McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. CHAPTER 7 EDUCATION

7-2 Justifying Government Intervention in Education  Is Education a Public Good?

7-3 What Can Government Intervention in Education Accomplish?  Should public education be free and compulsory?  Should government produce public education?

7-4 Real Annual Expenditure Per Pupil in Public Elementary and Secondary Schools Source: US Bureau of the Census [2009, p. 151]

7-5 Does Government Spending Improve Educational Outcomes? SOURCE: Organization for Economic Cooperation and Development [2007a]. Real Annual Expenditures on Private and Public Schools, All Levels of Education (2007)

7-6 Does Government Spending Improve Educational Outcomes?  Test Scores of Developed 29 Countries  15-Year-Olds  15 th Reading  9 th Science Literacy  24 th Mathematics Literacy

7-7 Modeling Education Quantity of Education Quantity of all other goods A B

7-8 Modeling Education Quantity of Education Quantity of all other goods A B

7-9 Modeling Education Quantity of Education Quantity of all other goods A B

7-10 Modeling Education  What form of government intervention increases the quality of education in theory? Demonstrate Your Result with a Partner

7-11 New Directions for Public Education- Vouchers  Vouchers financial grants to families that can be used to pay their children’s tuition at (nearly) any school Model? Competition  Opposition Information Availability for Consumers Ignore Positive Externalities  Focus on Wages Schools Deteriorate  Higher-Ability Students Tend to Leave Inequitable

7-12 New Directions for Public Education- Vouchers Empirical Evidence  Milwaukee $3,200 Vouchers to Low Income Students Higher Math Scores (Same Reading)  DC, NYC and Dayton, OH No Effect on Hispanics and Whites Higher Reading Scores for African Americans

7-13 Does Government Spending Improve Educational Outcomes?  Empirical Evidence: Does Spending on Education Improve Student Test Scores?

7-14 Public Spending and the Quality of Education  Empirical Evidence: Does Reducing Class Size Improve Student Test Scores? Measuring Costs  10% Reduction in US Class Sizes $692 per pupil Measuring Benefits?  Suppose Small Class Sizes Have Better Test Scores  Issues?

7-15 Public Spending and the Quality of Education  Empirical Evidence: Does Reducing Class Size Improve Student Test Scores? Tennessee's Student Teacher Achievement Ratio (STAR)  4 Years  11,601 Students  Random Class Sizes K-3 rd Grade 13 to 17 Students per Teacher 22 to 25 Students per Teacher  Better Performance on Exams in Small Classes Smaller Class Students More Likely to Take College Entrance Exams Larger Effect on African-American Students

7-16 Public Spending and the Quality of Education  Empirical Evidence: Does Reducing Class Size Improve Student Test Scores? CA Passed Law to Reduce Class Sizes by 10%  Problem? Israel  40 Student Max  Not Clear on Performance

7-17 Public Spending and the Quality of Education  Empirical Evidence: Does Reducing Class Size Improve Student Test Scores? Timings of Births  Not Clear

7-18 Does Education Increase Earnings?  Elementary and Secondary Education Decreasing Returns  Education and Earnings Theoretical

7-19 New Directions for Public Education- Charter Schools  Charter Schools public schools operating under special state charters that permit experimentation and allow independence  Empirical Evidence Diversity of Choice Student Outcomes

7-20 New Directions for Public Education-School Accountability  School Accountability monitoring student and school performance via standardized tests

7-21 New Directions for Public Education-School Accountability  No Child Left Behind Act (2001) (2002) Annual Testing 3 rd through 8 th (Primary Ed.) School Report Cards Inadequate Progress  2 Years: Allow Transfer  3 Years: Tutors and Remedial Classes  4 Years: Structural Changes

7-22 New Directions for Public Education-School Accountability  Empirical Evidence? Higher Scores  Rewards or Punishment with Report Cards Why?