Oct 09

Economic Factors and K-12 Education

I recently came across a strategy paper from the Hamilton Project titled “A Dozen Economic Facts About K-12 Education.The purpose of the project is to encourage development of public policies that are connected to a 21st century education and which foster “ economic growth and broad participation in that growth.”  The authors argue that public policy changes are needed to enhance the economic security of individuals while at the same time ensuring that public investments in education made by government officials are effective. The entire paper is available at: http://www.hamiltonproject.org/files/downloads_and_links/THP_12EdFacts_2.pdf.  The Hamilton Project is connected to the Brookings Institute which is a nonprofit think tank in Washington, DC that focuses on public policy.  According to their website, their mission is to “conduct high-quality, independent research and, based on that research, to provide innovative, practical recommendations that advance three broad goals:

  • Strengthen American democracy;
  • Foster the economic and social welfare, security and opportunity of all Americans; and
  • Secure a more open, safe, prosperous and cooperative international system.”

The authors make the case that education is a great equalizer by providing equal opportunity for all.  Although equal outcomes may not occur, an equal opportunity is critically important. They argue that the gap between the highly educated and the less educated is getting wider which is leading to greater inequality.   To combat this trend and to focus on equal opportunity, public policies must be created to increase both high school and college completion rates.  The authors note that more than 20% of students leave high school without a high school diploma and only one third of the population has a college degree.   These figures are virtually unchanged since 1970.

Using results from other studies as well as their own, the authors identify twelve economic facts related to K-12 education.   These facts should encourage communities and states to examine their public policies and determine if there are changes which would improve the current condition of education. The twelve facts are noted below.

1.  Lack of education reduces earning potential.

Having less than a college degree dramatically impacts earning potential over one’s lifetime.   In 2010, more than 80% of high school dropouts made less than $30,000 a year.  Not having at least a high school diploma means little opportunity to have a high paying job.

2. Education benefits individuals and society in general.

In 2009, almost half of individuals without a high school diploma did not have a job.  More than 25% of those without a high school diploma were disabled, sick, or institutionalized (mostly in prisons).  Not having a good job contributes to higher crime rates and to a larger number of welfare recipients.  Incarceration of the less educated has tripled over the past four decades.

While not connected to this strategy paper, I calculated the amount of money spent to educate children in Virginia over thirteen years from kindergarten through grade twelve.  Over that time period, Virginia spends a little less than $98,000 per child.  For the same thirteen year period, the state spends almost $325,000 to keep a prisoner incarcerated.

3. More education increases chances of being married and raising a child outside of poverty.

More than 38% of children of mothers without a high school diploma were living in poverty in 2010.  Only 3% of children of college graduates were living in poverty.   Just over half of those without a high school diploma are married while college graduates are 15 percent more likely to be married.

4. More education is linked to a longer, healthier life.

Over the past several decades, the life expectancy of those without a high school degree has  decreased even though the general trend is that life expectancy for the total population has increased. The life expectancy of those with a college degree has increased significantly.

5. The United States is no longer a world leader in high school and college completion.

America’s older workers were among the most educated in the world. America’s younger generation ranks 15th in college completion and 11th in high school completion in comparison to the 34 countries who are members of the Organization for Economic Cooperation and Development(OECD).

6. The achievement gap among racial groups remains an issue.

There is no significant difference in cognitive ability between white and black nine-month olds; however, black students enter kindergarten achieving at lower levels than whites.  That gap widens as children get older. When socioeconomic differences are factored in, it accounts for some but not all of the variance.  School quality may play a significant role.

7. Education lags behind other sectors in investing in innovation.

Companies in the United States spend 3-23% of their expenditures on research and development.  In education, only .2% is spent in this area.

8. Parents with more education invest more in their children.

Parents with more education provide more enrichment opportunities and extra-curricular activities.  Examples include the use of tutors, summer camps, and travel.   These investments lead to unequal opportunities.

9. Better teachers matter.

A 2011 Study by Chetty, Friedman, and Rockoff[1],  developed a value-added component of teacher impact based on whether or not teachers were in the 75th percentile or in the 25th percentile of the value-added measurement.  Over just one year, students with teachers with the higher value-added demonstrated significant differences.  They were more likely to attend college, attend higher- ranked colleges, earn higher salaries, live in higher SES neighborhoods, save more for retirement and were less likely to have a child as a teenager.

10. Some charter schools show dramatic improvement in student achievement.

While the results of charter school studies are less than conclusive, there are some charter schools that have demonstrated significant success.In a few, the achievement gap has been effectively eliminated in as little as three years.  Research should determine what made these schools successful and how that information can be applied to public schools.

11. Small-scale interventions present opportunities for improving student achievement.

Rather than focusing on the mega-picture of education, the report notes that smaller scale interventions generally implemented at the local level may produce significant success.  The report cites several examples including creating reading incentives, starting schools at a later time, providing after-school enrichment, creating smaller class sizes, and moving from middle schools to a K-8 structure.

12. Providing more information and creating greater transparency can improve achievement.

Many qualified students from lower socio-economic backgrounds do not apply to colleges where they would be competitive  Targeted information about specific colleges and programs may help. Making the financial aid process more transparent and easier to follow
would also help as would providing assistance in completing FAFSA applications.  Many students of low-income families are discouraged from applying to schools where they would be competitive because of having to complete so many forms and because of the cost of application fees.

Chetty, Raj, John N. Friedman, and Jonah E. Rockoff. 2011 (December). “The
Long-Term Impacts of Teachers: Teacher Value-Added and Student Outcomes in
Adulthood.” NBER Working Paper 17699, National Bureau of Economic Research,
Cambridge, MA. Accessed at http://obs.rc.fas.harvard.edu/chetty/value_added.pdf.