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Charles Wheelan, Ph.D. The Naked Economist

Charles Wheelan, Ph.D., The Naked Economist

When One Plus One Equals Three

by Charles Wheelan, Ph.D.

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Posted on Tuesday, September 4, 2007, 12:00AM

The good news is that the kids are back in school, football season is underway, and my Chicago Cubs are flirting with first place in the NL Central. The bad news is that I'm still not done explaining why it's so hard to make schools better.

Last month, I wrote that we still fumble the most basic task related to education reform -- telling good schools from bad ones. The next discouraging bit is that even when we know which schools need to get much better, the two most intuitive fixes -- spending more money and offering more choice -- have surprisingly modest results.

Maybe this is a case where one plus one equals three.

More Spending, Better Results?

Anyone who's spent time in a struggling school knows that there are lots of things that could be done with more money: adding teachers, fixing decrepit buildings, offering more sports and activities, upgrading books, and so on.

Presumably, doing those things would improve student performance. This is the reasonable view made by those who lean left. Less reasonably, it's also the emphatic view of the teachers unions and the politicians (mostly Democrats) who depend on their support.

Yet the relationship between spending and student achievement is surprisingly tenuous. True, in one famous randomized experiment (yes, children were treated like laboratory rats), students assigned to smaller classes did better than students assigned to larger classes. Obviously, money is what makes smaller classes possible.

The effects were not huge, however. James Heckman, a University of Chicago economist and recent Nobel Prize winner, has argued that the economic benefits of the achievement gains from smaller classes may not even cover the costs of hiring more teachers to make smaller classes possible.

Money Doesn't Change Everything

Meanwhile, there are plenty of other studies showing little or no connection between spending and outcomes, once the research controls appropriately for the backgrounds of the students involved. Schools that spend more generally have better outcomes, but, for reasons I explained last month, it's not necessarily the higher spending that causes them.

(For example, there's also a connection between a student's SAT scores and the number of cars his or her family owns -- but it's not causal. Buying three more cars when Junior gets to high school won't help him get into Harvard. If you understand this distinction between correlation and causation, you can skip last month's column.)

But the most discouraging evidence on the relationship between money and student achievement comes from the large number of states that have had court-mandated changes to their school funding formulas. These remedies have usually involved pumping lots of money into poor schools, with generally limited results. According to a summary of the literature in the Handbook of the Economics of Education, "While spending may have been equalized, there appears to have been no commensurate improvement in the performance of students from poorer districts."

No Incentive for Improvement

On the one hand, this is surprising. I've been involved with enough public schools to know that there's always something worthwhile that requires just a little more funding.

On the other hand, this isn't surprising at all. I've also been involved with enough public schools to know what happens when good intentions meet a voracious and inflexible bureaucracy. If you pour money into a broken system, it's a bit like one of those children's games where the marble goes in the top and then bounces through ladders, wheels, chutes, holes, and assorted objects before landing a long way from where you thought it was going to fall (if it gets to the bottom at all).

Many school districts, including most large urban ones, don't have much incentive to make sure that money flows to where it'll be most productive. True, there's a whole lot more test-taking going on than there was two decades ago. And lots of talk about "accountability." But consider this simple question: Where would you feel more secure as an employee -- in a public school that's performed poorly for five years in a row, or at an airline (or paper company, or Chinese restaurant) with a similar record?

Memos and "improvement plans" would be flying furiously in the former -- and pink slips in the latter.

Given a Choice

So we should change the incentives! And hold schools accountable! And make parents into consumers, bringing market discipline into our schools!

If a typical Democratic political convention consists of cheering delegates from the teachers unions, the Republicans (and most economists) tend to talk more about the elixir of school choice: Let's use markets to make schools better.

Indeed, school choice is one of the most elegant theories in the realm of public policy. In theory, choice gives a powerful incentive to everyone in the system -- administrators, principals, teachers -- to do the kinds of things that would make their schools more attractive to prospective students. If students flee a school when given the option, the teachers and administrators in that failing institution have to either fix the problem or lose their jobs. That can focus the mind.

