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Does spending more money on public schools produce better students?

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Luis Woodhill in Forbes magazine.

Excerpt:

Accordingly, the “investment in education” that Obama wants more (and more, and more) of is actually “federal-government-directed investment in education”. When considering whether we really want more of this, it is important to remember that it was “federal-government-directed investment in energy” that gave us Solyndra, Ener1, and Beacon Power, and that it was “federal-government-directed investment in housing” that has cost taxpayers more than $150 billion in losses (thus far) at Fannie Mae and Freddie Mac.

So, how would we know if increased government “investment” in education was producing a return? We would see a steady rise in the ratio of GDP to “nonresidential produced assets” over time. Our GDP is produced by a combination of physical capital and human capital. Accordingly, if the economic value of our human capital were rising, the impact would show up in the numbers as increasing productivity of physical capital.

Now, here is the bad news. While total real ($2010) government spending on education increased almost 13-fold from 1951 to 2009, the measured GDP return on physical capital actually declined slightly, from 47.7% to 44.1%. This could not have happened if we were getting an appreciable economic return on our huge “investment” in education.

What follows is a “first approximation analysis”. The numbers could be done with more precision, but they are good enough to give us an idea of what the nation has been getting (actually, not getting) for its massive “investments” in education.

Assuming that about 25% of our total population is in school at any one time, average real (2010 dollars) government spending per student rose from $1,763 in 1951 to $12,209 in 2009. This is an increase of about 7 times. Assuming an average of 13 years of education per student (some go to college, some drop out of high school), this means that during this 58-year time period, we increased our real “investment” in the human capital represented by each student from $22,913 to $158,717.

Meanwhile, we have also been investing more in physical capital. Real nonresidential produced assets per worker increased from $79,278 in 1951 to $206,717 in 2009. So, each worker in 2009 had $127,439 more in physical capital and $135,804 more in educational “capital” to work with than he did in 1951.

Unfortunately, it is clear from the numbers that GDP tracks only physical assets, and not the sum of physical assets and educational “assets”. Excluding the GDP produced by the housing stock, the ratio of GDP to nonresidential produced assets has been essentially constant over the 59 years 1951–2009 (it has oscillated with the business cycle around a midpoint of 48.2%).

So, it appears that our massive “investments” in education have produced no measurable economic return. Should we be surprised by this? No. Average scores on standardized tests have not risen, despite the fact that we are “investing” seven times as much in real terms in each student than we did six decades ago. So, even by the measures used by the educational establishment, it is clear that the higher spending has not created any additional human capital.

The nation and its people would be much better off today if most of the additional “investment” in education that we have made over the past six decades had been used to create more nonresidential produced assets. GDP, real wages, and our standard of living would all be considerably higher.

Also, imagine if, instead of being given a 2009 education for $158,717, an average student were given a 1967-style education for about $58,000, and $100,000 in capital with which to start his working life. This would be sufficient to start any number of small businesses. Alternatively, if put in an IRA earning a real return of 6%, the $100,000 would grow to about $1.8 million over 50 years.

The huge government “investments” made in education over the past 50 years have produced little more than “Solyndras in the classroom”. They have enriched teachers unions and other rent-seekers, but have added little or nothing to the economic prospects of students. America does not need more such “investment”.

There is no reason to believe that having government spend our money will produce a better return than letting us keep our money and then letting us spending it on schools that actually perform.

News

New study: total compensation of public school teachers is 52% greater than fair market value

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Whenever advocates of greater spending on education try to argue that teachers are not paid enough, they always compare teachers to other workers to other workers in terms of years spent in college. On that view, a software engineer with 6 years of college (B.S. and M.S. in computer science) is the same as an English teacher with 6 years of “Education college” (B.Ed and M.Ed in education). But is the ability to write code to perform real-time commercial transactions in a distributed database environment really deserving of the same total compensation as teaching 6-year olds how to read Dr. Seuss books? Is the supply of each skill set the same? Is the demand for each skill set the same? What should the price of each kind of labor be?

