Welcome to the Profit of Education website. Continuing the conversation begun in the book Profit of Education, we discuss the latest economic evidence on education reform.

Same old, same old

There’s a new release of Education at a Glance. It has the usual comparison of teacher salaries relative to other college educated workers in the U.S. and other countries. And the message is depressing as usual. Teacher salaries in the U.S. are not competitive with other professions the way they are elsewhere.

Here’s the picture:

Teacher salaries Ed Glance 2014

To give you one specific comparison, the number for Canada is 1.05 while the United States is stuck down at 0.68.

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Online education

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Matthew Chingos and Guido Schwerdt offer us what may be the first really good evidence on large-scale, online courses in secondary schools. Students in Florida complete about half a million classes a year online. Nearly all the students taking online courses are also enrolled in public/private/home-schools and take more of their courses in the old-fashioned way.

Do students learn as much taking online courses? According to the authors’ analysis they do. In fact, maybe they learn a little more.

Students choose whether to take a course online. So you might wonder whether the students who choose online courses happen to be better students. Well yes, in fact they are. The authors control for observable student characteristics (including previous grades). So to a first approximation the comparative outcomes for online and regular classes control for student differences. Of course there may be unobservable student characteristics that aren’t adequately controlled for (as the authors carefully point out). Still, the controls the authors have been able to use go a long way to arguing that online courses can be a good thing.

Costs of education matter and much of the motivation for online courses is that they are cheaper. I was surprised to see that they’re not all that much cheaper. Here’s a picture from the paper.

FLVS per pupilThe online courses have only been about 10 percent cheaper than the in-person courses, although the advantage has grown to about 20 percent in more recent years. The authors do remind us, however, that the online course “costs” don’t include the expense of computers used at school to access the online systems, nor the cost of providing guidance counselors, school lunches, etc.

All-in-all though, this new evidence seems to argue for cautious optimism on the use of at least some online courses in secondary schools.

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  1. sjl says:

    This is really unconvincing. The positive selection into these classes is massive–a third of a standard deviation in test scores after controlling for student characteristics. Adding in two test scores makes the FLVS effect fall to one-fifth of that. I find positive selection on unobservables a much more convincing explanation than a real effect of FLVS.

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New evidence on peer effects

My colleague Michael Gottfried offers us some evidence that peer effects in school can be pretty large. Measuring peer effects is hard. Here’s the problem: Suppose parents of particularly able kids maneuver their children into classes where learning works really well. To the outside observer it looks like being surrounded by particularly able kids is beneficial when what’s really going on is that particularly able kids are more likely to end up in a productive classroom.

Michael does several clever things to get around this methodological problem. One technique he uses is to restrict his sample to the roughly half of students who look to be in a classroom to which students were assigned randomly. In practice, this means that students in the class have roughly the same observable characteristics as does the whole population of students in the same grade in the same school.

So how big are the peer effects? Here’s one metric. If your classmates scored one point higher on their tests last year, then you’ll probably score about 6/10ths of a point higher this year than you would otherwise. That strikes me as pretty big.

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Why is the teaching force increasingly female?

Richard Ingersoll and coauthors write:

With career and employment alternatives increasingly available, one might think that fewer women would enter occupations and professions that traditionally have been predominantly female. This has not happened for teaching. Both the number of women entering teaching and the proportion of teachers who are female have gone up….It is unclear why this has happened.

I’ve made a little graph from the Digest of Education Statistics illustrating the facts. (Data is interpolated between years where needed.)pcntfemaleteacher

To add to the Ingersoll et. al. comment above, this is a period in which women have seen some improvement in wages relative to men outside of teaching, but not as teachers.

Mysterious.

P.S. In private schools, the fraction of women teachers has declined. The change is about 4 percentage points over the same period.

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  1. preserve says:

    Honest questions,
    Has the ratio of female/male graduating from universities shifted since the 80’s?
    Do females see a greater opportunity of promotion into administration now than in the 80’s? This may attract more women into the field.
    Where are the greatest shifts occurring? Primary or Secondary?

    • Dick Startz says:

      The ratio of women graduating from universities has indeed risen, and there are more women principals now. The shift is largely in secondary school. All these things do point in the direction of more women teachers. So I think you may have identified at least part of the answer.

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Educating kids from families with and without much education

Rick Hanushek, Paul Peterson, and Ludger Woessmann offer the following graph comparing educational outcomes across states while controlling for parental education. (The bright red arrows are my addition.) The circle for each state shows the percentage of 10th graders proficient in math. Rankings on the horizontal axis show how well a state does for kids from families where neither parent graduated high school. Vertical axis rankings are for families with at least one parent graduating college.

Hanushek et al low-high

I’ve added arrows pointing to Texas and to California.

Texas does moderately well–by American standards–at educating the children of well-educated parents. (By this ranking, Texas kids perform at about the middle of OECD countries, which isn’t exactly super.) California does less well. According to the authors’ calculations 54 percent of Texas kids from well-educated families are proficient in math. In California, it’s only 43 percent.

But now look at the kids whose parents are uneducated. Texas does better than any state in the country. In fact, the Texas proficiency number is the same as that of Finland’s much-vaunted school system. In contrast California, is a disaster for the children of the uneducated. Neither Texas nor California does a great job by these kids, but Texas kids are three times as likely to be proficient as are the comparable kids in California.

