right now.

As interesting as Nevill-Manning and Duncan are, the star of the episode is Peter Diamandis. As a kid, all he wanted to do was go into space. Things looked promising: he was born in 1961, just as NASA was flexing its considerable muscles. But as Diamandis aged, so did NASA, and it became less ambitious. He realized that relying on the government to push forward with space travel was a losing bet.

So he decided to do something about it. Inspired by the Orteig Prize, whose $25,000 tempted Charles Lindbergh to fly across the Atlantic Ocean, Diamandis founded the X Prize. Its initial offering: a $10 million prize for the first private team who could build and launch a vehicle that could carry three people to 100 kilometers above the earth. And then do it again, within two weeks. It worked.

DESCRIPTIONRic Francis/Associated Press Bob Weiss, Larry Page, Peter Diamandis and Buzz Aldrin at a ceremony for the Google Lunar X Prize.

That was in 2004. Just last month came the second X Prize: three teams who split another $10 million for building safe, reliable cars capable of traveling 100 miles on a gallon of gasoline, or gas-equivalent energy. The car prize money was put up by Progressive Insurance, the space-travel prize by the Ansari family.

The X Prize Foundation is not alone. According to a recent McKinsey & Co. report called “And the Winner Is …,” more than 60 prizes of at least $100,000 have been launched since 2000, representing nearly $250 million in prize money. Furthermore:

Before 1991, 97% of the value of the big-prize purses that we analyzed was dedicated to awards that recognize prior achievement, such as the Nobel and Pulitzer Prizes. But since 1991, 78% of new prize money in this data set has been dedicated to inducement-style prizes that focus on achieving a specific, future goal.

As Peter Diamandis sees it, most big institutions just aren’t inclined toward major-league innovation:

In a government situation, if you tried a bold, crazy idea and it blew up in your face, there’d be a Congressional investigation. In a large corporation, if you did that, there’d be a stock price plummeting. So, really, crazy ideas are in the purview of small companies, entrepreneurs who are willing to risk everything to make their dream come true, literally their lives, their fortunes. And we’ve seen that in our X Prizes where people have mortgaged their homes, or lost their marriages, or risked their lives.”

So this style of innovation may not be for the faint of heart. But in a world where problem-solving is often an exercise in political charades and hyperbolic idiocy, we say: bring on the bold, crazy ideas! And if the government wants to get involved, all the better. (Granted, it’s a bit easier to hold big competitive experiments when you can raise $4 billion in prize money just by dipping into the tax coffers.)

As with any experimentation, there will be lots of failures. (See you at the Congressional investigations!) But if the X Prize, Google and Charles Lindbergh are any indication, Race to the Top at least has a chance of helping a few million schoolkids learn how to fly.

Maria BetancesCMS

By creating certain compettition on schools, this will motivate the children to invent and try to acheieve their goals in life. This wll lead the children at school to motivate themselves to investigate and create. Meaning that if the government will provide certain funds for the kids to have the money to create what they want, this will create future professionals. However, will this be safe for the government to invest so much money? Do they have the amount needed without staying short? THe governemnt should go over this before they take any step. Imagine the governemnt onyl beeing able to provide certain funds for certain schools and leave out the others? This won't be fair. In conclusion It would be a great idea, but the government should go over this before making any final decission.


So why doesn't someone offer a big prize to someone who can fix our healthcare system?

My prizewinning suggestion is to force all healthcare providers to publish their prices for all procedures and end price discrimination, just as Walmart does for all its products.

Better yet, just hire Walmart to run the messed-up system.

Brendan Barth

This is the future of education, as the public system is so broken. Competition works, and spurs the best thinking and innovation.


There's a certain stigma attached to using children as test subjects (though none to subjecting them to tests!) There will be a lot of people who like this idea for the innovation it will likely bring about, and a lot of parents who will balk when it comes to using their children as guinea pigs. Wonder where the tea party movement will come down on this?

Alex in Chicago

I really fell like you shoved too much into this podcast. This isn't the insightful analysis that make Freakonomics popular. If you had done 25 minutes on just Google's 20% rule the podcast would have been much better.

Also why is 10% of the podcast listening to big band music?