There's just one problem with school choice: The data aren't that compelling. Choice does seem to have modest positive effects. In places where school choice has been studied with appropriate controls, the test scores of participating students are a few points higher -- though there's often no difference at all in some subjects or grades.

Choice and Competition

For example, Princeton economist Cecilia Rouse compared the achievement of low-income students in Milwaukee who used state vouchers to attend private schools to those who were eligible but turned away because their private school of choice was oversubscribed. She found that the voucher students had higher test scores in math but not in reading.

Those results are modestly encouraging -- but hardly the miracle cure that market enthusiasts would have you believe.

Again, on the one hand this is surprising. Choice is a fast-track way to short-circuit the bureaucracy and align the incentives of everyone working in the system. It rewards schools that innovate in ways that attract new students and punishes those that don't.

And, again, on the other hand this isn't surprising at all. Schools don't necessarily act like airlines or Chinese restaurants. Think about the Ivy League, the pinnacle of the best higher education system in the world. It's built upon choice and competition. Kind of.

Most Ivy League schools accept less than 1 in 10 applicants. What kind of business turns away 90 percent of its eager customers -- while often accepting those who can't afford to pay over those who can? Why hasn't Harvard doubled or tripled in size? Why hasn't Yale quadrupled tuition? Those are the kinds of things that competitive firms are supposed to do when demand exceeds supply.

Of course, the best schools are often the best because they restrict the supply of difficult students. That's part of competition, too. Competitive businesses make money by improving operations -- but also by shedding loser customers. I expect that the Chicago Public Schools would be excellent if they had to accept only 1 of every 10 eligible students. (Indeed, the magnet schools in the system, which are allowed to select students competitively, are some of the best in the country.)

Still Worth a Try

So what to do? The evidence isn't overwhelming for either spending more money or for creating more competition. Yet if I were a legislator, I'd be comfortable voting for a plan that did both at the same time.

Politically, it's a nice compromise. Substantively, the whole may be much more effective than the sum of its parts. More money gives schools greater resources; school choice makes it more likely that those dollars will be used in ways that make students better off.

Can I guarantee it will work? Nope.

But given that 1) We've been wringing our hands over school reform since the Soviets launched Sputnik 50 years ago, and 2) The two political parties are at loggerheads over strategies that might well be complementary, it seems a reasonable thing to try. But in all honestly, I can't promise you that one plus one will equal three.

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75 Comments

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  • Scott - Wednesday, September 12, 2007, 4:21PM ET  Report Abuse

    • Overall: 5/5

    Good stuff.

  • Yahoo! Finance User - Monday, September 10, 2007, 1:18PM ET  Report Abuse

    • Overall: 2/5

    ..underlying assumption that very different school populations are capable of equal outcomes is.. quite simply.. flawed. Ergo the problem may be intractible.

  • BruceW - Monday, September 10, 2007, 12:56AM ET  Report Abuse

    • Overall: 1/5

    Second installment on a problem that still rambles on in different directions, leading sufferably to a conclusion that tells its reader to hope for a best of both worlds compromise. wow........zzzzz

  • john - Sunday, September 9, 2007, 6:14PM ET  Report Abuse

    • Overall: 4/5

    Elected school Principals who can actually control the hiring & firing of their staff would probably help. Younger children staying with the same teacher for a few years would probably help and that would expose poor teachers when they make little progress with their students compared to other teachers in the same school. We don't have 5 different guys work on our cars or let 10 different general contractors do a construction project, why change teachers every 180 days and have no idea who dropped the ball.

  • bobbie - Thursday, September 6, 2007, 7:39PM ET  Report Abuse

    • Overall: 1/5

    Get rid of the lame teachers union in this country. Too many lazy teachers that are a bunch of spoiled kids thinking they have the hardest jobs on the planet. Can't fire pathetic teachers, most are just regurgitating the same lesson plans, no real creativity in terms of the program.

