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Last night Bob Schieffer claimed that "the U.S. spends more per capita than any other country on education. Yet, by every international measurement, in math and science competence, from kindergarten through the 12th grade, we trail most of the countries of the world."

That's a remarkable juxtaposition. But is it true? At best Schieffer misled viewers last night. Read on for the details....

It's hard to know for sure, but Schieffer is probably relying on OECD data, such as this 2007 report. And that's the first potential problem, since the OECD doesn't include all countries. Cuba, for example, spends an extreme amount on education relative to its national income.

What does Schieffer mean by "more per capita"? He was sloppy. Let's dismiss "per capita" out of hand. Countries with lower birth rates, longer life expectancy, and/or lower immigration rates than the U.S., such as Japan, will automatically spend less on education "per capita" simply because they have fewer younger people relative to total population. Schieffer probably meant absolute dollars per pupil. In 2004 that was $12,092 per student in the U.S., including primary, secondary, and higher education, and including both private and public funds. (That figure excludes pre-primary education, such as Head Start.)

However, Schieffer conflates "kindergarten through 12th grade" with the total dollar spending per student for all levels of education. Total spending per student is more heavily skewed toward higher education in the U.S. at $19,842 per higher ed student, excluding research dollars.

Also, fully 31.6% of the $12,092 number, or about $3,821 per student, is from private sources, not public. The U.S. educational system is the second most privatized system in the world by this measure, second only to South Korea. (Is the U.S. system's alleged poor performance per dollar due to too much privatization? Schieffer didn't ask, but it's a good question. Note that McCain favors more educational privatization.) A lot of viewers would have thought, understandably, that Schieffer was talking about U.S. public sector spending when he said "U.S."

Of course, as any amateur economist knows, absolute dollar figures are poor measures of spending. It's much more sensible to look at expenditure per student compared to per capita GDP, especially in a service-intensive enterprise such as education. Even including both private spending and higher education spending, by that measure the U.S. is merely even with Portugal and Denmark but ranks behind Switzerland.

So should we bash teachers for getting paid too much in the U.S.? When (correctly) measured relative to per capita GDP, U.S. teachers are among the lowest paid in the OECD. Only Hungary, Iceland, Luxembourg, Norway, and Sweden pay their teachers about what the U.S. does -- and all those countries offer their citizens significantly greater public service benefits, such as health insurance.

But U.S. teachers are slackers, right? No, U.S. primary teachers provide an average of 1,080 hours of instruction per year, #1 in the OECD, and secondary teachers in the U.S. also rank at the top. And they have bigger class sizes than most of their OECD peers.

Moreover, the U.S. spends comparatively less on teacher salaries as a percentage of education spending and considerably more on non-teacher staff overhead (such as test administrators?) than most other OECD countries. (The U.S. also spends a bit more on non-current expenses, which include school construction. That's probably understandable since the U.S. is more rural than most OECD countries and thus would need a bit more in facilities.) John McCain seems to think American teachers are the problem, and it just isn't so. They're not paid competitive salaries, they work harder than their peers in other countries, and they absorb much less of total education spending. So is the solution spending more on teacher salaries, reducing class sizes, and decreasing teaching hours (i.e. hiring more teachers)? That sounds a lot like what Obama talked about, doesn't it?

So that's the investment side. What about the results side?

Schieffer didn't bother to inform his viewers that there are actually several metrics where the U.S. does rather well. For example, the U.S. still has among the highest college graduation rates, meaning that primary and secondary schools are apparently succeeding in their core preparatory mission, at least for college track students. Other countries are catching up, though, in college graduation rates, as the U.S. has stalled. Obama's efforts to improve college affordability make a lot of sense in this light. His policy prescription looks particularly astute when you consider that more Americans are starting college but fewer are finishing -- highly suggestive of affordability problems. Only 54% of U.S. students finish college (tied with New Zealand for lowest completion rate in the OECD), compared to 91% for Japanese entrants.

A similar phenomenon is true of higher secondary education: U.S. high school graduation rates are still among the top in the OECD, but other countries are catching up and some have even passed the U.S. Part of the reason for the U.S.'s continued strength is found in GED programs, which are giving dropouts an important second chance. Without GED programs the U.S. would rank much lower (though not at the bottom).

Also, if Schieffer is correct that U.S. primary and secondary education is bad, we should see low wage premiums for high school graduates versus high school dropouts. Exactly the opposite is true: U.S. employers pay a comparatively higher wage differential to high school graduates, a differential that ranks among the top in the OECD. High school dropout unemployment rates are much higher in the U.S. than in most other OECD countries, too. (This despite the fact many OECD countries have higher official total unemployment rates than the U.S.) Our primary and secondary education system is wildly successful in the most profound economic way: boosting earning potential and employability. (Our higher education system replicates this result: college grads make huge economic leaps yet again versus non-college track high school grads.)

So there you have it. Schieffer botched the question, in simple terms. Yes, the U.S. educational system has its challenges, but Schieffer could have started with a much better setup. It was a missed opportunity, and I hope he'll do better in future settings. Unfortunately he seems to have fallen victim to conventional wisdom which is so often wrong, or at least incomplete.

Originally posted to sipples on Thu Oct 16, 2008 at 12:56 PM PDT.

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