Tag: educational productivity

Research Shows $100 Billion Ed. Stimulus Likely Hurting Economy

Tomorrow morning, the president’s Council of Economic Advisers will release a report assessing the short and long-term effects of the stimulus bill on the U.S. economy. As with previous iterations, this report will attempt to forecast overall effects of the stimulus across its many different components and the different economic sectors it targets. In doing so, it ignores the clearest research findings available pertaining to a key portion of the stimulus: k-12 education.

The president has committed $100 billion in new money to the nation’s public school systems, and required that states accepting the funds promise not to reduce their own k-12 spending. The official argument for this measure is that higher school spending will accelerate U.S. economic growth. But a July 2008 study in the Journal of Policy Sciences finds that, to the authors’ own surprise, higher spending on public schooling is associated with lower subsequent economic growth. Spending more on public schools hurts the U.S. economy.

How is that possible? There is little debate in academic circles that raising human capital – improving the skills and knowledge of workers – boosts productivity. So an obvious interpretation of the JPS study is that raising public school spending must not increase human capital. While this possibility surprised study authors Norman Baldwin and Stephen Borrelli, it is consistent with the data on U.S. educational productivity over the past two generations.

Since 1970, inflation adjusted public school spending has more than doubled. Over the same period, achievement of students at the end of high school has stagnated according to the Department of Education’s own long term National Assessment of Educational Progress. Meanwhile, the high school graduation rate has declined by 4 or 5%, according to Nobel laureate economist James Heckman. So the only thing higher public school spending has accomplished is to raise taxes by about $300 billion annually, without improving outcomes.

The fact that more schooling without more learning is not a recipe for economic growth is confirmed by the independent empirical work of economists Eric Hanushek and Ludger Woessmann. Their key finding is that academic achievement, not schooling per se, is what matters to economic growth.

Based on this body of research, the president’s decision to pump $100 billion into existing public school systems is likely slowing the U.S. economic recovery.

Has Any Other Field Suffered a Productivity Collapse like Education?

I’ve repeatedly claimed that public schools are alone in having suffered a productivity collapse over the past 40 years: their outcomes stagnating or even declining while per pupil costs have skyrocketed. Is that really true?

Dr. Stephen Bohrer, who appears to work in Colorado’s public school system, begs to differ. Responding to a recent op-ed of mine, he writes that: “The price of a Baby Ruth is up 2,000% since 1970. It doesn’t taste any better and is smaller.”

Though historical prices on Baby Ruths are hard to find, there’s a nice suite of data on the Hershey bar, which seems a fair enough test of the good Dr.’s claim. According to FoodTimeline, the price of a 1.375 oz Hershey bar in 1970 was 10 c, and the price of a 1.55 oz bar in 2008 was 59 c. Adjusting the first price to 2008 dollars puts it at 55.5 c.

So the real price-per-oz of a Hershey bar FELL from 40.4 c to 38.1 c over the past 40 years. And it didn’t get any smaller. No gold star for Dr. Bohrer.

So, who else wants to play Stump the Chump? If you think you know a field that has suffered a productivity collapse like education over the past 40 years, send me an e-mail with your claim and the data on which it’s based (ACoulson |at| cato.org). If anybody comes up with a winner, I’ll report it here.

Educational Productivity Has Collapsed — NAEP

The latest Long Term Trends results of the National Assessment of Educational Progress are out. They reveal a productivity collapse unparalleled in any other sector of the economy.

At the end of high school, students perform no better today than they did nearly 40 years ago, and yet we spend more than twice as much per pupil in real, inflation-adjusted terms. I can’t think of any other service that has gotten worse during my lifetime. Our school system has failed alone.

While the stagnation in overall achievement masks a 3 to 5 percent gain in the achievement of African American 17-year-olds since 1970, the scores for whites at the end of high school are virtually unchanged.

Anyone who points to the slightly higher scores in the early grades as cause for celebration is missing the point. What parents care about is that their children are well prepared for higher education and future careers at the end of their secondary education. The fact that scores have risen somewhat in the early grades means little since those gains evaporate for the vast majority of students by the time they graduate.

Update: The Associated Press story is now out on the Long Term Trends NAEP results… and it doesn’t mention the long term trends. The story only reports changes in achievement over the most recent 4 year interval of a test whose raison d’être is to reach back to the early 1970s. I wonder why…. Fortunately, the Detroit Free Press does a better job.