He Said, She Said Journamalism and OPB

Update, I messed up on the links, the second was supposed to be to my class size posts - fixed now, sorry!

Grrr... On my way to Corvallis this morning I was listening to OPB when "Think Out Loud" came on with a show about class size. Fantastic, I thought. I was excited to hear what a dispassionate academic expert had to say about the evidence on class size as I have been doing a lot of reading on the topic these last few days and have had to read very carefully a vast array of very mixed results to discern what the evidence does and does not say about class size. It would have been very interesting to hear how someone who is unbiased and had been studying the issue for years distilled all of the research and explained it to the lay public. After all, this is what public radio is all about, right?

Um, no. Instead they did the lazy and entirely unhelpful thing of contacting advocacy groups on either side of the issue to give a quick sound bite: "class size is hugely important!"; "no it isn't!" This is standard practice on commercial TV and radio (turn on CNN, FOX, MSNBC at any time of the day or night and this is what you get) - although much more polite.

What makes me so incensed about this is that any listener who did not know much about the issue would not be helped at all by this program - which is just about everyone. The only thing this type of program does is reinforce preconceived notions whether they are right or wrong. If you think class size matters, I am sure you do even more after having listened because a person on the radio confirmed your belief. If you think it does not matter, ditto. So a huge chance was missed to contribute to the level of the discussion around this issue.

I think that, in general, OPB and NPR do a much better job than commercial broadcasters actually getting to the heart of issues, which is why I am an avid listener (and a contributor, defying all economic logic*). What makes for good irony is that the show ended early so OPB could appeal for donations and the main theme of the appeal is that OPB is unique and therefore different than other radio. Not this morning.

*Not really, but that is a whole other can of worms...

Class Size Redux

A day after complaining about 'Think Out Loud' not getting a neutral academic to talk about the evidence, I make my opinion known in a more public forum. After reading a lot of the literature on both sides, I am convinced that the best available evidence is from Tennessee and comes down solidly on positive and significant impacts of small classes. I think I do a good job noting the diversity of findings and some criticisms of the study. But I'll let you be the judge.

Excerpts from my op-ed in the The Oregonian:

... This raises the question, should Oregonians be concerned about large sized classes? The answer is yes.

The effect of class size on student achievement is the subject of intense debate among economists and education researchers. The reason has much to do with the difficulty of isolating the effect of class size when examining average achievement differences across classes, schools, districts and states.

...

Studies of the data from the Tennessee experiment have found significant and persistent differences in the achievement of children in the small classrooms (13-17 students) versus the large classrooms (22-26 students). The achievement gap was even wider for disadvantaged students in inner-city schools.

Princeton economist Alan Krueger has estimated that being in a smaller class significantly improved math and reading test scores ... and this from little more than two years spent in smaller classes.

Although the experiment was conducted on kindergarten through third grade classrooms, the effects of having been in a small class remained after the children returned to larger classes in higher grades. Furthermore, the more time a student spent in a small class setting, the larger and more persistent are the gains in achievement.

...

Subsequent study of the original participants in the program have found improved achievement in high school and a greater propensity to enroll in college preparatory classes.The experiment wasn't perfect and it has not been replicated, but it is the best evidence available and it points clearly to class size effects. Economist Krueger has estimated that the value of the productivity gains far outweigh the additional costs to the state from class size reductions. It is curious that Oregon seeks to create a renewable energy economy through tax breaks and grants while at the same time disinvesting in the human capital of the very people who are necessary to make it possible. ...

I was pleased to see they left my little lesson on selection issues in. But one thought, can you imagine the outcry if they tried such an experiment in Oregon today? If your kid was in a 25 student 1st grade class and your neighbor's kid was in a 15 student class next door in the same school, wouldn't you be outraged - even if you were told it is for the benefit of science?

Do Days in School Matter?

YES.

Oregon lawmakers' cavalier attitude toward early school closures suggests that the marginal impact of days in school on student learning is small. But where are the facts? I have yet to hear or read a quote from one single lawmaker about the marginal impact of school closures, so I decided to go find out for myself.

Understanding the marginal impact of a day in school on student performance is complicated by the fact that school closures are not usually random. For example, if we looked at the impact on Oregon students of the 2003 shortened school year we would have trouble disentangling the effects of the short school year with other effects of the economic downturn in the state like decreased provision of social services, increased unemployment and other disruptions that could hamper student performance. Therefore we could not plausibly attribute any decreased performance to school closings alone.