  • RudyS - Thursday, September 6, 2007, 5:56PM ET  Report Abuse

    • Overall: 4/5

    Here, I will help you understand the problem better. In the school district where I pay school taxes, the high school seems most interested in students tha major in football. Allow me to explain. 5 years ago they renovated the football stadium at a cost of over one million dollars. Meanwhile, the actual brick and mortar of the school building itself is cracking and in need of repair. Here's a novel thought. You know those folks at NASA that put two human beings on the moon all the way back in 1969? I would say the average age of a NASA worker then was about 39. Meaning they were born around 1930 - before TV, before personal computers, before iPods and iPhone and even before digital calculators (they used slide rules and long math). But hey! They landed humans on the moon! What's wrong with education? We give kids excuses. When I went to school in the 1970s there were kids in my class there were...ah...a little slow. But it was like, hey buddy...buck up! There were no fancy names for that crap like ADD and hypersensitive and whatever else. There were no special classes because there were no special students; everyone was given the same opportunity...no dumed down math and reading. The result? Hey, maybe some of them remained a little undereducated, but compared to the retards (pardon my lack of political correctness) that high schools are graduating now, they still did well later in life. The moral of this story? Let kids be kids and tell the adults that are teaching them that they need to act as role models and not buddies to the young people.

  • Yahoo! Finance User - Thursday, September 6, 2007, 3:49PM ET  Report Abuse

    • Overall: 4/5

    I believe it is an excellent idea to have every administrator teach or substitute a class once a quarter to get to know each and everyone of their students.

  • john - Thursday, September 6, 2007, 10:41AM ET  Report Abuse

    • Overall: 1/5

    throwing more money at the schools has shown to be ineffective. Wake up and learn from other countries where teachers are getting paid 35% more than US teachers, yet the cost per student is one-third the cost in the US, and the student performance way exceeds ours. The problem is the wastefullness starting at the large bureaucratic school districtricts where office holders earn enormous wages yet never set foot in the classroom. good teachers need to be paid more and ineffective teachers need to try some other profession -- the protective seniority system is also a major problem where teachers don't have to be accountable. More money will not solve the problem. John Stossel has well investigated this.

  • dompind - Thursday, September 6, 2007, 8:05AM ET  Report Abuse

    • Overall: 1/5

    Id like to see something from this guy that shows he can even spell doctorate.I like baseball and apple pie and Im a rightwing commoner parrot stories are getting old....Yes we should hold schools accountable.HOW DID THIS GUY DID A DOCTORATE IN ANYTHING!?...And we shouldnt stop there...we shold hold employers accountable too.

  • Yahoo! Finance User - Wednesday, September 5, 2007, 10:44PM ET  Report Abuse

    • Overall: 2/5

    Not a bad article. Currently, the US education system is only rated higher than the third world countries. I agree with the poster about the "culture" making a difference. Maybe any school dropout should be neutered or installed with a Norplant that can be reversed when they come back to school and graduate. In the school system here, the "babysitting service" is the going norm. Our problem is the gerry mandered school board voting districts. This arrangement has created an unholy alliance between the uptown power brokers, the liberals and minorities. They use each other to stay in power and control the welfare state here.

  • tierartze - Wednesday, September 5, 2007, 9:03PM ET  Report Abuse

    • Overall: 2/5

    Is the Milwaukee schools the only pertinent example here? Does'nt the World Bank track vouchers and are they not working well from South America to Sweden? Our secondary schools score abysmally compared to the rest of the developed world yet we are not sure that a voucher system that works so well elsewhere is a direction we would wish to pursue? Milton Friedman once noted that the inertia of the status quo made it difficult to bring needed change, this article will do little to advance much needed change and meaningful debate to our educational shortfalls.

