International Study Coauthored by Hoover Fellow Eric Hanushek Shows Clear Evidence of Economic Benefits of Educational Improvement

Monday, January 25, 2010
Stanford
Eric A. Hanushek

Findings from a newly released report, The High Cost of Low Educational Performance: The Long-Run Economic Impact of Improving PISA Outcomes, were presented by Eric Hanushek, a coauthor of the report and the Paul and Jean Hanna Senior Fellow in Education at the Hoover Institution at Stanford University, at an exclusive preview event in Washington, D.C., on January 19.

Said Hanushek, ”Relatively small improvements in students’ educational performance can have extraordinary impacts on a nation’s future economic well-being” The new international study released today from the OECD uses economic modeling to show that even modest and achievable gains in student learning yield large increases in gross domestic product (GDP) over the long run.

“This report provides powerful evidence that educational improvements make an important and lasting impact not only in the lives of students but in the livelihood of nations,” said Bob Wise, president of the Alliance for Excellent Education and a former governor of West Virginia.

Summary of Key Findings
This report examines three scenarios to estimate what the long-term effects of educational improvement, as measured by scores on the highly regarded Programme for International Student Assessment (PISA), would be on the nation’s GDP.

  • Scenario 1: Increase average scores on PISA by 25 points over twenty years.
    This relatively modest goal—less than Poland achieved in just six years, from 2000 to 2006—would result in an increase in the U.S. GDP of $40 trillion over the lifetime of the generation born in 2010. Even this minor performance improvement represents a significant increase (25 percent) over what might be expected without raising the current level of student performance.

  • Scenario 2: Bring each country to the average level of Finland.
    Finland is the highest-performing country on PISA, scoring about 50 points higher than the United States in mathematics and science. Raising U.S. scores to that level would increase GDP by $100 trillion over the lifetime of a child born in 2010.

  • Scenario 3: Bring all students up to a minimum skill level.
    Although the U.S. average score exceeds the PISA minimum level (400 on a 0 to 1,000 scale), about 19 percent of U.S. students perform below those levels. Simply raising the cognitive skills of those students would add $72 trillion to GDP over the lifetime of a child born in 2010.

“These results show how powerful the impact of high-quality education is for developed countries,” said coauthor Ludger Woessmann, a professor from the University of Munich and a visiting fellow at the Hoover Institution. The study will be presented this week at the World Economic Forum at Davos, Switzerland.

The report notes that there is some uncertainty in these projections, as in any projections. But even reducing the projections to allow for plausibly minimal estimates suggests large gains in cognitive skills and human capital. Even achieving just half the projected impact would be a remarkably important potential change in the economic growth of the United States, the report concludes.

The complete report, entitled “The High Cost of Low Educational Performance,” is available at http://edpro.stanford.edu/hanushek/files_det.asp?FileId=263.