NEPC Resources on Economics
NEPC Review: The Economic Cost of the Pandemic: State by State (Hoover Institution, January 2023)
A report calculates the future economic burden that the pandemic has imposed through reduced student achievement levels. Under a set of assumptions about the link between achievement and earnings, this economic burden is projected to be very large, persistent, and variable across states. From there, the report contends that—to offset this achievement gap—schools need to be “made better” even as the report is silent on how schools can improve or if more funding is needed. Setting aside this exhortation, however, the report actually falls short of a full accounting of the total loss in children’s human capital from the pandemic. It focuses only on achievement deficits, failing to consider the other dimensions of human—and social—capital. Unfortunately, without a full reckoning or understanding of the damage the pandemic imposed on schoolchildren, it is unlikely that any policy responses will be adequate, efficient, or equitable.
NEPC Review: Priced Out of Public Schools: District Lines, Housing Access, and Inequitable Educational Options (Bellwether Education Partners, October 2021)
A Bellwether report attempts to examine the availability of low-income rental units in school districts to understand whether districts in the largest 200 metropolitan areas are accessible to families in poverty. While the report’s focus on the intersection of housing and education policy for students’ opportunities is commendable, it suffers from significant methodological shortcomings. One problem is that the report’s approach is disconnected from federal housing policy and research. In addition, and particularly problematic, the report is silent on how race and racism relate to housing access and educational opportunity. These concerns and others severely limit the report’s utility for informing social policy.
NEPC Review: Capitalism in the 1619 Project (The Heritage Foundation, January 2021)
The 1619 Project of the New York Times re-examines United States history with the experiences of Black Americans at the center. The 1619 Project has elicited a significant backlash, culminating recently in the efforts of multiple state legislatures to ban the use of its curricular materials. Consistent with those efforts, this Heritage Foundation report seeks to disqualify the 1619 Project curricular materials as insufficiently celebratory of American capitalism. The report asserts that the 1619 Project overstates slavery’s importance to U.S. economic history. However, the report is less concerned with potential students’ content knowledge about slavery than with their receptivity to the libertarian policy preferences of the Heritage Foundation. Disconnected from the current scholarly literature on both American slavery and history pedagogy, the report commits the exact sin with which it besmirches the 1619 Project: substituting ideology and political motives for an accurate engagement with the past.
NEPC Review: Unleashing Educational Opportunity: The Untapped Potential of Expanded Tax Credit Scholarships in Pennsylvania (Commonwealth Foundation, August 2020)
The primary goal of the report Unleashing Educational Opportunity: The Untapped Potential of Tax Credit Scholarships in Pennsylvania, is to argue that expanding vouchers or tuition tax credits for private schooling can lead to large economic gains for the state. Such gains would result from two purported benefits: increased lifetime earnings for those attending private schools on vouchers, and reduced social costs associated with crime. These assertions are based on the claim that a vast body of rigorous research shows higher academic achievement among voucher recipients and shows that these voucher recipients are more likely to attend and graduate college and less likely to commit felonies. The report fails to support its thesis and misapplies its findings, and thus is of no practical use to policymakers and others.
NEPC Review: Ripple Effect: How Expanding School Choice Programs Can Lead to More College Graduates and a Stronger Economy (Wisconsin Institute for Law and Liberty, January 2020)
A report from the Wisconsin Institute for Law and Liberty claims a chain of benefits will purportedly follow if the current cap on voucher enrollment for the state of Wisconsin is increased from four percent to 20%. The resulting improvement in graduation rates will, the report asserts, result in the employment of more people at higher wages, leading to increased personal wealth and government income of $3.2 billion over 20 years.The obvious failing of this logic is how this projected “ripple effect” will occur. Causal links are weakly explained and lack support. The claims cannot be verified because the methods are not described and, in key areas, the numbers literally do not add up. Other prominent unaddressed issues include social stratification, inequitable selection effects, the cost of running two school systems, and the effects on learning. With a large number of relevant variables at play and the study’s apparent reliance on descriptive methods, interpretations of the data are subjective and untrustworthy, and ultimately, the report offers no assistance to policymakers or others.