Let’s see what this new study from the American Enterprise Institute says.

Excerpt:

The teaching profession is crucial to America’s society and economy, but public-school teachers should receive compensation that is neither higher nor lower than market rates. Do teachers currently receive the proper level of compensation? Standard analytical approaches to this question compare teacher salaries to the salaries of similarly educated and experienced private-sector workers, and then add the value of employer contributions toward fringe benefits. These simple comparisons would indicate that public-school teachers are undercompensated. However, comparing teachers to non-teachers presents special challenges not accounted for in the existing literature.

First, formal educational attainment, such as a degree acquired or years of education completed, is not a good proxy for the earnings potential of school teachers. Public-school teachers earn less in wages on average than non-teachers with the same level of education, but teacher skills generally lag behind those of other workers with similar “paper” qualifications.

Here’s what the study shows:

  • The wage gap between teachers and non-teachers disappears when both groups are matched on an objective measure of cognitive ability rather than on years of education.
  • Public-school teachers earn higher wages than private- school teachers, even when the comparison is limited to secular schools with standard curriculums.
  • Workers who switch from non-teaching jobs to teaching jobs receive a wage increase of roughly 9 percent. Teachers who change to non-teaching jobs, on the other hand, see their wages decrease by roughly 3 percent. This is the opposite of what one would expect if teachers were underpaid.
  • Pension programs for public-school teachers are significantly more generous than the typical private sector retirement plan, but this generosity is hidden by public-sector accounting practices that allow lower employer contributions than a private-sector plan promising the same retirement benefits.
  • Most teachers accrue generous retiree health benefits as they work, but retiree health care is excluded from Bureau of Labor Statistics benefits data and thus frequently overlooked. While rarely offered in the private sector, retiree health coverage for teachers is worth roughly an additional 10 percent of wages.
  • Job security for teachers is considerably greater than in comparable professions. Using a model to calculate the welfare value of job security, we find that job security for typical teachers is worth about an extra 1 percent of wages, rising to 8.6 percent when considering that extra job security protects a premium paid in terms of salaries and benefits.

And they conclude:

We conclude that public-school teacher salaries are comparable to those paid to similarly skilled private sector workers, but that more generous fringe benefits for public-school teachers, including greater job security, make total compensation 52 percent greater than fair market levels, equivalent to more than $120 billion overcharged to taxpayers each year.

Well, maybe teachers are overpaid – but that would be OK if they were somehow super intelligent and productive.

Are teachers intelligent?

CBS Moneywatch explains what the research shows about teachers.

Excerpt:

Research over the years has indicated that education majors, who enter college with the lowest average SAT scores, leave with the highest grades.   Some of academic evidence documenting easy A’s for future teachers goes back more than 50 years!

The latest damning report on the ease of majoring in education comes from research at the University of Missouri, my alma mater.  The study, conducted by economist Cory Koedel shows that education majors receive “substantially higher” grades than students in every other department.

Koedel examined the grades earned by undergraduates during the 2007-2008 school year at three large state universities that include sizable education programs — University of Missouri, Miami (OH) University and Indiana University.  The researcher compared the grades earned by education majors with the grades earned by students in 12 other majors including biology, economics, English, history, philosophy, mathematics, chemistry, psychology and sociology.

Education majors enjoyed grade point averages that were .5 to .8 grade points higher than students in the other college majors. At the University of Missouri, for instance, the average education major has a 3.80 GPA versus 2.99 GPA (science, math, econ majors), 3.12 GPA (social science majors) and 3.16 GPA (humanities majors).

So it is easy for teachers with lower SAT scores to get much higher grades than other applicants to non-teaching programs with much higher SAT scores. It doesn’t sound like the smartest people go to teachers college. Nor does it sound as if they learn anything very challenging when they are there.

Are teachers doing a good job of teaching useful skills?

CNN sheds some light on how well teachers perform.

Excerpt:

Last week, the College Board dealt parents, teachers and the education world a serious blow. According to its latest test results, “SAT reading scores for the high school class of 2011 were the lowest on record, and combined reading and math scores fell to their lowest point since 1995.”

