Efficiency and Equity in Education.

• Author: Hanushek, Eric A.

Eric A. Hanushek [*]

Education is of interest to many economists because of its perceived importance for a wide variety of economic issues. But like others in society, economists also have a personal interest in education -- having been students and perhaps taught themselves, having had children who are students, and often having formed strong opinions about educational policy through their own experiences. This combined professional and personal interest in education undoubtedly has heightened the interest in school research and led to stronger reactions to the policy implications of that research.

A major strand of my work concerns what determines student achievement -- what economists generally would call part of "human capital quality" -- and, most importantly, what role schools and governmental policy play in this equation. The results of this research reveal a complicated picture of determining factors that have subsequent implications for other areas of research and policy undertakings.

However, over shadowing all other findings is the fact that measurable attributes of teachers and schools bear little systematic relationship to student performance. This finding is controversial, at least partly because of its policy implications.

Some Background

The concept of human capital, while part of economics for several centuries, has only recently become central to both theoretical and empirical analyses. In the 1960s and 1970s, Theodore W. Shultz, Gary Becker, and Jacob Mincer laid the foundation of this theory. Their analyses framed the issues of investment in individual skills and provided insights into their empirical relevance. However, most early analysis concentrated on the quantity of individual human capital--not the quality or its determination--and its implications for subsequent wages or health. Specifically, the impact of schools on "quality" was not addressed. In fact, the best early study on the role of schools in skill formation was conducted outside the field of economics in the "Coleman Report." [1] This government publication, dictated by the Civil Rights Act of 1964, suggested that schools had little to do with human capital as measured by cognitive achievement. This pioneering analysis focused on quality issues but contained a variety of fundamental analytical flaws. [2] The Coleman Report commonly has been interpreted as showing that "schools do not matter," because its analysis indicated that family background, followed by peer influence, and least of all school attributes, determined student achievement. While its methodology was problematic, the report motivated a broad inquiry into the role of schools.

Analysis of Educational Production

Economists naturally think in terms of a production model, where school and other influences go in and student achievement comes out. However, the concept has been implemented in a variety of ways.

The standard statistical analysis relates student outcomes to family profiles and observable characteristics of schools and teachers. This approach, which frequently relies on schools' administrative records, has been applied to a wide range of U.S. schools. But these studies failed to reveal that school resources influence student performance in any systematic way, a finding I've developed in a series of papers. [3] In close to 300 studies examining the influence of class size reduction on student performance, nearly equally balanced positive and negative effects were uncovered. The dearth of statistically significant results (14 percent on each side) also underscores the fact that the vast majority of these studies reveal no relationship at all. Studies on teachers' graduate education and experience, as well as on per-pupil spending, yield similar mixed results. These findings, while once surprising to many, have now become the conventional wisdom.

The most significant misinterpretation of these standard studies--the central problem with analyzing the Coleman Report--is the conclusion that schools do not matter in education. Another closely related line of research has pointed out the flaws in that interpretation. Specifically, while the commonly measured attributes of teachers do not appear to be important in any systematic way, there remain large and consistent differences among teachers and schools.

Alternative statistical studies have used a general fixed-effect approach to estimation of teacher and school quality. In this methodology, differences in the growth of student...