Rationalizing School Spending: Efficiency, Equity, and Externalities, and Their Connection to Rising Expenditure

Eric A. Hanushek
In Victor Fuchs (ed.)
Published Date
Individual and Social Responsibility: Child Care, Education, Medical Care, and Long-Term Care in America
University of Chicago Press/NBER
pp. 59-91
Widespread dissatisfaction with the performance of schools, as opposed merely to size of the sector, has propelled education to a position high on the policy agenda. Yet the source of this dissatisfaction varies. Some people focus on student outcomes-whether the products of the schools can read and compute at an acceptable or desirable level. Others are more concerned with distributional aspects, concentrating on racial and economic differences in schooling and the rewards of schooling. Still others identify cost growth as the key problem, at least cost growth when compared to perceptions of performance of the schools. Another group focuses its attention on the role of government in providing education, arguing variously that government does a poor job (in terms of costs and performance) or too good a job (in terms of introducing specific values, moral views, and the like).