The Economic Impact of Educational Achievement Gaps
McKinsey put out a report yesterday looking at the economic cost of poor educational performance through the fairly clever gimmick of asking what would the economic benefit be of closing various kinds of “achievements gaps” that can be found in the American school system. Some findings:
— If the United States had in recent years closed the gap between its educational achievement levels and those of better-performing nations such as Finland and Korea, GDP in 2008 could have been $1.3 trillion to $2.3 trillion higher. This represents 9 to 16 percent of GDP.
— If the gap between black and Latino student performance and white student performance had been similarly narrowed, GDP in 2008 would have been between $310 billion and $525 billion higher, or 2 to 4 percent of GDP. The magnitude of this impact will rise in the years ahead as demographic shifts result in blacks and Latinos becoming a larger proportion of the population and workforce.
—If the gap between low-income students and the rest had been similarly narrowed, GDP in 2008 would have been $400 billion to $670 billion higher, or 3 to 5 percent of GDP.
—If the gap between America’s low-performing states and the rest had been similarly narrowed, GDP in 2008 would have been $425 billion to $700 billion higher, or 3 to 5 percent of GDP.
To make a long story short, having a high-performing school system is extremely valuable. This is important to keep in mind when talking about spending money on schools or other social services aimed at children and their parents. There’s much more to improving educational outcomes than spending money at random, but insofar as you identify a use for the money that’s genuinely useful it’s worth spending extremely freely. This is worth mentioning because reasonable doubts are often raised about the scalability of certain promising, but limited in scope, educational models that charter school networks have been put into play. Insofar as the scalability problem is simply a question of it looking improbable that a requisite amount of money can be found, then there’s good reason to believe that it would be worth setting that worry aside and just finding the money.
In other words, we can understand this as part of the reason that some of the high-tax social democracies are so successful. It’s not, per se, that high levels of taxation don’t dampen economic activity. But the high-quality social service those taxes are financing, reflected in things like very good educational outcomes, provide a more-than-offsetting boost.
Meanwhile, I thought this chart was fascinating. On the Y axis you get average PISA scores, and on the X axis you get the percent of variance in student performance that can be accounted for in terms of socioeconomic status:
There’s an impressive amount of variance along both axes. And there also isn’t a really clear trend here. You normally expect to see Finland clustered with Denmark and Sweden rather than with Japan and Canada.
39 Responses to “The Economic Impact of Educational Achievement Gaps”
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April 23rd, 2009 at 5:41 pm
MattY: it’s now after 5pm EST. You can take off the CAP shock collar and see if you come up with some other reasons why the plans above might not come to fruition.
April 23rd, 2009 at 6:14 pm
I wonder why the United Kingdom isn’t on that chart.
Although I am not surprised about the results; Education inequality: Germany > NZ > Aus > Canada. That corroborates my personal, anecdotal experience. It also happens that German (and Belgian) education is rigorous and excellent.
Although quite frankly, the education in Canada is extremely poor. There are a lot of people going through high without ever having heard of John Milton, even in the wealthier suburbs.
April 23rd, 2009 at 6:17 pm
I am curious as to how they come up with this methodology. Do they just suppose that if we had more people with educational attainment X, then they could have the types of jobs people at attainment X have right now? But unless demand for those types of services increase that makes no sense.
If everyone was able acquire the skills of PhD in computer science right now, it will not necessarily change the amount of money that Google is spending on people. They might be able to hire people for less money, and thus hire more people in total. But the overall expenditure on labor would be the same.
There might be some affect on GDP if you consider that you have more people with income above a certain threshold. But that is a matter of economic equality, not education.
April 23rd, 2009 at 6:23 pm
[...] of Education, and of Supporting Education Posted on April 23, 2009 by rsn Matthew Yglesias has a great post at his blog which describes a McKinsey report that analyzes the economic cost of having a poor education [...]
April 23rd, 2009 at 6:24 pm
This ties in very well to the previous graph looking at college attendance as a function of math scores and wealth.
While not conclusive, the fact that wealth and math scores don’t appear well correlated seems to suggest that being born good at math is better for your socioeconomic mobility than being born into a rich family.
Personally, this conclusion makes me feel pretty good; that all is right in the world. Of course, I tend to think that it is easier to make someone wealthy than it is to make them good at math, but I might just be saying that because I’m an elitist technocrat with some math skills.
April 23rd, 2009 at 6:24 pm
Link?
Being in the top left is good right?
April 23rd, 2009 at 6:38 pm
Education inequality: Germany > NZ > Aus > Canada. That corroborates my personal, anecdotal experience.