A Weak Defense of a Useless Report
NEPC Review: The Michigan Context and Performance Report Card: High Schools 2018 (Mackinac Center, January 2019)
A Mackinac Center for Public Policy report, The Michigan Context and Performance Report Card: High Schools 2018, seeks to measure and publicize high school performance by ranking schools according to their test scores. Although this has been done previously in many contexts, this publication touts as its major contribution taking socioeconomic status into account in its school rankings. While the stated goal of the report is laudable, the reality falls far short due to several shortcomings, detailed in this review. Given these shortcomings, the rankings presented in this report should be given no weight in any discussions of policy or practice. In fact, this report does a disservice by introducing questionable information in an easily readable form that is not substantiated by any credible analysis.
Update: Ben DeGrow and Michael Van Beek posted a response to the review in a blog post at: https://www.mackinac.org/critique-of-cap-report-card-fires-blanks.
John T. Yun’s response to the blog is posted immediately below the review. There is a corresponding newsletter at:
https://nepc.colorado.edu/publication/newsletter-yun-response-050219.
Reviews Worth Sharing: The Long-Run Effects of Teacher Collective Bargaining
In Teacher Unions and Students’ Long-Term Economic Prospects, Emma García and John Schmitt review The Long-Run Effects of Teacher Collective Bargaining, a paper by Michael Lovenheim and Alexander Willén presented at the 2018 meeting of the Allied Social Science Associations (ASSA) paper session on "New Evidence on the Effects of Teachers' Unions on Student Outcomes, Teacher Labor Markets, and the Allocation of School Resources."
This review was originally published on the Economic Policy Institute website at: https://www.epi.org/blog/teacher-unions-and-students-long-term-economic-prospects/
NEPC Review: Renewing Our Cities (EdChoice, March 2017)
Two reports contend that the introduction of school choice can promote economic development in economically distressed urban areas. The first report, published by EdChoice, presents a case study of a charter school that has, according to the report, contributed to the economic development of the city of Santa Ana, California. The second report, published by the American Enterprise Institute, presents a proposal for a hypothetical voucher-like program that, if implemented, would purportedly spur economic development in high-poverty neighborhoods by luring higher income families into those neighborhoods. This review explains that both reports overlook significant bodies of relevant research literature and make unsupported claims that rely on flawed logic and data. The EdChoice report fails to collect and analyze data related to the report’s causal assertion that economic development in Santa Ana resulted from the establishment of the charter school. The American Enterprise Institute report’s claims about the benefits of the proposed program to publicly fund private schooling are unsupported by existing research. We conclude that these reports offer little useful guidance for policy or practice.
NEPC Review: Increasing Education: What it Will and Will Not Do for Earnings and Earnings Inequality (The Hamilton Project, March 2015)
A recent report discusses three commonly held propositions about education’s economic power: 1) education is the critical factor in creating economic prosperity; 2) college degrees increase earning power; and 3) increasing educational attainment will narrow income inequality. The report endorses the first two propositions but finds the third inaccurate, concluding that a significant increase in educational attainment is not likely to significantly decrease wage inequality. The use of an empirically based simulation to project what would happen if an additional 10 percent of the population suddenly received college degrees is illuminating. However, the analysis has important limitations. There is little evidence provided to show that increasing educational attainment is, as the authors contend, “the most effective and direct way” to improve economic prosperity. The data are drawn only from males and no attention is paid to how income gains differ across race, field of study, labor-market conditions, and institutional reputation. Critically, no analysis compares education with other approaches to economic problems. Claiming that the primary solution to important economic problems is to improve “human capital,” the report perpetuates a problematic myth that undervalues alternative approaches to poverty and economic insecurity. Indeed the knowledge society narrative, assuming that everything depends upon more education, may itself be flawed.
Review of The Texas Economy and School Choice
In a recent report, The Texas Economy and School Choice, written by Arthur Laffer for the Texas Association of Business and the Texas Public Policy Foundation, Laffer evaluated the effect of the proposed Taxpayer Savings Grant Program (TSGP)—essentially a universal voucher program designed to provide school choice to every student in Texas. Laffer concludes that by raising graduation rates, improving education achievement, and thus increasing human capital, the TSGP would substantially raise wages and income for working families, thereby improving economic growth in Texas. In this review, we highlight two profoundly problematic areas of the report. First, Laffer’s assertions about the educational benefits of choice represent a severe overreach with and misapplication of the available research. Second, the author’s economic estimations are over-generalized and heavily biased towards those families who already have the wealth to choose and relocate. The report applies simplistic economic logic to education and fails to consider all but an extremely narrow and inappropriate slice of research on education, making the report unsuitable as a basis for public policy decisions.