Two researchers in Maryland, however, use a clever strategy to isolate the effects of school instruction days on student performance by looking at weather forced closures of schools - snow days - on assessment scores. The strategy works because tests are administered in April, before the districts can make up snow days by tacking them on at the end. The fact that snow days are random events and are different across Maryland's school districts allows for a plausible counter-factual: the performance of kids not affected by snow days. But this is not all, the researchers use a panel of data - multiple years variation in school days that allow them to control for differences across schools as well. In other words, they are looking at year over year differences in a specific school's performance based on snow days.

The results are presented in this paper (and some similar results by one of the authors is presented in another related paper). Unfortunately, the measures are a bit crude: they see only the percent of children that pass or fail statewide assessment tests in math and reading. They find that for each lost day of school, the pass rate for 3rd grade math and reading assessment tests fall by more than half a percent. So a loss of five school days (like what is being contemplated in Oregon) would lead to a three percent increase in the failure rate. This is shocking in and of itself, but consider the reduced performance for all students, including those well above the failure line and the implications for the overall performance loss - the total loss of learning - is truly profound.

Now there is a caveat: schools that know they are loosing days can strategize to maximize learning at the end of school, but remember that Oregon already has one of the shortest school years in the nation (and in the industrialized world) - so we are already trying to squeeze as much learning out of the short school year as it is, it is therefore not clear to me that more can be squeezed out of an already dry stone.

It is simply astounding to me that the Governor can talk about positioning Oregon to become a leader in green technology while at the same time disinvesting in Oregon's human capital. I have news for him - Oregon will be a leader in green technology not because of a few selected tax breaks, but because we lead in technological innovation. And we will only lead in technological innovation if we have smart people and excellent schools and universities, this is the lesson of Silicon Valley.

It is time to have a real discussion of the costs to the state of expediency in budget cuts. The obvious alternative to a shorter school year is increased class size. So what is the impact of class size? There is some debate: Hoxby (2000) finds no measurable effect, Hanushek (1998) agrees, but Rivkin, Hanushek and Kain (2005) (in a much better test) find positive, but quite small increases in student performance from reduced class size. The conclusion is inescapable - a shorter school year imposes a much greater cost on Oregon's children than increased class size.

It is time for the Governor and lawmakers in Salem to wake up and start making smart, informed decisions rather than off-the-cuff ones.

Economist's Notebook: Education, Part 1

This post will be the first in a series of posts in which I try and distill the frontier of economic research on education.  I have talked a lot about how, as a development economist, I think that a state like Oregon should spend heavily on education as human capital is perhaps the most important investment for future growth.  

But am I right that this translates directly to a high income country?  Is more money the solution or are there other things the state can do to improve the human capital accumulation of its children?  And, should the state focus more on K-12 or on higher education?  These are all questions that I realized I did not have good answers to, because I did not have enough knowledge of the latest evidence.  

So in a series of posts over the next few weeks, I hope to focus on some particular pieces of evidence from the economics literature.  Economists do not have all the answers, of course, and bring only one perspective, but economists are particularly good at examining data and teasing out causal links, so I don't claim these to be the last words, just starting points.  

So the first paper I want to introduce to the discussion tries to tackle the very difficult problem of assessing what matters for the quality of primary education.  The difficulty lies in the fact that since families choose to locate in areas in part because of the quality of the school district or a particular school itself, if we see variation in student achievement it is hard to tell whether it is the school that is causing the high levels of achievement or the families.  So, for example, we may see that one school spends twice as much per pupil than another school and has student achievement scores that are twice as high in the well funded school.  The question is whether it is the spending per pupil that is causing the high achievement or that the families of the kids in the better funded school are better educated, wealthier, etc.  Why this matters is that if we see a poor performing school, we might be tempted to say that increasing the per-pupil spending is the answer based on the evidence above.  But we just don't know.  

So how do you tackle this problem?  Well, Rivkin, Hanushek and Kain, in the March 2005 issue of the journal Econometrica use a unique data set from Texas that observes multiple cohorts of children as they move through grades 3 through 7.  This data set allows a very serious examination of some basic questions.  Do schools matter in the achievement of children, or is it all family and peer effects?  Do teachers matter?  Do observable things like class size, teacher education and teacher experience matter?  Finally, if these observables do matter how big are the effects (important if you want to know what to focus on)?   Though these are some pretty basic questions, answers to then have been elusive.  Why?  Well imagine you see that teachers with masters degrees seem to have better performing students than teachers with only bachelors degrees.  You might be tempted to conclude that this means that teachers with masters perform better in the classroom.  But it could be that talented students and their parents seek out such teachers (probably through seeking out well-funded schools that employ such well-qualified teachers in abundance).  Also schools themselves sort teachers and students and often match well performing students to the well-qualified teachers and therefore create a self-fulfilling prophecy.  