  • Yahoo! Finance User - Wednesday, September 5, 2007, 8:58PM ET  Report Abuse

    • Overall: 1/5

    SIgh, two bad ideas put together don't make a good one. The key problem is using "market success" as measured by enrollment as a measure for school quality. Unfortunately in our crazy times, there are parents who *want* their kids to be dumb, and these parents would flock to schools that *don't* teach, for example, biology, geology and astronomy. School quality is best measured the way colleges do it: by peer review and regional accreditation. There is no "college crisis" except that of affordability. Indeed, to meet accreditation standards, schools may need more funds to buy books, repair classrooms, buy computers, or hire better teachers. If teacher pay is raised across the board, tenure needs to be traded off. Giving tenure to unqualified teachers is tantamount to child abuse; if the teacher is not required to take enrichment courses and keep up to date, he/she should not expect continued employment, let alone a pay raise every year. Once the school's quality is good, success still depends on student quality. If parents don't support their kids' studies, community based Big Brother/Sister systems and the like could provide educationally abandoned kids with good role models who provide moral support for their educational efforts. If kids have no hope of going to college for financial reasons, the return of federal and state grants and discounted loans (not market rate, gawd! these are kids!) tied to academic achievement as well as need could provide hope and a valuable incentive. Private programs that guarantee college money have worked wonders in inner city schools; kids just need to know it's financially possible, and they will work hard. Markets work very well at allocating food, clothing, and other consumables. They have a disappointing record when it comes to necessities that reflect a single, high-stakes choice, like heart surgery or an education. We saw how doctrinaire Communism imploded because it refused to bend and consider market reforms. How bad must our educational and medical systems get before doctrinaire market economics admits it can't handle these high-stakes single choices as well as a collective system?

  • Irv - Wednesday, September 5, 2007, 5:08PM ET  Report Abuse

    • Overall: 5/5

    Is it really that hard to make objective criticisms? I think he sidestepped a lot of issues to be politically correct but considering the space constraints it was a good article and worth reading. 5 stars.

  • Melissa - Wednesday, September 5, 2007, 4:59PM ET  Report Abuse

    • Overall: 5/5

    This article helps pinpoint the various problems with the educational system. One thing he left out of the equation is parental influence. If a child hears his whole life that he/she is expected to attend college then more often than not they make it. Kids who aren't encouraged rarely go. It's hard to see how schools can improve when parents are left out of the equation in every step of the way. I would like to see the bad teachers fired as well! I would get fired if I did my job poorly as would almost everyone out there.

  • Larazus Long - Wednesday, September 5, 2007, 4:33PM ET  Report Abuse

    • Overall: 1/5

    Only in Liberal America is failure given more resources and success is punished. Wheelan's column advocates more of the same. Public education is successful in the desired outcomes of the Left. Diversity, Multiculturalism, Feminism, Environmentalism and the creation of more and more paid union positions are examples of the success of public education. We truly do get what we pay for. Do not confuse education with public education. Public education has no intention of producing a highly educated individual. It exists to subsidize and create more Democrats. ...... The reason for choice is simple. Parents are responsible for raising their childern, not the state. Choice allows the values of the individual to trump the values of the state, and that is the Left's biggest fear. If you want parental involvement, then respect the rights of parents. Only thru the seperation of education and state will we find true reform. Freedom works every time its tried, but sadly that rarely happens.

  • happyguy - Wednesday, September 5, 2007, 4:25PM ET  Report Abuse

    • Overall: 2/5

    Motivation of students and their parents is key. Asian schools drop the lower performers every few years and continue with the rest. Not that I like that system, but I do like the motivation it provides to do your best. US culture seems to worship the best in sports and good looks, but it worships the mediocre in everything else. If we would just spend half the money on talented and gifted kids as we do on the low performers, the best and brightest would actually like school and want to show up.

  • Yahoo! Finance User - Wednesday, September 5, 2007, 3:56PM ET  Report Abuse

    • Overall: 1/5

    How can Americans consider their country to be a superpower when they have numerous long-term problems? I guess it is all about the looks, shopping and buying stupid gadgets instead of solving problems. And people wonder why internationally, foreign students are excelling at math & science. American parents, especially the moms are too busy shopping for clothes and shoes all the time.