The reading scores, which stand at 497, are noticeably lower than just six years ago, when they stood at 508. And it’s just the second time in the last 20 years that reading scores have dropped so precipitously in a single year.

[…]The 2011 budget for the Department of Education is estimated to top $70 billion, while overall spending on public elementary and secondary education is about $600 billion a year. By comparison, in 1972, before the Department of Education even existed, SAT critical reading scores for college-bound seniors were above 525, more than 20 points higher than they are today, while today’s math scores are only slightly better than in 1972.

So, not only are these highly-paid teachers less intelligent (on average) than other college applicants, but they also fail to educate our children properly. And we are forced to pay them, through taxes, regardless of how they perform. Our children who are suffering from this failed monopoly.

Do teacher unions improve teacher quality?

And do you know who protects bad teachers from being fired, and prevents good teachers from being paid more?

This is why we need to abolish the federal Department of Education and teacher unions. Why are we paying these people ridiculous salaries and benefits to fail our children?

Must-see videos on education policy

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News

Atlanta public schools caught helping students to cheat on standardized tests

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Beverly Hall and Atlanta public schools
Beverly Hall and Atlanta public schools

From the liberal Atlanta Journal-Constitution, news of a cover-up of “systemic” cheating in the Atlanta public schools. (H/T Reason to Stand)

Excerpt:

State investigators have uncovered a decade of systemic cheating in the Atlanta Public Schools and conclude that Superintendent Beverly Hall knew or should have known about it, The Atlanta Journal-Constitution has learned.

In a report that Gov. Nathan Deal planned to release today, the investigators name nearly 180 educators, including more than three dozen principals, as participants in cheating on state curriculum tests, officials said over the weekend. The investigators obtained scores of confessions.

The findings suggest the national accolades that Hall and the school system have collected — and the much-vaunted academic progress for which she claimed credit — were based on falsehoods. Raising test scores apparently became a higher priority than conducting the district’s business in an ethical manner.

[…]The report’s release culminates more than two years of inquiries into Atlanta’s huge gains on the state-mandated Criterion-Referenced Competency Test in 2009. An AJC analysis first detected statistically improbable increases in test scores at two Atlanta schools in 2008. The following year, the AJC published another analysis that found suspicious score changes on the 2009 CRCT at a dozen Atlanta schools. The newspaper’s reporting ultimately led to the state investigation that is being released today.The investigators’ report, officials said, depicts a culture that rewarded cheaters, punished whistle-blowers and covered up improprieties. Strongly contradicting denials of cheating and other irregularities by Hall and other top district executives, the report describes organized wrongdoing that robbed tens of thousands of children — many of whom came from disadvantaged backgrounds and struggled in school — of an honest appraisal of their abilities.

At the same time, the document apparently provides a scathing assessment of the school system’s handling of the scandal, accusing district leaders of hampering the special investigators’ efforts to uncover the truth. The investigators reportedly accuse Hall and her top aides of refusing to take responsibility for the district’s problems.

The report also will detail potentially criminal acts by district officials, the AJC has learned.

In an effort to maintain Hall’s high profile in national education circles, the superintendent and her top aides reportedly tried to hide unflattering information as far back as 2006. District officials illegally altered documents related to the test and withheld material that should have been released under the state’s Open Records Act, the report is expected to say.

There is a possibility of criminal charges, and I do hope that this woman and all responsible spend at least a few years in jail.

We need to get taxpayer money out of the public school system, and back into the hands of parents, through a federal voucher system. Let the parents decide which school is best for their children. Let them buy education the same way that they buy things from other retailers. Choice and competition. Lower price and higher quality. If they don’t like the results that public schools provide, then let them take their money to a private school – or use the money to homeschool.

Notice that the largest teacher union, the National Education Association (NEA) has endorsed Obama. Democrats protect the failings of the education establishment, in exchange for votes and political activism. The faster we vote the Democrats out, the faster education in this country will improve.