How does this data help overcome this problem?  Well by seeing how individual students do through repeated observations over a number of years and by seeing how different groups of students perform in the same teacher's classroom allows an econometrician to control for student heterogeneity and the non-random matching of students and teachers.  Students may have many things that make them better students that are not observable (drive, diligence, intelligence, etc.) but by looking only at individual students through the course of their studies you can effectively control for the effects of these unobservables.  Ditto the non-random matching of students (as long as the policy remains the same through the time of the data).  

So what do they find?  Well, teacher quality is incredibly important.  In fact they find that exposure to high quality instruction can largely offset the disadvantages associated with low socioeconomic background.  However, the quality of teachers is NOT related to their academic background: teachers with masters were not systematically better than those without.  Also, after the initial years in the profession, experience was not related to achievement.  These results help explain a puzzle in the education literature: it is believed that teachers are incredibly important but when we look at things like education and experience of teachers they seem unrelated to student achievement.  So it is true that they are incredibly important, but education and experience are not what characterizes a good teacher. [This poses another puzzle for those who believe in the Spence signaling model, but that is another story...] 

They also find that smaller class sizes do matter, but not as much as teacher quality.  Class size matters most in earlier grades, but other school resources have little to no measurable effect. In other words increased spending on schools seems to matter through the smaller class sizes and in teacher quality, but not in teacher credentials and in other school amenities.  

This research created a policy puzzle, if good teachers cannot be easily identified by their credentials or experience how do you figure out who the good ones are?  It appears that to a large degree, you have to learn their quality by hiring them and observing them.  This argues for considerable flexibility in schools' ability to hire and fire teachers, especially in the first few years of their employment.   Being able to effectively identify the talented teachers and retain them seems to be the first-best solution, but after that, reducing class size seems to be the best way to spend money on student achievement.  I am having a hard time locating recent data on state-by-state comparisons of average class sizes, but the data I can find from the 90s places Oregon near the bottom of all states in terms of class size.  

In the next post in this series, I will look at higher education. 

NOTE: I have updates this post with a link to the article

Class Size and Achievement, the Tennessee STAR Study

Because any analysis of students achievement that looks at existing differences in class size is going to have severe problems stemming from the fact that students and teachers are not randomly appearing in large and small classes, the gold standard of all class size studies is the Tennessee STAR study. This was a randomized intervention into Tennessee's schools that made for both small and large classes and randomly assigned students and teachers to both types of classes. The only non-random part was that school districts decided for themselves whether to participate.

Here is a summary of the program and the findings:

Star

Among those that question the results of this study, Eric Hanushek is the most notable. He remains unimpressed suggesting a number of deficiencies of the study but his major quibble is that all of his research suggests that teacher ability is hugely important and he thinks the 'random' assignment of teachers was probably anything but.

Each Year of Education Matters

States like Oregon are in a fiscal mess as a result of the recession and are being forced to go through some 'belt tightening.' In Oregon, since the state general fund is vital to education funding, this means some pretty severe cuts to K-12 education.

But does it really matter that much if a kid has a year or two of substandard education from such budget cuts through such measures as reduced instructional days or larger class sizes?

Yes.

New research by a gaggle of economists has found that the quality of a child's kindergarden itself has lifelong implications for children. Here is The New York Times' article and here is a follow up blog post. From the article:

How much do your kindergarten teacher and classmates affect the rest of your life?

Economists have generally thought that the answer was not much. Great teachers and early childhood programs can have a big short-term effect. But the impact tends to fade. By junior high and high school, children who had excellent early schooling do little better on tests than similar children who did not — which raises the demoralizing question of how much of a difference schools and teachers can make.

There has always been one major caveat, however, to the research on the fade-out effect. It was based mainly on test scores, not on a broader set of measures, like a child’s health or eventual earnings. As Raj Chetty, a Harvard economist, says: “We don’t really care about test scores. We care about adult outcomes.”