  • MB - Wednesday, September 5, 2007, 3:51PM ET  Report Abuse

    • Overall: 2/5

    1. Separate the kids by interest and ability. The good students should not be dragged down by the uninterested or trouble-makers. We already do this for sports -- there are elite leagues and recreation leagues. 2. Uninterested high-school kids should just go to work. After they mature, they may want to come back for education. Or they will do the many jobs that don't need a lot of education. Some kids just cannot be incentivized. Eg . there are some kids that are tremendous athletes, with a chance at multi-million pro contracts if they work hard, stay off of drugs, and don't commit crimes -- yet many of them won't even do that. Even millions of dollars is not enough incentive. 3. Outsource: If schools are paying $10,000 per kid, we could get a Chinese or Indian tutor FOR EVERY KID, to follow them all day and tutor them.

  • HanO - Wednesday, September 5, 2007, 3:27PM ET  Report Abuse

    • Overall: 5/5

    I'm sure Charles has read the book Freakonomics. The unsavory answer really comes down to breeding smarter students. Hard to do without facing accusations of eugenics, Nazism, and racism. But that is what the human genome and genetic research is pointing towards. So how do we get from point A (where we are) to point B (schools full of smarter students with the mental ability to absorb an education)?

  • mbounarati - Wednesday, September 5, 2007, 3:17PM ET  Report Abuse

    • Overall: 3/5

    Maybe it's time for RADICAL/REVOLUTIONARY change - Eliminate govt and unions in our schools. If the US Dept of Education and teachers unions ceased to exist for the next 20 years what would happen?

  • ShaniqaP - Wednesday, September 5, 2007, 2:10PM ET  Report Abuse

    • Overall: 1/5

    Fire bad teachers. Expel students who have chronic discipline problems. Let the bad teachers flip burgers for a living, and let the evil children grow up to pick vegetables and scrub toilets. We shouldn't waste tax money on the worst people in our country.

  • Jeff F - Wednesday, September 5, 2007, 1:45PM ET  Report Abuse

    • Overall: 2/5

    Does he really make a point here? Money and choice will help students whose parents have an interest in helping them succeed, but those are already the students most likely to make it out of a poor school system.

  • Yahoo! Finance User - Wednesday, September 5, 2007, 1:10PM ET  Report Abuse

    • Overall: 5/5

    I can summarize this article are like this. Let's have public/government funded education but not government run education. I'll make this deal with the teachers unions: I'll double/triple what I pay in taxes for education but let me spend it the way I see fit for my childern. The only reason we don't have more CHOICE for elementary education is that children don't vote. The supposed argument about separation of church and state as it relates to vouchers is completely bogus. If we need to we should ammend the consititution so that parents and children have the FREEDOM to give children what they need. FREEDOM is supposed to be what this country is about but not if your a child. Just one more thing. I know I'm painting with a broad brush but teachers are complainers. Listening to them you would think that there jobs consist of 80 hours a week of hard labor while the rest of work 5 hours a day for triple there pay. Technically I have a 37.5 hour work week but add 10-15 hours onto that to get reality. I get 20 vacation days. That's it. The rest of the time I have to be at work period. Pension forget about it. Medical it's costing me more everyday. Resources staff reductions happen all the time but I still have to make do without. Excuse my spelling and grammer but I toiled in bad public school.

  • Dewc - Wednesday, September 5, 2007, 1:04PM ET  Report Abuse

    • Overall: 3/5

    Taking a different tack, I believe public school offerings just aren't sufficiently relevant to the majority of students to keep the kids interested and productive. It doesn't take much money to look at local problems and opportunities and structure the curriculum around these. Math, writing skills, government, art, music, phys ed-- everything could be integrated into an active program that enlisted student observation and ingenuity. The current obsession with standardized objectives and testing leave little room for creativity, student-appropriate adjustments, or environmental considerations. My rural community kids will learn more by addressing what they know; then they can be taught how to infer and extrapolate for other environs less familiar to them. As a School Board member, I am frankly disillusioned with the business-like production model of public schools today. Current practices do little to teach the immense responsibility of citizenship or provide a sense of empowerment in changing the world. Hands-on assignments that challenge the children to identify, build, and implement solutions will teach not only the fundamental RRR skills but also the teamwork needed for success outside of the classroom. My county has a dismal budget situation, but the actual education issues will not be remedied by money so much as by a change in approach. I laud the wonderful teachers who have struggled to fit innovative ideas and individualized approaches into the stifling demands of No Child Left Behind and other mandates.

