Hoover Daily Report

Lost Opportunities

Monday, July 21, 2003

One way to look at the costs of failed education reforms is to calculate the added money we put into our schools with no improvement in student performance. These costs, although significant, pale in comparison to the opportunity costs to our economy. In failing to reform our schools, we are failing to provide the foundation for our own future economic growth.

The impetus for many education reforms today was A Nation at Risk—a federal report issued in 1983 that concluded the United States was hurting itself by maintaining mediocre schools. Unfortunately, the push to improve schools resulting from the report has led to ineffective reforms. Per-pupil spending, for instance, has increased by 50 percent over the past twenty years; pupil-teacher ratios have fallen by a sixth, to sixteen to one; and yet student performance, according to the National Assessment of Educational Progress, is essentially the same today as it was in 1970.

Although the resources we are providing to schools are increasing, the quality of the education those schools are providing is not. This is a crucial distinction because extensive research demonstrates that education quality, as measured by test scores, is related to the earnings of individuals, national productivity, and economic growth.

Individuals with greater skills tend to earn more than those with lower scores. But each individual's education also has the potential of making others better off: a more educated society has a higher rate of invention, leading to increased productivity, which leads to more invention, which equates to more productivity, and so on. The resulting economic growth determines the improvement that will occur in society's overall standard of living.

Labor force quality can be directly related to the economic growth of a country. Relying on objective measures of the mathematics and science performance of students in many countries during the past four decades, a colleague and I considered differences in national growth (after accounting for differences between countries' levels of income, the average number of years students are in school, and population growth rates).

We discovered that school quality has profound effects on economic growth—feasible levels of improvement in math and science skills can lead to as much as a 1 percent increase in the annual growth rate of per capita gross domestic product (GDP). Although 1 percent may not sound significant, consider this: in the year 2000, per capita GDP in the United States was $34,950; an annual growth rate of 1 percent would raise that to $57,480 by 2050—more than a 60 percent increase.

What if the United States had embarked on true school reform at the time of A Nation at Risk? Had we lifted math and science performance to the level of the best European countries during the decade of the 1980s, U.S. growth would begin to pick up as those students became a significant portion of the labor force. Today, on the twentieth anniversary of the report, the "reform dividend" from this growth could have exceeded our total annual spending on K–12 education.

The opportunity costs for failing to reform our schools have been high and will only continue to rise if we do not act now to make education reform a reality. The economic future of this nation simply cannot readily afford another twenty years of lost opportunities.