Early this year, Mr. Chetty and five other researchers set out to fill this void. They examined the life paths of almost 12,000 children who had been part of a well-known education experiment in Tennessee in the 1980s. The children are now about 30, well started on their adult lives.

On Tuesday, Mr. Chetty presented the findings — not yet peer-reviewed — at an academic conference in Cambridge, Mass. They’re fairly explosive.

Just as in other studies, the Tennessee experiment found that some teachers were able to help students learn vastly more than other teachers. And just as in other studies, the effect largely disappeared by junior high, based on test scores. Yet when Mr. Chetty and his colleagues took another look at the students in adulthood, they discovered that the legacy of kindergarten had re-emerged.

Students who had learned much more in kindergarten were more likely to go to college than students with otherwise similar backgrounds. Students who learned more were also less likely to become single parents. As adults, they were more likely to be saving for retirement. Perhaps most striking, they were earning more.

All else equal, they were making about an extra $100 a year at age 27 for every percentile they had moved up the test-score distribution over the course of kindergarten. A student who went from average to the 60th percentile — a typical jump for a 5-year-old with a good teacher — could expect to make about $1,000 more a year at age 27 than a student who remained at the average. Over time, the effect seems to grow, too.

...

The crucial problem the study had to solve was the old causation-correlation problem. Are children who do well on kindergarten tests destined to do better in life, based on who they are? Or are their teacher and classmates changing them?

The Tennessee experiment, known as Project Star, offered a chance to answer these questions because it randomly assigned students to a kindergarten class. As a result, the classes had fairly similar socioeconomic mixes of students and could be expected to perform similarly on the tests given at the end of kindergarten.

Yet they didn’t. Some classes did far better than others. The differences were too big to be explained by randomness. (Similarly, when the researchers looked at entering and exiting test scores in first, second and third grades, they found that some classes made much more progress than others.)

Class size — which was the impetus of Project Star — evidently played some role. Classes with 13 to 17 students did better than classes with 22 to 25. Peers also seem to matter. In classes with a somewhat higher average socioeconomic status, all the students tended to do a little better.

But neither of these factors came close to explaining the variation in class performance. So another cause seemed to be the explanation: teachers.

Some are highly effective. Some are not. And the differences can affect students for years to come.

This is, frankly, a staggering result. When I have talked about the Obama administration's emphasis on collecting and examining longitudinal eductation data I tell them that it represents a way of moving beyond test scores as measures of tecaher and school effectiveness. I emphasize that it allows us to focus on outcomes not test scores. This is a perfect example. I also emphasize that it is important to try reforms so that we can tell what works. In this case it is the amazing STAR study done in Tennessee.  As I have written about before both here and in The Oregonian the STAR study provides a unique opportunity to study the effect of class size - which was found to have real and important impacts.  But, as this study emphasizes, it is the teachers themselves that are the most important factor by far (and as I have said it is impossible to predict success in the classroom of potential teachers so it is important to have a way of rewarding the good ones and discouraging the bad ones).  


Anyway, what this study says is that kindergarden itself has lifelong consequences for kids and it is not hard to imagine that this is true, to varying degrees, of each individual year of education.  So these occasional budget slashing years are doing irreparable harm to our kids.  And as the follow up blog post emphasizes, unlike a lot of other effects, the effect identified in this paper (in terms of adult outcomes) are the same for rich and poor kids.  So everyone should be concerned.


And if this isn't a clarion call for a permanent rainy-day fund, I don't know what is.

Oregon's Class Size Problem

As noted by The Oregonian's Betsy Hammond: "Oregon's student-teacher ratios, long some of the highest in the nation, rose to dramatic new highs of about 22 students per teacher in 2012-13, the state reported last week."  Here is the accompanying graphic (pity there are not national averages to compare):

Oregon's pupil-teacher ratio 

But does this matter?  As with most things in social science the issue will never be entirely settled, but the weight of the evidence is solidly in the 'yes' column, something on which I have written extensively.

In fact the metric I think is probably the most appropriate that is directly ties to funding is the contact hours per student, which is the combination of school days and hours divided by class size.  Both of which appear to be important empirically.

Public Education Funding in Oregon

Sigh... From The Oregonian: In class size, Oregon ranks No. 49

Should We Care? This is one of the biggest debates in labor/education economics:

Kreuger says yes.

Hoxby says no.

Heinesen says yes.

Hanushek says no.

Yes, but it is a difficult question say Finn and Achilles.

Here is a good paper that debates the question.