  • Yahoo! Finance User - Wednesday, September 5, 2007, 1:03PM ET  Report Abuse

    • Overall: 4/5

    Good points. One issue that gets overlooked is the dumbing down of curriculum to be more "inclusive". This happened in the high school I attended (thankfully long after I left). They were trying not to be elitist by minimizing the different levels of classes available, but this does a great disservice to the more advanced students who need the challenges of more difficult work. I can't see what's wrong with teaching students according to their levels of ability and allowing them to challenge themselves if they (or their parents) so choose. It might even lead to a more challenging curriculum for everyone, which can be a huge benefit. Yes, there are always going to be students who need extra help, but this kind of system would help manage that. The other big problem is the popular culture today, which seems to make studying and working hard in school "uncool." Kids today don't want to be seen as geeks for enjoying and doing well in school. This is truly sad, especially sad when you see the comparisons of achievements of US students compared to others around the world. We should be leading the pack, not lagging behind. Is it any wonder that companies are having a hard time finding people to fill the technical and scientific roles they need?

  • David S. - Wednesday, September 5, 2007, 12:59PM ET  Report Abuse

    • Overall: 3/5

    Good, but not enough. Charles Wheelan tends to say his mind and doesn't go overboard trying to be politically correct. He came close but then but he shied away from mentioning the "C" word - Culture. NOT race, but culture. That's where many folk won't tread because culture is often confused with race. Why do the children of Hassidic Jews, Black Muslims, and of many Asian parents tend to do so well in school - any school. Hint, it's not their race, it's the culture they have been exposed and trained into. And the parents are the carriers of that culture. The parents themselves are required to be deeply concerned and proud about their children because of their culture. Pride, love, concern, attention weren't well discussed by Charles. Lots of focus on numbers and tests distract from the real issues - the unquantifiable but very, very important issue of the culture the child is born into.

  • Aaron - Wednesday, September 5, 2007, 12:58PM ET  Report Abuse

    • Overall: 2/5

    The subject is a dead horse, but thought provoking none the less. There are a lot of problems with the public school systems and it will take a large variety of solutions to fix the much larger problem. The sad part is it will not be fixed in my life time because of the political grid-lock and bogus programs like "no child left behind". It's a great humanitarian thought, but it is an impossible task. The more the system tries to please everyone the less successful the system will be in the future. The bottom line is there are kids that just don't care about school and you can't make them care until they are ready to car; if they are ever ready. Don't make the kids that do care suffer in their education while you try and make the others care. Again, it's noble to try and improve everyone, but sometimes you have to let Darwinism take effect.

  • David - Wednesday, September 5, 2007, 12:52PM ET  Report Abuse

    • Overall: 1/5

    Wheelan supports outsourcing good U.S. jobs to India which has led to an eroding tax bax for supporting out schools.

  • Yahoo! Finance User - Wednesday, September 5, 2007, 12:43PM ET  Report Abuse

    • Overall: 1/5

    Improve public schools: First do away with tenure. Second make strikes by these public employees illegal AND provide penalties for unions and teachers. Here in WA teacher walkouts are illegal BUT since union money elects most Democrat politicians, judges, and school board members no one is ever punished. The teacher strikes hurt only the students and their families.

  • Mark - Wednesday, September 5, 2007, 12:39PM ET  Report Abuse

    • Overall: 4/5

    I believe that there should be little doubt that overall, considering all schools, money is the greatest problem. I think it has some to do with class sizes, but I think it has more to do with keeping good teachers in education. How many good, successful, inovative people leave the profession they chose because financially it can't begin to compare with the opportunity they have in other professions. I believe this especially true in math and science, but also in most other fields of study. Folks that are truly talented have opportunities outside of teaching that are much more rewarding and less stressful than the 16 hours a day they put in and the lack of appreciation they receive. If they have initiative, they will escape and be rewarded handsomely for it.

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