Lost Opportunity: Increased Economic Growth, Fueled by Improvements in Student Performance, Might Have Funded the Nation's Entire K-12 Education Budget by Now. (Feature)

THE CONCERNS ABOUT SCHOOL QUALITY EXPRESSED IN A Nation at Risk reflected declining trends in performance among U.S. students and their mediocre standing relative to students in other nations. America's failure to address these concerns has led to substantial losses for individuals and for society as a whole. The workers who failed to acquire essential skills can attest to the fact that their earnings have not kept up with those of the typical worker. And the aggregate effects are even more dramatic. By some estimates, today's entire K-12 education budget could be funded by the reform dividend that might have been expected from improving math and science achievement in response to the calls of the 1983 report. To wit, improvements in the schools would have boosted U.S. economic growth, and the annual windfall by 2002 would have exceeded total K-12 spending for that year. Quality Matters Much of the research on the economic impact of education has properly concentrated on the role of school attainment--that is, the quantity of schooling. This focus is natural. The revolution in the United States during the 20th century was the universal provision of a basic education. Moreover, years of schooling are easily measured, and data on years attained, both over time and across individuals, are readily available. Yet today's policy concerns revolve around issues of quality much more than of quantity. Completion rates for high school and college have been roughly constant for a quarter of a century in the United States, while the rest of the industrialized world has largely caught up on measures of school attainment. Risk was more concerned with the fact that U.S. students had fallen behind their peers in nations like Japan, the Netherlands, and France on international exams in math and science (see Figure 4, page 44, in Paul E. Peterson, Ticket to Nowhere). These concerns sparked the standards and accountability movement, which seeks to define what students should learn and tests to see whether they have mastered the material. In good part because of the impact of the Risk report, it is now generally recognized that students' cognitive skills are a crucial dimension of education quality. But it has not, until recently, been clear just how important differences in cognitive skill are for the long-term well-being of a nation's economy. Fortunately, data are now available that allow one to estimate the connection between cognitive skill and the economy. The conclusions of this emerging body of research are clear: education quality, as measured by test scores, is positively related to the earnings of individuals, national productivity, and economic growth. Individual Earnings Just as most parents believe, economists have clearly shown that a student's achievement in school directly affects his or her earnings later in life, after allowing for differences in the quantity of schooling, experience in the labor force, and a variety of other factors that also influence earnings. Students who do well in school also tend to go on for further schooling, which provides an additional boost to their earnings. As is well known, the economic benefits of a college education have risen dramatically during the past quarter century, and substantial evidence shows that students with good grades or high scores on achievement tests tend to pursue more education. These facts are part of the reason that so much attention has been paid to the schools as an agency of equal opportunity, ultimately helping to reduce inequities in the distribution of income. Long before the Risk report, the War on Poverty saw schools as key to reducing racial and other disparities in economic opportunity. Through schooling it was hoped that family poverty would not be transferred to the next generation: high-quality school investments would make up for deficits originating in the home. Today, many believe that the continuing difference between the earnings of black and white workers is due in good part to differences in their educational achievement, as measured by tests of cognitive ability. …

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