Here is an excellent essay by Ehrenberg, et. al., that is a comprehensive treatment of the theory, the evidence and the policy implications.

My reading of the literature is that for traditionally disadvantaged individuals (e.g., low income US and developing countries) it matters more than for non-disadvantaged students - for whom it might not matter much at all. Overall, however, the mass of evidence seems to pretty clearly support the idea that large classes are detrimental to student achievement. But, as always, much more work needs to be done.

A thought: if Novel H1N1 is bad this year with significant absences, might this provide a natural experiment to study the class size effect in Oregon schools?

Soccernomics: Size Matters Redux

Emirates Stadium - Home of the Arsenal

I see the Timbers are getting a little touchy about the size of their field:

Portland are 5-1 in league play at their home. And yet, over the past month, a couple of opposing coaches have publicly taken issue with JELD-WEN Field’s size and suggested that it plays into the Timbers’ favor.

“The pitch, because it’s a little bit too small, when you watch the games they played at home, it’s a little pinball,” Philadelphia Union coach Peter Nowak told local reporters prior to the May 6 game in Portland. “[The Timbers] press the other team, and we’ve got to figure out a good plan for that.”

Too small?

At 70 yards wide, 110 yards long, the pitch at JELD-WEN Field is FIFA certified and meets the governing body’s guidelines as well as those of MLS. Field dimensions are not fixed from one pitch to the next and are a bit like Major League Baseball ballparks in that sense.

The oldest club in English Premier League soccer, Stoke City, play in a stadium with exactly the same dimensions as JELD-WEN. Do other EPL teams complain that it is too small?

Less than two weeks after Nowak brought it up, Columbus Crew coach Robert Warzycha chimed in with his thoughts on Portland’s success at home.

“More than anything, it’s the [artificial] turf and the field dimensions,” Warzycha told the Columbus Dispatch. “And the way they play at home. They’re scoring on set pieces.”

For the record, Portland did score on set pieces to beat both Philadelphia and Columbus. But was the size of the field really working against the opponent?

At JELD-WEN Field, the dimensions are dictated to some degree by the configuration of a stadium footprint that dates to 1926. It also has to do with sight lines for spectators. (From the press box, it is difficult to see the near touchline with out standing up.)

They doth protest too much.  Of course the quote from Ben Olsen that was in my last post was from the coach of a winning team so there is no suggestion of making excuses with him.

Anyway, what strikes me in all of this is the explanation that sight lines are to blame, but not from the stands mind, from the press box!  Are you serious?  You would shrink your field just so those in the press box don't have to stand up?!?  That is so lame.

And by the way, bringing up Stoke City is neither here nor there, but since they did, there is a big difference between the level of play in the Premier League and the MLS for one, and for two Stoke City is grass so the size is not amplified by a fast bouncy plastic surface.  I don't believe that any other Premier League team has a pitch smaller than the 75x110 yards (the modern stadium standard).  Arsenal did have a Jeld-Wen size field and used to be known for cynical defensive football, but then Arsene Wenger came in and instilled a possession, quick passing style of play utilizing world class players who could pull it off.  Still, when they built their new stadium they went to 75x115.

Just sayin'

Econ 539-Public Policy Analysis: Data Analysis

One of the most difficult aspects of social science is the fact that we don't often get to test policy in a lab, we have to use real-world data and try and isolate effects from all of the noise. Fortunately we have become pretty sophisticated at doing so and even more adept at designing policy implementation in a way that gives us some experimental evidence. Today in class we will discuss data analysis and different ways of teasing out causality and the necessary caution one must have in interpreting results.

As an example we will think about perhaps the most commonly used example: the education - earnings relationship.



We will also study the empirical evidence on class size and discuss the STAR study and it limitations.



In other words, what do these two graphs tell us and how much should we trust conclusions based on these pieces of evidence?

The Value of Teacher Quality

It is not news that teacher quality is the most important factor in an effective classroom, but Eric Hanushek has a new paper where he attempts to place a value on quality and the numbers are very big.  This, I suppose, speaks to the debate about pay for performance.  If the actual value of a good over a not-so-good teacher is so large then perhaps we should have sizable rewards for good teaching.

