Friday, January 14, 2011

Education spending in U.S states and Test-Scores

Some readers wanted me to adjust for the cost of living when comparing education spending and test-scores. To my knowledge no perfect state by state adjustment exists, so I used this one produced by MERIC. The figures seemed plausible (D.C high, Tennessee low).

What I am doing here is comparing education spending per pupil with test scores of 8-graders in different American states, as measured by NAEP (which is considered a reliable comparison of pupil knowledge in different states). I use the average of math and reading.

I repeat that correlation does not equal causality. It may for example be that states who spend the most have the best educated parents. However, establishing statistically significant correlation is a necessary first step in arguing for causality, especially when we don't have controlled experiments.

First, let's start with where the debate between liberals and libertarians is currently: the correlation of state spending and test scores.

At least the correlation is clearly positive, unlike last time when I included other nations as well as U.S states. But the correlation isn't statistically significant, and no self-respecting Libertarians would let liberals get away with using a non-significant relationship in a debate.

Now let us do two simple adjustments. First, I divide the students into three demographic groups. The first group is The Majority, the weighted average of non-Hispanic White and Asians. I add those because the sample size of Asians are too small in many states (Whites alone produce roughly the same results).

Whites and Asians are 60% of the U.S student population. The second sample is Hispanics, 22% of students, followed by African-Americans who constitute 17% of the U.S student population.

First, White and Asians:

Similar results for Hispanics:

Lastly Black pupils:

Notice again the parsimonious power of the crude demographic and cost adjustments: the correlations are about twice as strong, and the relationship is now statistically significant for Whites, Asians and Hispanics.

Admittedly the correlation between spending and test-scores is still weak for African-Americans. I suspect the reason is selection: that the best scoring African-Americans tend to live in rural states with few minorities. (The seven highest are Montana, Vermont, North and South Dakota, New Hampshire, Wyoming and Hawaii). These states spend less than the national average. However the African American parents who move to Hawaii are probably different from the ones who remain in Detroit or the South. Also, states with a large disadvantaged population have their resources spread thin compared to Montana and Wyoming.

So I removed all states where the Black student population is small. This is not strictly kosher, especially since I did it after observing the results. In my defense I did a OLS-regression of the full sample and weighted by state population, and the relationship between spending and test-scores is the same for blacks and whites.

Even though they are passionate about increasing education spending, liberals have not used these simple and effective arguments against anti-education spending libertarians.


Let me put the top 10 and bottom 10 states for African Americans. The Star* signifies a Red-State (a state that was won by Bush in 2004):


1* Montana
2 Vermont
3* North Dakota
4 New Hampshire
5* South Dakota
6* Wyoming
7 Hawaii
8 Massachusetts
9* Texas
10 Delaware


42* Nevada
43* Nebraska
44 Rhode Island
45 California
46 Wisconsin
47* Mississippi
48 District of Columbia
49* Alabama
50* Arkansas
51 Michigan

Before I did the comparison, I assumed that since Blue-States are richer and probably more tolerant towards African-Americans, they would have higher scores. But it turns out the opposite is true, the population weighted NAEP score of African-Americans in the 2004-Republican states is 2 points higher than Democrat states.

This is despite the fact that Blue-States spend significantly more than Red-states on education, both before and after controlling for the cost of living. Yes, the Deep South still has low scores, but this is compensated by above average performance in Texas, the Mountain States and the Midwest.

Ironically, the Blue-States are equivalent to the United States in the PISA debate (more resources, worse outcomes) and the Red-States the equivalent of Scandinavia or North-East Asia (less resource, better outcomes). If we were as prone to jumping to conclusions that support our ideological biases as the left or libertarians, the debate would be over. This "proves" once for all that lower-spending on education causes better outcomes for minorities!

However I suspect the reason for this contradiction has to do with insufficient demographic adjustment, just like the PISA-debate. Blue-state are more urban, so that their schools have to deal with more disadvantaged students. The schools are not necessarily worse, or at least this comparison cannot tell us if they are. We need much more careful studies to determine this, controlled experiments or at least a before-and-after methodology that takes into account the background characteristics of the students. Just reporting average scores is not enough.

Liberals are rarely willing to cut the United States slack for having a different population mix than Scandinavia. In the education debate, the are getting a dose of their own causality-ignoring medicine from libertarians.

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