Except that education in NZ is particularly bad. That is a country that has disastrously bad case of tall poppy syndrome with respect to educational attainment.
April 23rd, 2009 at 6:54 pm
Since achievment gaps in the US are generally due to differences between students rather than differences between schools the premise of this post is faulty.
April 23rd, 2009 at 7:03 pm
After a little bit more consideration…I think this may tell us more about the educational system of countries as a whole, rather than about the correlation between wealth and math scores. That this comparison is between countries rather than within them makes it harder to draw conclusions.
How much of the variation has to do with unincluded idiosyncrasies of the countries under consideration. The fact that we show no correlation, may just follow from cultural and political variation across country.
Still. I find the question of how much social mobility there is and the factors behind it very interesting, insofar as these issues are central to many peoples’ political philosophies. (Although they might not think about this often)
The related Yglesias post is here:
http://yglesias.thinkprogress.org/archives/2009/04/college-attainment-and-family-income.php
April 23rd, 2009 at 8:10 pm
As this is getting posted, Democrats are taking away vouchers from poor minorities in DC.
April 23rd, 2009 at 8:30 pm
To #2… your “in the wealthier suburbs” reveals a misunderstanding. The whole point of the Canadian system is that there won’t be any difference in the quality of education provided regardless of income.
Thus the graph shows that only 10% of the variance in scores can be accounted for by socioeconomic status.
One of the factors that must be considered when buying a house in the US is the quality of the school district. It can change the price of a house by as much as $50K (in MA, anyway). Nothing even remotely like that in Canada.
Of course, the low income single parent is less likely to have the time to read to their child nightly and, since that’s been shown to be a huge predictor in scholastic performance, there will be some variation.
April 23rd, 2009 at 9:19 pm
The problem with the McKinsey report is that the right wing movers and shakers either don’t believe the findings, or are caught up in thinking it’s a zero sum game.
I wouldn’t be surprised to find a lot of upper bracket taxpayers looking at those GDP deltas, and assuming that a 1.3 to 2.3 trillion dollar change would have been forgone earnings on their part. A rising tide floats all boats? Yeah, I don’t think they believe that crap, either.
April 23rd, 2009 at 9:31 pm
It’s rather unfortunate that Turkey’s PISA score is right in the middle of a truncation in the vertical axis, making it impossible to know what it is.
Anyway, it looks to me like there’s a mild negative correlation between educational quality and inequality.
Given that New Zealand appears to be ahead of the US, Norway, Denmark, Sweden, Germany, and most other countries, I’m not sure how atrocious their education system is, tall poppy syndrome or no. Same applies to Canada. If education in Canada is extremely poor, education on Planet Earth is extremely poor.
April 23rd, 2009 at 9:58 pm
Can we please stop talking about Korea as if it had a good school system? The school system in Korea is terrible. Private education is de facto necessary, extremely expensive, and the whole education system aims to do one thing and one thing only: produce high test scores. I’m Canadian, I work in Korea, and it’s absolutely ridiculous to compare the two countries as if they’re anywhere near equal.
April 23rd, 2009 at 10:25 pm
I can’t be the only person who was initially confused as hell by the meaning of the graph until he realized that the “axes” centered on the US aren’t really axes at all…
April 23rd, 2009 at 10:36 pm
There is zero evidence that better schools would increase GDP.
What would increase GDP is a full-employment policy and active programs to bring that about.
April 23rd, 2009 at 11:09 pm
The US should start emphasizing “Quality of Life” for the bottom of the income scale over GDP.
April 23rd, 2009 at 11:23 pm
As this is getting posted, Democrats are taking away vouchers from poor minorities in DC.
This group is unwilling to discuss this, HP. Whatever school union members claim is obviously correct and unbiased. The idea that they may have some venal interest in stopping competition doesn’t register at Think Progress.
April 24th, 2009 at 3:02 am
What this graph tells us is that as progressives concerned about education quality and broad-based economic growth, especially of low-pollution high-tech industries, our absolute #1 priority right now must be to demand the immigration of millions more Mexicans in the United States.
Here in California, the public school system is a mere 48.7% Hispanic, and unfortunately still 28.5% white.
This is why I support the DREAM act. Only when all of America’s schools become majority hispanic can our country compete with the economic tigers of Latin America.
Si se puede!
April 24th, 2009 at 3:03 am
There’s usually about a one month gap between Matt reading something I’ve written and his coming up with a politically and intellectually emasculated riff on the same topic that won’t offend CAP. Here’s my original:
http://www.vdare.com/sailer/090315_education.htm
April 24th, 2009 at 3:04 am
School achievement levels in Mexico are so disastrously low that McKinsey had to truncate the left axis to fit Mexico on the same graph as the Northeast Asian and European countries,
Clearly, we desperately need more Mexican immigration to improve our school systems. Look how good California does on the NAEP these days. We must Californicate all of America!
