NCPA - National Center for Policy Analysis

More Education, More Growth?

June 8, 2001

Many argue that increasing education spending will improve educational results and consequently boost future economic growth. However, a recent study found that the quantity of education is a less important factor in economic growth than the quality of education.

Researchers used test scores in 39 countries in mathematics and science from 1965 to 1991. The quality of math and science education are considered to be indicative of a country's growth potential, and should be reflected in test results. They compared the scores to economic growth rates, and to traditional quantitative education measures -- such as spending per pupil. They found:

  • Raising the quality of education by 1 standard deviation -- a measure of variation -- boosts the country's real per capita growth rate by more than 1 percent.
  • On the other hand, raising the quantity of education by 1 standard deviation boosts a country's per capita growth rate by only 0.3 percent.
  • Moreover, while traditional education growth models relating education spending to growth explain only 33 percent to 41 percent of the variation in countries' economic performance, adding the measures of math and science skills improved the explanatory power of such models to around 70 percent.

Thus, the study suggests that boosting spending will not achieve the desired results without substantial education reform designed to improve performance.

Source: "The Math of Growth," Economic Intuition, Winter 2001; based on Eric A. Hanushek and Dennis D. Kinko, "Schooling, Labor-Force Quality, and the Growth of Nations," American Economic Review, December 2000.


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