NEPC Review: The Economic Benefits of Closing Educational Achievement Gaps (Center for American Progress, November 2014)
A new report from the Center for American Progress estimates substantial economic benefits from closing achievement gaps. These gains result from higher economic growth, which the report suggests would arise from higher levels of student achievement and specifically from higher achievement by minority students. Overall, the report estimates that if Black and Hispanic high school math scores converged to equal those of White high school students, the size of the U.S. economy would increase by $20 trillion over the period from 2014 to 2050. Federal and state/local tax revenues would also increase, by $4 trillion and $3 trillion respectively, over this period. Thus, the report makes an economic case for sizeable public investments to close achievement gaps. However, although there are likely to be economic gains from closing these gaps, the report does not include much detail concerning specific calculations and does not check the accuracy of its estimates. Moreover, these estimates rely on a single study, and that study has limitations: it looks across countries rather than at the U.S. economy, and it implies a very powerful role for cognitive skills (test scores) over behaviors. A general proposition—that reducing educational gaps makes sense on both efficiency and equity grounds—is plausible. But the report does not provide enough detail for readers to see how big the efficiency gains are, and readers are asked to accept that closing achievement gaps—rather than raising graduation rates or enhancing socio-emotional skills—will yield the biggest economic pay-off.
Review of The Economic Benefits of New York City's Public School Reforms, 2002-2013
The Economic Benefits of New York City’s Public School Reforms, 2002-2013 attempts to estimate the economic impact of school reforms implemented during the tenure of Mayor Michael Bloomberg. The report focuses on two types of effects: direct effects on the earnings of students graduating under the reforms (who might not otherwise have done so), and indirect effects of higher graduation rates and charter school availability on residential property values. The aggregate impact on earnings and property values is estimated to exceed $74 billion. While such estimates are always an exercise in some level of speculation, this report relies on highly inappropriate assumptions to reach its conclusions. Specifically, it attributes all gains in high school completion and college enrollment to the reforms, applies national statistics on earnings and college completion to the marginal graduate in NYC, and extrapolates cross-sectional associations between graduation rates and home prices at the zip code level as the causal effect of higher graduation rates. Without taking away from the real educational and economic gains that many students experienced during this period, this seriously flawed analysis should be taken by no one as a credible estimate of its economic impact.
Why Comparing NAEP Poverty Achievement Gaps Across States Doesn’t Work
Baker’s step-by-step analysis explains the complexities of comparing achievement gaps between higher- and lower-income students across states. Raw comparisons are misleading because they rely on an incorrect assumption that the average of low-income children in one state is comparable to the average of low-income children in another. New Jersey, for instance, comes in 5th in a ranking of raw comparisons between states, but when the necessary corrections are made for the size of the income gap between higher and lower-income students, New Jersey comes in 27th – with a smaller gap than in the average state.
NEPC Review: Stretching the School Dollar: A Brief for State Policymakers (Thomas B. Fordham Institute, January 2011)
Bruce Baker examines the costs and benefits of layoffs made by seniority versus those made by “quality,” as encouraged by Petrilli and Roza. He argues that the tradeoff is not between “keeping old, dead wood” versus “keeping quality teachers,” as it is often put, but rather the tradeoff between laying off teachers on the unfortunately crude basis of seniority only versus laying off teachers on a marginally-better-than-random, roll-of-the-dice basis. He concludes that the latter may actually be more problematic for the future quality of the teaching workforce.
Deficiencies & Misinterpretations in the Center for American Progress Method for Measuring and Comparing School District Return on Investment
Bruce Baker’s critique of the Return on Investment (ROI) Index for K-12 public school districts, published by the Center for American Progress, finds CAP’s analysis sorely lacking: it support neither the general findings conveyed in the report, nor the policy implications and proposals that follow from them.
Understanding Costs and Inflation
Bruce Baker responds to the general assertion that public education system is less cost-effective now than it was 30 years ago by arguing that comparisons in education spending over time are overly simplistic if they simply adjust for the value of the dollar. He specifies and discusses three major factors that influence the cost of education: changes in the incoming student populations over time, changes in the desired outcomes for those students, and changes in the competitive wage of the desired quality of school personnel.
Reviews Worth Sharing: The Attack on American Education (December 2010)
Bruce Baker takes off from Robert Reich’s lament about the “new attack on American education” to make the case that in many states, the de-investment in education has been occurring for decades, to ruinous effect.