April 24th, 2009 at 3:08 am
So, Matt, if we turned American into a Nordic social democracy, would our math scores rise all the way to Finland’s level? Or would they improve barely to Norway’s level, which is just slightly above America on your graph?
Look, the truth is that
April 24th, 2009 at 3:15 am
Look, the truth is that there isn’t a whole lot of difference in these school achievement tests between Northeast Asian, European, and North American countries.
I’ve looked at a lot of international test results, and the small differences among First World countries are not terribly consistent from test to test and from year to year.
Much of the difference in test scores between, say, Finland and Norway is noise. Perhaps, the Finnish translator of the test questions did a better job than the Norwegian translator. Who knows? Coming up with precise tests across languages and countries is hugely hard.
What is obvious is the big gap between students in the First World and the Third World.
Something else of interest is that black students do a lot better in America on international tests than their distant cousins in Ghana do. Mexican-Americans do better than Mexicans do. This suggests that American school systems are a lot better than school systems in the Third World and that the terrible scores in the Third World could be improved over the generations.
But Asian-Americans don’t do better than Northeast Asians.
April 24th, 2009 at 3:26 am
Here are the 2007 Trends in International Mathematics and Science Study (TIMSS) results for eighth grade math, in which the U.S. beats Sweden and Norway. The TIMMS give you a wider array of Third World countries, which can keep you from getting hung up, like Matt did, on minor differences between First World countries. The big differences between the First World and Third World countries show up consistently on the various international tests and across time as well.
Chinese Taipei 598
Korea, Rep. of 597
Singapore 593
Hong Kong SAR, 572
Japan 570
Hungary 517
England 513
Russian Federation 512
United States 508
Lithuania 506
Czech Republic 504
Slovenia 501
Armenia 499
Australia 496
Sweden 491
Malta 488
Scotland 487
Serbia 486
Italy 480
Malaysia 474
Norway 469
Cyprus 465
Bulgaria 464
Israel 463
Ukraine 462
Romania 461
Bosnia and Herzegovina 456
Lebanon 449
Thailand 441
Turkey 432
Jordan 427
Tunisia 420
Georgia 410
Iran, Islamic Rep. of 403
Bahrain 398
Indonesia 397
Syrian Arab Republic 395
Egypt 391
Algeria 387
Colombia 380
Oman 372
Palestinian Nat’l Auth. 367
Botswana 364
Kuwait 354
El Salvador 340
Saudi Arabia 329
Ghana 309
Qatar 307
As you can see, the scores fall clearly into three categories.
At the top of the Math chart are five affluent countries populated by Northeast Asians.
The next 22 countries are made up of the U.S., 18 European countries, Armenia (which is technically in Asia), Israel (which has a substantial European minority) and Malaysia (which has a sizable Chinese minority).
And then comes the Third World, with the countries that you’d expect to be relatively smart, like Lebanon and Thailand, at the top of the Third World, and the usual suspects at the bottom.
April 24th, 2009 at 3:50 am
As the son of two teachers in the Chicago school system I agree wholeheartedly. However, I need more assurances that the city is not going to piss away the money before I’ll feel comfortable paying more in taxes.
April 24th, 2009 at 9:33 am
What Dave Penner at 14 said about Korea applies to Japan also: high test scores are the result of private (fairly expensive), extracurricular crams schools, not the core curriculum.
April 24th, 2009 at 10:27 am
Where is the graph that shows the impact of two parent households?
Also, many European countries have a two or three track education system. In Germany they have the Gymnasium – college bound, Hochschule – technical training equivalent to an associates degree and Realschule – laborers with some training. Kids get split into these tracks in about sixth grade if I remember correctly. My heart broke when I told my neighbors daughter that she could come to the US as an exchange student when she was in 11th grade. She informed me that she wasn’t going to 11th grade, only 10th grade. She was in fifth or sixth grade at the time. BTW – her grandfather was a bank president and her grandmother was from one of the most notable families in our town. She didn’t cut the mustard and got tracked into Realschule.
All systems are not equal. I just wonder if they are measured equally.
April 24th, 2009 at 11:10 am
McKinsey claims:
“If the gap between black and Latino student performance and white student performance had been similarly narrowed, GDP in 2008 would have been between $310 billion and $525 billion higher, or 2 to 4 percent of GDP.”