I live in California. There’s a lot of talk around here about education for all. Someone’s not walking the walk.

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U.S. Students from Educated Families Lag in International Tests

So I lifted the title of this post from the very nice piece over at Education Next. Recommended reading if you have a few minutes. If you have a few more minutes, you might want to go through the longer, but equally readable, version at the Harvard Kennedy School.

Let me share the authors’ main point, and then raise a political question.

As you know, the U.S. ranks a solid “mediocre” in educational outcomes when compared to other industrialized countries. One response has been that the U.S. does well at the top of the social pecking order, just not so well at the bottom. And that we have a lot more people at the bottom of the pecking order than do other countries. I’m not sure I find this very reassuring. Still, the argument is that the usual comparisons aren’t “apples-to-apples.”

Hanushek, Peterson, and Woessmann blow away this line of reasoning by controlling for parents’ education, and then redoing the comparisons. In their chart, copied below, the authors look only at kids from families with at least one college-educated parent. These are more-or-less reasonably comparable groups across advanced countries.

In every country whose bar sticks out past the red (U.S.) line, kids from well-educated families beat kids from well-educated American families. Small differences across countries should probably be taken with a grain of salt. But our kids from well-educated families coming in 28th?

Hanushek et al high

Now for my political question. While kids from low-education families are the ones who perform really poorly in American schools, those families don’t have a whole lot of political clout. But why aren’t well-educated families raising havoc?

Here’s my theory (just theory, no direct evidence.) The authors define “highly educated” as a family with at least one college-educated parent. My rough calculations (I looked at a dataset called NLSY97) suggest that’s about the top third of the family education distribution. Both parent college-educated families make up something like 15 percent of households. Maybe in today’s America to find political clout in you need to look at the top 15/10/1? percent. Maybe for the very few, education compares a lot better than for the hoi polloi.

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Free market fantasy

Have you noticed that a subset of education “reformers” seem to be deep into free market fantasy? It’s not the free market part that bothers me. No, the problem is that some folks seem to be in deep fantasy about how free markets operate. You see, in free markets you have to pay well to get good people. Not always, but most of the time. The “free market” types too often want to have incentives and stuff, but aren’t willing to pay teachers enough.

Here are two quotes from a very nice New Yorker article on what went wrong with Newark school reform. The context is Mark Zuckerberg’s very generous attempt to fix Newark schools by anteing up $100 million of his own money.

Zuckerberg had come to see teaching in urban schools as one of the most important jobs in the country, and he wanted to make it as attractive to talented college graduates as working at Facebook. He couldn’t succeed in business without having his pick of the best people—why should public schools not have the same?

So far, so good. Now the next sentence.

Zuckerberg attracted young employees to Facebook with signing bonuses far exceeding the annual salary of experienced Newark teachers. 

Any bets whether the Newark reform would have turned out differently if the line could only have read

Young teachers in Newark got signing bonuses far exceeding the annual salary of experienced Facebook employees?

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Is education getting more important? Or less?

You probably suspect that education is even more important to earning a good living than it used to be. If so, you’re right. Gonzalo Castex and Evgenia Dechter have estimated the returns to different levels of education both now and 20 years ago. They show that more education raises wages more today than in the past. I’ve extracted some of their findings into a little table. Each row tells us the percentage increase in wages for a given educational level when compared to being a high school dropout. The key is the highlighted columns.

Castex and Dechter

Getting a high school diploma makes more difference now than it used to. The difference isn’t huge, but the return is definitely higher. The bigger jumps are for college and beyond.

Yes, education is even more important than it used to be.

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Summer break

ProfitOfEducation is off for a bit of a summer break!

summer

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Dumping tenure to grow the economy?

Suppose that the Vergara decision and its aftermath were to lead to the entire country replacing the worst two percent of teachers with average teachers? It’s pretty clear that students who benefited from the teacher upgrade would end up with higher wages when they enter the work force? How much is that worth?

Let’s begin with the idea that really bad teachers do incredible damage. (This is a good place to stop to remind everyone that really great teachers do incredible good.) Suppose that the effect of having really bad teachers for a kid’s K-12 experience is that he never earns a penny for his entire life. And suppose that if the same kid had average teachers throughout he would earn an average income. This would seem to over-estimate the teacher effect, but let’s go with it.

Median income in the United States is around $30,000 per year. There are around 160 million workers. So $30,000 times 160 million times 2 percent is just about 100 billion a year. That’s real money, but it’s not a giant slice out of our huge economy. (It’s a bit over half a percent of GDP.) And I suspect this estimate is an upper bound.

Two caveats:

  1. Maybe we’ll get reforms following Vergara that help more than just the bottom few percent. If so, the effect could be enormously larger.
  2. Rick Hanushek, who is arguably the dean of education economists, has argued that the effect of Vergara might be in the trillions rather than in the billions. Hanushek’s analysis relies on school reform raising the rate of economic growth. This requires faster technological progress. Because new technology isn’t created by people at the bottom end of the educational ladder, his argument doesn’t seem to apply to a reform focused on helping those on the bottom rungs. So I’ll stick with the billions number.
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