RALEIGH – Some years ago, I was on a JLF tour across the state to release one of our education reports. At a stop in Rocky Mount, a local school official challenged the importance of our statistics on how North Carolina and the nation as a whole compared to other countries in science and math achievement.
“I’ve heard these warnings for years,” he said, but it didn’t seem to matter much. The American economy continued to outperform most of the world, including countries with higher-scoring students. During the Cold War era, several countries behind the Iron Curtain would routinely score high on international tests, he added, but no one considered them healthy economies or attractive places to live.
The questioner was rather hostile, but I think I disarmed him a bit by praising his point. Policymakers sometimes get carried away with rhetorical claims, forecasting dire consequences if their favored policies aren’t adopted. By the time the collapse doesn’t come, they have moved onto something else. Such rhetoric excess knows no partisan or ideological bounds.
More to the point, when policy analysts say that a given cause will have a given effect, they usually mean that the connection will occur ceteris paribus — that is, all other things being held equal. Social phenomena are complex. They have multiple causes, multiple effects, and are often hard to measure. It is perfectly reasonable to say that, all other things being equal, a person who never smokes is at less risk of heart disease than one who does. But the nonsmoker may be morbidly obese and die relatively young of a heart attack, while the smoker may be fit, have no family history of heart disease, and die of heat stroke in her 90s while outside taking a smoke.
With regard to education, most people assume that a better-educated population is likely to be better off economically. It’s a reasonable assumption. Knowledge and skills are forms of human capital, and most economists will tell you that the accumulation of useful capital – be it physical, financial, intellectual, or social – makes work more productive and thus raises living standards. Furthermore, many individuals obviously boost their own incomes and opportunities by acquiring more education.
However, rigorous efforts to establish clear relationships between education and economic growth have yielded mixed results. Some studies have found correlations. Others have not. Most of the time, the researchers created regression equations that allowed them to hold other variables constant. In the real world, the other variables matter. That’s why communist countries with smart high-scoring graduates stagnated for decades while countries with low rates of formal education grew rapidly. Other factors, such as the legal and fiscal climate for business investment and openness to trade, swamped the education effect.
A common research problem has been flawed measurements. In attainment, the standard measure for many years was a population’s average years of schooling. But some education systems clearly impart more useful knowledge and skills per year than others do. Measuring knowledge and skills directly made more sense, but for a long time comparable testing data didn’t exist for enough countries.
They do, now. Economist Eric Hanushek and three colleagues published a pathbreaking study of international educational achievement and economic growth in the Spring 2008 issue of the Hoover Institution’s Education Next journal. Using an innovative statistic based on test scores rather than years of schooling, the researchers studied 40 years of data from every angle. They did cross-sections and time-lagged comparisons. They studied all available countries and then excluded Asia to see if the effect was independent of the vast cultural difference. They adjusted for many other growth-enhancing variables, such as economic freedom.
What Hanushek and his colleagues found in their model was that while average years of schooling demonstrated a correlation with long-term economic growth, average math and science scores demonstrated a far stronger effect – for every half a standard deviation increase in average score, a country’s growth rate went up by a full percentage point, which in economic terms is huge. Indeed, once they put test scores into the model, the effects of years of schooling disappeared. It’s about learning, not time spent.
Over time, America has still had healthier economic growth than that of most other countries despite mediocre educational performance. We’ve offset the mediocrity with greater freedom and innovation. However, as the rest of the world adopts lower taxes, labor-market reforms, better property-rights protections, and other elements of a freer economy, our offsetting advantages are shrinking. If American students performed as well as Canadian, Korean, Finn, Taiwanese, and Dutch students, Hanushek concluded, the additional output of the American economy would exceed the entire cost of our K-12 education system.
That’s not to say America spends too little now. We already outspend all of these countries in dollars per pupil, often by huge margins. Just as with educational attainment, education investment is more about quality than quantity.
Hood is president of the John Locke Foundation.