That’s a major underestimate, because if blacks and Hispanics were as smart as Asians and whites, we could also dump our giant affirmative action hairball (see the Supreme Court’s Ricci case for a window into the underhanded stupidity that drives hiring and promotion decisions all across American organization due to fear of EEOC “disparate impact” lawsuits). That would probably boost GDP by, say, 8%.
And it would cut down on outsourcing to China. American employers are constantly sued for discrimination. It’s just a routine but expensive thing, which is one reason they like firing most of their American workers and outsourcing the plant to China.
April 24th, 2009 at 11:47 am
Matt, did you actually look at that graph? What we see is that countries that are either homogenously Northeast Asian or European (like Finland with its negligible level of immigrants) or have careful immigration systems for skimming the cream of middle man minorities (like Canada) are in the favored upper left corner.
You really are turning into a closet immigration restrictionist, aren’t you? A huge fraction of your posts keep winding up with the implication that we need to crack down on illegal immigration to stop from exacerbating whatever social problem you are complaining about at the moment.
It’s time for you to come out of the closet and proudly stand with Mickey Kaus as an immigration realist.
April 24th, 2009 at 12:37 pm
There has been lots of commentary about our PISA scores here in Finland. One explanation tells that our language, Finnish, is written and spoken in the same way. Then there is “culture of trust” (no inspectors, no national exams, no national evaluation of learning material… fourth season of The Wire was frightful to watch), 97% of schools are public schools, research-based teacher education, focus on broad learning, free meals…
Publication (pdf) on Pisa 06 by Ministry of Education:
http://www.minedu.fi/export/sites/default/OPM/Julkaisut/2008/liitteet/opm44.pdf?lang=en
April 24th, 2009 at 1:04 pm
My heart broke when I told my neighbors daughter that she could come to the US as an exchange student when she was in 11th grade. She informed me that she wasn’t going to 11th grade, only 10th grade. She was in fifth or sixth grade at the time. BTW – her grandfather was a bank president and her grandmother was from one of the most notable families in our town. She didn’t cut the mustard and got tracked into Realschule.
Her parents are utter idiots. They should send her to Schule Schloss Salem (SSS), or Lyceum Alpinum Zuoz (LAZ) in Switzerland, if she can’t cut the mustard in the public system. Private schools are there for a reason; sometimes, to pick up the pieces for the weaker upper-middle class kids. For her parents to not used that resource, which they could have afforded, to get her into university (she definitely is not going to uni by means of Realschule) is criminally irresponsible.
April 24th, 2009 at 1:10 pm
I have sympathy for those cases, but not much. When parents clearly have the ability and the resources to help their kids, but refuse to do so, then there isn’t much sympathy to be had.
We once had an exchange student from a German Catholic boarding school. Lives in Munich or something. He was a fine chap but there was no way he could have qualified for Gymnasium in the public system. His brother goes to school in CH, escaping the system altogether.
April 24th, 2009 at 1:17 pm
And another thing; the reason Belgium is in the place it is on that chart is because an astounding 60% of its schools are Catholic parochial, i.e., private.
April 24th, 2009 at 1:42 pm
You know what amazes me most is European language education. My wife and I don’t speak Greek or Italian but we cruised from Venice to Rome via some Greek islands, and guess what. Every store clerk along the way spoke at least enough English to sell us a cappuccino in Venice or a gyros sandwich on Santorini or a Prada purse on Capri, or a fake Prada purse on at least one sidewalk just about everywhere.
A Greek camera store clerk on the island of Corfu spoke enough English to diagnose and fix our camera while extolling the virtues of his top quality, internationally recognized brand of SD memory cards. “Those cheap internet brands are no good,” he said.
April 24th, 2009 at 3:38 pm
[...] stability caused the current financial crisis. The Economic Impact of Educational Achievement Gaps (Yglesias) New Mckinsey report about economic impact of losing certain “achievement gaps” in American [...]
April 24th, 2009 at 4:42 pm
[...] on that pricey Achievement Gap Matthew Yglesias is one of the smarter people out there on the blogs, and he also does some writing on the McKinsey report noted yesterday: There’s much more to [...]
April 25th, 2009 at 12:09 am
Outside of EEP, who funded the McKinsey report?
April 25th, 2009 at 12:40 pm
P. Brunson:
MY loves him some think tank “research.” It tells him what he already believes to be true is, in fact, “true.”
April 29th, 2009 at 6:17 am
[...] schools, here’s a report from McKinsey about the economic impact of the education gap, via Matt Yglesias: — If the United States had in recent years closed the gap between its educational [...]