Here is the abstract [HT: Greg Mankiw]:

Most analyses of teacher quality end without any assessment of the economic value of altered teacher quality. This paper combines information about teacher effectiveness with the economic impact of higher achievement. It begins with an overview of what is known about the relationship between teacher quality and student achievement. This provides the basis for consideration of the derived demand for teachers that comes from their impact on economic outcomes. Alternative valuation methods are based on the impact of increased achievement on individual earnings and on the impact of low teacher effectiveness on economic growth through aggregate achievement. A teacher one standard deviation above the mean effectiveness annually generates marginal gains of over $400,000 in present value of student future earnings with a class size of 20 and proportionately higher with larger class sizes. Alternatively, replacing the bottom 5-8 percent of teachers with average teachers could move the U.S. near the top of international math and science rankings with a present value of $100 trillion.

There is a big problem however: how do you measure a good teacher, or even more problematically, how do you measure good performance on an annual basis?  In Brazil I heard about experiments in Chile with so-called value added measures of teacher quality that were terrible disappointments.  There is a complete lack of consistency across different tests and even within sections of the same test.  In other word, when they gave a standardized math test to students at the beginning and at the end of a year, some students improved markedly on one section of the test but did not on the other and vice-versa.  So there was no clear way to rank classrooms in terms of the value added by the teacher.  The same was true across tests (Spanish and Math, say).  So how can you say one teacher is better than others?  You can't.

We are still a long way off from the answers.

Time to Sound the Drum for a Rainy Day Fund...and a Few Other Things

The latest Oregon budget forecast predicts a $473 million kicker refund to Oregon taxpayers.   This when Oregon's economy is going strong and we could finally start to address things like having the lowest high school graduation rate in the country:

This blog has sounded off about the kicker many times before, with both and Fred Thompson and I arguing for its demise, and in it's place a permanent and significant rainy day fund to stabilize state spending.  Doing so would allows us to better achieve things like protect and enhance our transportation infrastructure that at serious risk of significant deterioration.

If I were governor, this would be my agenda:

1.  A bill that would convert the kicker to a rainy day fund.

2. A bill that instituted a carbon tax for all carbon fuels, including gas, and used proceeds to fund transportation infrastructure with rebates for low-income households. Included in this bill would be a repeal of the ban on self-service gas to offset the increased price at the pump.

3. A budget that significantly increased funding for K-12 education dedicated to class size reduction and an increase in contact hours.

4. I would also increase funding for public research universities (conflict of interest alert!).

To me, these are the three pillars of a sound long-term state economy: solid transportation infrastructure, an talented and educated workforce, and an active and innovative research and development infrastructure.

Yes on Measures 66 and 67

Here is my take, published today on The Oregonian's web site:

I support measures 66 and 67 because, based on economic evidence, I believe that the risk to the economy from declining education funding far outweighs the potential harm of the taxes themselves.

Economists understand that taxes have consequences, but the effect of these taxes on most businesses and individuals in Oregon will be minimal and the state will remain one of the lowest business tax states in the country. How low? According to the conservative Tax Foundation, even with the new taxes, Oregon will rank 14th in lowest tax states. Thus Oregon businesses are neither excessively burdened by taxes, nor likely to find greener pastures elsewhere. The effect of the new taxes on employment is therefore likely to be very small, and may be more than offset in the short-run by jobs preserved in social services, public safety and education.

Rejecting these new taxes will, however, likely lead to very severe and long-run consequences on the Oregon economy through the decline in investment in education. The positive economic effects of education are empirically well founded. Economic research by Eric Hanushek of Stanford University has found ‘significant growth effects’ from the improved cognitive abilities that result from investments in education. Claudia Goldin and Larry Katz of Harvard have found that a large part of what explains the phenomenal economic success of the United States in the 20th century is the investment the country made in education. The same is true for states: more educated states tend to be more economically successful than less educated states. It is no accident, for example, that the state of California built the world’s best system of public higher education and saw its economy grow to the 10th largest in the world and become a key engine of growth for the US economy in the second half of the 20th century.

So how is Oregon currently doing in terms of public investment in education? Miserably. In K-12, Oregon currently ranks 49th in the nation in terms of class size and has a school year that is three weeks shorter than the national average. In higher education, Oregon ranks 41st in terms of per-student funding. The percentage of Oregonians earning a college degree is actually decreasing through time. Clearly we are not currently on track to create an economy characterized by healthy growth and job creation and we cannot afford to fall any farther behind.

It is also important to note that private business benefit directly from public investment in education: research by Enrico Moretti of the University of California at Berkeley has found that businesses enjoy increased productivity from locating in cities with a large share of college graduates. In other words, a highly educated population makes businesses more productive.

