The Benefits of Improving U.S. Educational Performance

by Reihan Salam

Jim Pethokoukis discusses the results of a new survey of the skills of adults residing in OECD countries, the subject of a recent article in the New York Times:

New OECD education tests show that among adults in advanced economies, the US ranks near bottom in skill with numbers and technology, and near the middle for literacy. Japan and Norway finished first and second in all three areas with the Netherlands, Sweden and Norway near the top, according to The New York Times. The US scores were notable for a few reasons: 1) the US usually had more people in both the highest and lowest proficiency levels; 2) the skills of highly educated Americans were slightly below the average of their peers, while those without high school had skills much worse than their counterparts; 3) the younger Americans were, the worse they scored.

This raises the question of why the U.S. nevertheless performed quite well relative to its peers in recent decades, and Jim quotes a recent interview in which Eric Hanushek, an expert on U.S. education policy at the Hoover Institution, offered a theory as to why the U.S. has fared well despite weak educational performance in recent years. The basic answer is that the U.S. started out with a big lead in educational performance — hence “the younger Americans were, the worse they scored” (older Americans fare well relative to older people living in other market democracies, as the U.S. was among the world’s first countries to achieve universal secondary schooling for its population) — and the U.S. has long enjoyed superior economic institutions, e.g., “free and open labor in product markets, we’ve had limited intrusion of government, and a variety of other things: good property rights.” But America’s institutional advantage has eroded over time, so it seems reasonable to conclude that the weakness of U.S. educational performance will prove more costly in relative terms in the decades to come.

Hanushek is, along with Paul E. Peterson and Ludwig Woessman, co-author of Endangering Prosperity: A Global View of the American School, a book which largely eschews explicit policy recommendations, yet which argues that U.S. educational performance in comparative context ought to be cause for alarm, as it portends a larger productivity slowdown:

A wide variety of tests support the claim that the level of human capital acquired by young people while in school has a direct, causal effect on a country’s economic growth rate. Further, these tests indicate that school policy, if effective in raising cognitive skills, is an important force in economic development. While other factors— culture, health, and so forth— may affect the level of cognitive skills in an economy, schools add their own contribution to the acquisition of human capital within a society. But obtaining more years of schooling, by itself, will have little effect on economic growth rates— unless that additional schooling enhances student learning. A conclusion that seems intuitively correct— additions to human capital are essential if a country’s well-being is to be enhanced— is supported by a wide variety of econometric tests.

In Chapter 5, Hanushek et al. use a simple simulation to demonstrate the potential gains from improving U.S. educational performance to the levels achieved in other affluent countries:

Here we consider the economic value of three improvements obtained within twenty years, that is, by 2033. They involve moving the United States to achievement levels seen elsewhere in the world:

—Improve U.S. mathematics scores to the level of Germany or Estonia in 2009 (a 25-point improvement in PISA scores from our 2009 level).

—Bring the average U.S. student up to the level of Canada in 2009 (an improvement of 40 points on PISA).

—Bring math scores up to the level of Singapore in 2009 (an improvement of 75 PISA points).

The accompanying chart suggests that in the absence of an improvement of skills, U.S. GDP per capita will more than double over the next eighty years, going from approximately $50,000 to $125,000. Matching Canadian educational performance will lift GDP per capita in the 2090s to more than $200,000. Matching Singaporean educational performance will lift GDP per capita to well over $300,000.

One issue that is worthy of note is that educational performance in the U.S. varies across groups. Non-Hispanic white and Asian students tend to perform at a higher level than African American and Hispanic students. With this in mind, Hanushek et al. consider the educational performance of students drawn from relatively advantaged groups:

While the 42 percent rate of math proficiency for U.S. white students is much higher than the averages for students from African American and Hispanic backgrounds, U.S. white students are still surpassed by all students in sixteen other countries. A better than 25-percentage-point gap exists between the performance of U.S. white students and the percentage of all students deemed proficient in Korea and Finland. White students in the United States trail well behind all students in countries such Japan, Germany, Belgium, and Canada.

States vary widely in the percentage of white students who are proficient in mathematics. White students in Massachusetts outperform their peers in other states; 58 percent are at or above the proficient level in math. Maryland, New Jersey, and Texas are the other states in which a majority of white students is proficient in math. Given recent school-related political conflicts in Wisconsin, it is of interest that only 42 percent of that state’s white students are proficient in math, a rate no better than the national average.

The NAEP data allow us to isolate an elite segment of the U.S. student population, those who have at least one parent who has attended college. Given the benefits that accrue to most of those who live in better-educated families, that segment can be expected to outrank all students in other countries. It may be helpful to think of it as the upper bound of what the U.S. education system has delivered in terms of student performance. Significantly, not even among students from college-educated families can we find a majority of students crossing the proficiency bar in math (see figure 3-2). Only 44 percent of such students nationally did so. In Massachusetts 61 percent of students from college-educated families are proficient in math. Seven other states have a majority of students from college-educated families performing proficiently in math: Vermont, Minnesota, Kansas, Pennsylvania, Virginia, New Jersey, and Colorado.

The news is sobering. Some might try to comfort themselves by saying the problem is limited to students from immigrant families, or to African American students, who have suffered racial discrimination, or to others who have suffered from ethnic discrimination. But not even half of the students from college-educated families were proficient in mathematics. And children of college-educated parents in our best state (Massachusetts) still trailed all students in Hong Kong and Singapore. [Emphasis added]

Raising educational performance is going to be a decades-long project, and it is primarily the responsibility of state and local governments. There are, however, things that the federal government can do to help improve educational performance. Frederick Hess and Andrew P. Kelly have argued the following in National Affairs:

[I]t is when Washington tries to direct improvement efforts or to exercise control over education that things go awry. This is how we get the unworkable mandates of No Child Left Behind and the infeasible promises of Race to the Top. A better approach would be to limit Washington’s involvement to tasks for which it is uniquely suited and that respect and embrace the basic tenets of federalism and our constitutional design.

Two such tasks in particular suggest themselves. The first deals with the public goods of providing accurate, comparable measures and information needed to help empower parents, voters, state and local officials, and educators and of supporting the kind of basic research necessary for dynamic markets and entrepreneurial problem-solving. The second enlists the federal government in support of “trust-busting” and bureaucracy-taming — enabling promising new providers to challenge education monopolies, working to correct the legacy of federal micromanagement, and helping to free state and local reformers from the burden of their predecessors’ bad decisions.

This is a modest, realistic agenda, yet Congress isn’t debating measures that might help improve U.S. educational performance. Rather, we’re debating the debt ceiling. 

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.