Eric M. Jones

Frankly, I still vote for bulldozing the whole educational system and starting again. The USA ranks 22nd in Science, 27th in Math, and 33rd in Reading. So are we going to get that up a couple steps?

The USA is simply disqualified in this race. Kind of like bringing a toy balloon to the X-Prize race to space. Serious contenders only, please.

Listen to Richard Feynman: He said that there is not even the slightest evidence that anyone knows which educational system works best, yet we have all the data we need. This is all just malarkey.


With the economic crisis happening right now, all over the world, government should invest more on education. Higher educations will create better jobs and more progress for the economy. But we also have to think about the fact that the government will be giving up prosperity in certain areas for example health care. The success of this investment, will not be seen right away. Those students for example in High School will not be able to take advantage of this plan very fully. The increase in higher-level education will be seen when the younger children graduate, since greater improvement can be seen. With this in mind, I personally believe that people will think of this investment as a sham because the positive outcome of it will be shown in the long run. If citizens do not see improvements in the short run, they will see it as a waste of hope.
Further more, I would like to know, where the USA, having economic crisis at the moment will get this money. Will the country pass higher taxes rates? Will it take on more debt by asking for a loan? How will it recollect all this money for donation?


anthony cheeseboro

Race to the Top will have the result of benefitting those school systems which are already the most competitive. Schools that are underachieving will see little or no benefits from competition of this sort.


Why should the government have to be in the role of venture capitalist? Why not let the real venture capitalists find a market-based solution to our education problem. Why not? Because that would mean de-centralizing control of education in this country. The nostalgic fairy tale of an effective, cost-efficient, state-run public education system churning out hard-working, patriotic, tax-paying citizens is an American shibboleth that refuses to wither no matter how mediocre the actual product.

ezra abrams

This stuff sounds good, but it is really rightwing politics disguised as helping our kids.
First of all, public education for the well to do is
My kids attend school in Newton, MA, and I can assure you in towns like newton - towns where the upper middle class and wealth live - public education is great.
So this isreally about making the poor work harder; rather then tax the rich, and help remove some of the barriers to making public schools for the poor work (like, say, doing something about guns, or providing housing, or...) we say to the poor, hey, its good old Dickensian economics - if your are hungry and your teeth are hurting cause your parents can't afford dentistry, that will make you work harder.
As to that crap about gov't not being inventive, and the private sector being more inventive - anyone who uses google as an example of hte private sector is
google is the antithesis of hte private sector because they are a de facto monopoly, and can do the things that only de facto monopolys can do, which is give employees time to think...
which sort of validates the idea that this whole private enterprise/competition thing doesn't work and is just propaganda for the right wing billionaires whose idea of full employment is us as maids and butlers on their estates.....

As for all that prize makes a great story, and like most great storys we learn as kids, no one ever questions it.
I wonder if you go and actually look at what scholars have written about the lindbergh flight, you will probably find that the time "was ripe" the technology had matured to the point that it was doable...


the hub

race to the top has nothing to do with children directly... it is based on administrators and school boards ideas of how to reform programs to help school children.. not really that innovative if you ask me.

Education Consultant

RTTP simply reinforces the stratification that already exists in American public education. We need a Marshall Plan revitalize and reimagine all of our public education systems, rather than lavishing funds on a few already-competitive systems.


Race to the top is like the war in Afghanistan--a senseless waste of money for a wrong headed idea. Lawyer Arne Duncan is spending scads of money based on the fragile reed of standardized tests--tests that are gamed by the likes of Mayor Bloomberg and Chancellor Klein.

Look at the Harlem Children's Zone, Geoffrey Canada's idea of what might make Harlem's students into productive citizens insteads of drop-outs. He spends endless amount of rich folks's cash and achieves in 2010 substandard results (See NYTmes, Oct 13, 2010). Along the way, NYState standardized tests are gamed.

And the story finally comes out: No, it's not true that Canada's Harlem Zone Students outperformed tony Scarsdale, as previous NYS standardized test indicated. --it's just that they tests were studied in advance and answers were almost identical form year to year. Canada's student studied the test and did well. The new 2010 NYS test, was changed,was not given out,and proved a telling point--Harlem Zone did not do well.