The Oregonian and others have argued that we should hold out for something better and reject 66 and 67. But the country and the state are in the midst of the worst economic crisis since the Great Depression, we do not have the luxury to wait for something better. Research has shown that even temporary disruptions in education can have lifetime consequences for students. Inarguably the state needs to fix its broken revenue system and we should all demand that it do so soon. But we need the temporary fix that 66 and 67 provide right now. Without investment in the education of Oregon’s children, the future economic prosperity of the state is at risk.

Last week Fred Thompson shared his take on the measures on this blog. I largely agree with him but I am less sanguine about the disruptive effect of the failure to pass the measures and about the legislature's ability to come up with a quick compromise solution (including borrowing). Though I am much less of a student of the state government than Fred is, so keep that in mind.

The School Bond

I was quite bemused by an op-ed in today's Oregonian against the school bond measure.  It is both typical and confused:

When the Big One hits Portland Public Schools, it won't be an earthquake. It will be the realization that a half-billion dollar school bond can't buy a good education in Portland Public Schools.

Why?

Because money can't buy parental involvement -- one of the most important influences on every child's education.

That half-billion dollar bond will not be used to hire more and better teachers.

Nor will it add more classroom days. In 2012-13, Portland school students have almost 170 days. The national norm is 180 days.

And the bond will not lengthen the school day.

Instead, school bond supporters have seized on seismic safety. This is an emotional ploy, just as they have resorted to the kind of empty proclamations -- "a great city deserves great schools" -- that is associated with advertising, not education.

Typical in that the authors talk about instructional issues as missing from the bond.  Yes, the bond does not address the day-to-day operations of the schools and yes class size, contact hours and rewarding and promoting effective teachers is important and not part of the bond.

Confused in that these are all recurring budgetary items that are quite distinct than the one time expenditure the bond is proposing.  This bond is not about fixing the recurring budgetary woes of PPS but about addressing infrastructure.  Mashing the two together is misguided and misleading.  And then trowing in parental involvement, which has nothing to do about either, as the lead?  Bizarre.

And to belittle seismic safety as an emotional ploy is alarming and offensive.  If you know anything about PPS buildings and are not absolutely terrified of an earthquake then you are not paying close enough attention.

Here is a typically confused line:

What will the students gain? Upgraded middle-school science labs, some roofs, and disability access, which we thoroughly support. But a half-billion dollars, spent on buildings, cannot be spent on operating costs. The operating levy passed last year will not be enough to save teacher positions next year nor the next three years after.

Ummm...first of how about gaining buildings that will not collapse upon them and crush them to death in the inevitable earthquake.  Second, once again, the levy is not about operating costs - that is a recurring budgetary item that is mainly handled at the state level, this is about infrastructure.

The authors go on to state that PPS did not learn enough from last year's no vote.  I think they did.  My biggest concern last year was the lack of attention to seismic safety which I thought should be the number one priority.  I know, as do the authors of the op-ed that fancy facilities matter little in student achievement, but this has nothing to do with seismic safety. The bond is not about 'fancifying' facilities, but making sure they are minimally structurally sound.

Yes, they should have made a better proposal last year and I am frankly glad it failed, because we finally have a bond measure that addresses the elephant in the room: the threat of a big earthquake and the devastation it will reap on PPS schools.

[Full disclosure: I have two kids who attend a PPS school in one of the most seismically vulnerable buildings.  But I believe that in ten years, when they are out of PPS, I will still feel the same way about the vulnerability of our kids to the big earthquake and support expenditures to rectify the situation.]

Oregon University Funding and Faculty Salaries

Oregon Business Magazine reports on the Oregon University System's latest self study. The above chart is part of it and shows faculty salaries in Oregon as compared to all other states.  Oregon does poorly.  A few things to note about this - the first being that I clearly need a raise.  But seriously, there is a lot of talk about the generous benefits Oregon offers state employees, and they are pretty generous, but without them we would lag badly in terms of relative pay, these generous benefits vault faculty salaries from 43rd in the nation to 31st.  So talk of cutting into benefits has to take into account the fact that benefits are a component of overall compensation, so if  you cut benefits you will have to increase salaries to stay competitive.  And you will too because the second thing to notice is how states 44 through 50 offer a much lower cost of living.  I suspect that if you remade the left hand table with figures normalized by cost of living, Oregon would come out dead last.

