Although many states and districts are moving forward with accountability schemes, they are likely to run into real problems that compromise and distort these programs’ impact. Though it seems natural to measure outcomes and hold schools responsible for them, the mechanics of how to do that appropriately are complicated. Creating effective accountability schemes will require a deeper understanding of how these programs alter incentives in schools and in turn the dynamics of accountability.
In the summer of 2000, perfectly timed to shape the election debate over education reform, came a new RAND study that claimed to contradict the conventional research wisdom on the connection between school expenditures and class size on the one hand and student achievement on the other. “Our results certainly challenge the traditional view of public education as ‘unreformable,’” the study’s director, David Grissmer, said in an accompanying press release. “But the achievement of disadvantaged students is still substantially affected by inadequate resources.
Various important policy decisions, fund allocations, and contractual provisions rely on the calculation of price differences, implying that the estimation and use of different price adjustment mechanisms have serious repercussions. Accordingly, controversies about the best way to proceed also exist. A simple but powerful example is the recent debates about the accuracy of the Consumer Price Index (CPI). There are not only technical disagreements but also political disputes owing to the important uses of the CPI in both public programs and private contracts.
I begin with some overall observations and conclusions. The subsequent discussion will provide some of the relevant evidence and references to support my conclusions. As a starting point, educational investments are very important to the U.S. economy, a fact that suggests there is much value in an aggressive human capital investment strategy. The U.S. economy has been built up largely by using a skilled labor force and has capitalized on the presence of skills, making human capital investments very important to the success of the overall economy.
Economic analysis of education and schooling has progressed considerably over the past few decades, and this essay attempts to put a few key issues into perspective. I look at the field from the particular vantage point of an economist with an interest in how school resources are used and how student performance can be improved. This perspective at least as applied-may be a bit narrow, although I think it is central to much of the policy discussion in education.
The production of school reform reports is a big business in the United States. The current trend of reform was started by A Nation at Risk, the 1983 official government report that detailed the decline of America’s schools. Since then, new reports have been institution not to have its own report and position on reform. Yet, it is startling how little any of the reform reports, and the reform movement itself, draw upon economic principles in formulating new plans.
Part of the glue holding together the membership of the Association of Public Policy Analysis and Management is a concern about the character and path of public policies. Embedded in this is the professional opinion that analysis will improve the outcomes of policy deliberations. This issue-the relationship between policy analysis and policy development-has been the subject of a long-standing debate that has recently been revived.