Harlem Zone is all about small class size, 2 teachers in a room, auxiliary services, longer school year--and these services didn't do the trick.

What might work!
How about affordable housing and stable jobs for parents? It's no small thing that there is a high correlation between SAT scores and family income, heck, there is high correlation between zip codes and SAT scores. The richer the parents, and hence the better neighborhood they live in, the better the score. Many a college admissions officer has followed this simple rubric.

For the most part, our so-called "failing schools" occur in impoverished minority/immigrant parts of the urban landscape. That should tell you something; poverty can have a debilitating impact on educational achievement ! Students of poverty move often, have poor job prospects and, as a result, often drop out. High school drop-out rates in urban high schools in often 50%.

Give parents jobs, provide affordable housing, provide a career path for impoverished students and you have the means of solving the problem. Who will pay for it? Many well to do philanthropists are now pouring money into "failing schools." So far, they have not come up with the right solution to the problem. A jobs and housing program might be just such a solution.



Race to the top is nothing more then vote buying, paying off teachers unions in sympathetic districts. There isn't one honest education expert that can honestly say money is the problem with the US education system.


How interesting to read RandFan claim that the a good state-run public education system is a fairy tale immediately after reading that the US ranks in the 20s/30s in education -- that is, right behind 20-30 countries that have *stronger* start-run public education systems than we do.


Methinks you don't understand how VC works. Having lived in that world for awhile (by being part of a few VC-funded companies, and others that decided to move away from VC funding), I can tell you that schools are precisely the *opposite* of the ultra-high-growth startup companies that VCs look for. They're precisely the wrong fit for a fund that's trying to produce the types of returns they try to produce. If any have tried to find a highly-scalable solution that was likely to succeed, and have thrown money at that "solution," I'm betting they've failed (think "Edison Schools/EdisonLearning").

You may know "Atlas Shrugged," but that's not the real world of finance (or of starting up a corporation, for that matter). You might get some angel investors biting, as they can generally take a longer-term approach, but VC? Not a chance (especially after the implosion of the Edison Schools).


Sebastian Interlandi

Dear jokey,

Concerning your comment: "Race to the top is nothing more then vote buying, paying off teachers unions in sympathetic districts."

I'm pretty sure you are talking out of the back end of your pants. Teachers unions like mine HATE this RTTP game just like they HATE the other federal education laws.

The teachers actually think like the guy above from Newton MA. You need parents with jobs and safe neighborhoods to have good schools. The poorest and worst performing school districts are not going to benefit much from this project.


Making a competition with a pleasing reward will attract the attention of many schools. Because of this, many will be willing to improve their education system through reform. The effects of this will be positive because the states will be investing on human capital. By having improved the education system, new approaches for educating the future leaders will be used, hopefully having a positive effect. Students will now approach issues in a different manner, therefore helping our world in the future by making production more efficient or through other ways.


This stuff is delusional. Fix education by rolling out the usual solutions - unions, tenure, fire the principal, proivatize the school, etc etc. - utewr nonsense and testimony to the shoddy thinking of our political leaders.So yesterday my train was late into NYC. The solution according to the new education zealots would be to fire the train driver.
The real proble of course is the decaying physical and social infrastructures in the US. We need 3-5 trillion dolalrs for our roads, sewers, water etc and our :high speed": rail just makes other countries laugh. Similarly, our social infrastructure is a catastrophe and our soilutions will make it worse. Unemployment ( real ) at about 17-18%, record levels of childhood poverty, record number of families on foodstamps, 47 million without health insurance, the worlds largest prison population ( in both absolute numbers and percentages ) , financial and economic disasters in the black population, etc. It is little wonder that we fare so dismally in education.
Race tothe top and more provate schools, fired teachers will only nibble at the edges of our problem. In the meantime we spend in excess of 1 trillion dollars a year on warfare,
Can we fix education? Not with people like Duncan in charge and not untl we fix our social infrastructure.


Kind man

I for one would like to see the Federal Dept of Education completely eliminated and the savings passed on to the states where they can hire more teachers. We need better teachers, not more bureaucrats or administrators.