2. Education (O’Sullivan, Ch. 15) © Allen C. Goodman, 2006

3. How to you measure “good schools?” Discuss Which school is better? School A takes students from the 85 th to the 90 th percentile. School B takes students from the 40 th to the 70 th percentile.

4. Why are schools important? Big share of public fiscal responsibility. Why do we fund them publicly? We don’t fund food, or housing, or health publicly. –Spillovers. Supposedly an educated public provides benefits to everyone, not just the person who is educated. –Equity. Presumably everyone should have access to good education irrespective of wealth.

5. Why are schools important? Why do we fund them publicly? –Some market failure aspect. Are children, or their parents, appropriately informed about benefits of schooling? –Can children borrow against their future wealth to finance optimal amount of education.

6. Inputs and Outputs What are the outputs of education? –Test scores. Absolute or value added? –Results of education. Do students get good jobs? –Quality of life. Are people better because of education.

7. Production Function Relates outputs to inputs. Ignore, for a moment, how we measure the outputs. Achievement = f(C,C, E,E,T,T,H,H,P)P) C = Curriculum E = Equipment T = Labor input H = Home environment P = Peer achievement

8. Production Function School Resources (controlled by school) –Curriculum (what do we teach them) –Equipment (capital stock) –Labor (teachers, teachers’ aides, administrators) Home environment –Do parents promote good education (good home atmosphere)? –Can parents help children? –Can parents provide books, field trips, concerts?

9. Production Function Peer group effects –Quality of classroom peers Do they encourage competition? Do they disrupt the class? –Quality of school peers –Quality of neighborhood peers

10. What does this say? We spread our funds around the various inputs. We need both teachers, desks. Want to ask, of course, what is productive, what isn’t. Teachers Desks Q1Q1 Q2Q2 Q3Q3 Budget constraint

11. What does this also say? Lots of things we can’t control. What if parents aren’t home, or don’t care? What if peers disrupt classes? Teachers Desks Q1Q1 Q2Q2 Q3Q3 Budget constraint

12. What makes good schools? Coleman Report (1966) –Most important inputs are home environment of students. –High income families have more favorable home environments, provide better peer group. –School inputs don’t affect achievement.

13. What does this suggest? Schools don’t matter. Can’t use education, alone, to lift people out of poverty. Teachers don’t matter. Suggested better peers help lesser students, but lesser peers don’t hurt better students. Supported idea of busing.

14. Problems with Coleman Report Looked at school, rather than student, as unit of observation. Sensitive to statistical procedures. If you looked at home and peer effects first, it looked like schools don’t matter. If you look at school effects first, it looks like they do.

15. Other Studies General format: –Look at individual student achievement –Factors would include School quality Teacher quality Student ability Home and peer effects What do we find?

16. Other studies Home environment matters a lot. Teachers matter. –Teacher educational levels seem not to. –Verbal skills matter. –Experience may matter. Curriculum matters.

17. Other studies Class size MAY matter. –Most studies find modest impacts, generally insignificant. –BUT, they look over modest ranges. –Does it matter if average class size is 25 students or 26 students? –Does it matter if average class size is 10 students or 60 students?

18. Who do we want to educate? What does public want? Do we want elite schools, or egalitarian schools? And does it matter? Hard to educate Easy to educate start here educate only H educate only E Prod. Poss. Fron.

19. An interesting question Educational equality? Hard to educate Easy to educate Start here educate only H educate only E Prod. Poss. Fron. U1U1 Maximize Mean Test Scores? U2U2 45 o Line Why???