But my experience is that faculty are not as self-interested as you might think and what rankles academics in the state is the funding cuts that affect class size, instructional support, research seminars, travel to conferences to stay current in your field.  Academics became academics for the most part because they are passionate about their fields of study and they want to be able to effectively translate their expertise into knowledge for the next generation.  Most of us went into academics knowing that we could have become wealthier if we chose a different path, so it is not as much about personal gain as you might think.  I think deteriorating working conditions are more responsible for the recent loss of two professors in my department than the fact that they now command much, much higher salaries at other state's universities.

Still academics are not immune to personal compensation.  There is a lot of talk about the fact that part of the compensation for working in Oregon is being able to live in Oregon and this is true.  Economists call this a compensating wage differential.  It is exactly what led me to choose a 25% lower salary but the opportunity to come back to Oregon, and there are many others like me.  But not that many.  There are lots of good places to live in the US and the world and if Oregon is unable to offer at least somewhat competitive salaries they are not going to be able to recruit the better talent and ultimately it will be the students and the state that suffer.  The research that gets done will not be as relevant or cutting edge (you'd better believe that the academic market prices these things), the knowledge that gets passed on will not be as timely or sophisticated and the students produced will not be as dynamic or productive.

If Oregon is unable to adequately support state universities, universities must be allowed to do what is necessary to support themselves.  I support the efforts by the OUS to become a university system and achieve more independence.  But more on that later.

Is Oregon a Business Friendly State?

Yes, according to CNBC. Oregon comes in #18 in their rankling of states, and it would be higher if not for the terrible state of the state's economy and the horrendous state of the state education system. It is 20th in 'cost of doing business', 16th in 'access to capital' and 26th in 'business friendliness', 19th in 'technology and innovation' and 14th in 'transportation and infrastructure'.

What is troubling, however, is that the ranking of the state's education system has dropped from an already bad 29th in 2008 to 37th in 2009. And the fact that this is included in a "Top States for Business" ranking shows just how much education is important for business and the economy - not just for individuals.

Here is what CNBC has to say about education:

Education and business go hand in hand. Not only do companies want to draw from an educated pool of workers, they want to offer their employees a great place to raise a family. Higher education institutions offer companies a source to recruit new talent, as well as a partner in research and development. We looked at traditional measures of K-12 education including test scores, class size and spending.

And here are the education rankings. Hey, at least we are not Mississippi....yet.

Quick Take on the Results

PPS construction bond: It's the economy stupid.  

In a period of prolonged unemployment and falling home values, this was a huge ask for Portland homeowners - too huge in fact. It didn't help that the PPS administration and the school board have inspired no confidence in their ability to manage anything of this magnitude after the whole high school redesign fiasco.

PPS levy: Immediate and real impact.

The levy will have an immediate and real impact on the education of our kids - and in ways that are measurably meaningful, most notably class size.  I think voters get this, they get the connection between the quality of the education system for Portland's kids and the type of economy and society that will evolve from these investments.

Clackamas Sellwood Bridge fee: Free rider problem exemplified.

Clackamas voters understood that the new bridge would be built anyway, why not get others to pay for it and get to use it for free? This is the classic free-rider problem in economics with public goods.

Oregon's Economic Forecast: Grim

The latest numbers as reported by The Oregonian:

SALEM -- The revenue forecast released this morning shows that Oregon will be short at least $855 million for schools, social services and other state programs this year.

Legislative leaders and Gov. Ted Kulongoski have suggested cuts to schools and furloughs for state workers and school teachers in order to make up the gap with four months remaining in the budget period. The 2007-09 budget was set at $15 billion.

The shortfall for the 2009-11 budget period will be even larger, at least $2.5 billion short of maintaining current services.

The governor may be right that we should not dip into reserve funds, but that decision should be made based on a determination of the effectiveness of spending.  Just saying that the budget is going to be worse in the future is not good enough.  Perhaps fewer school days are appropriate but I doubt it.  I would at least like to see a comparison of student performance based on marginal differences in instruction days and class size. 

Beeronomics & Econ 101: Economies of Scale - Redux

After my post this morning, Beervana blogger Jeff Alworth sends along this new picture and writes: "Each one of those tanks at Widmer is 1500 barrels (46,500 gallons)--the annual production of a big brewpub.  There are six in that room and one of the brewers joked, "the biggest six-pack in Portland.""


Here is another aspect of economies of scale: the cube-square law.  According to Galileo (via Wikipedia) this law states: "When an object undergoes a proportional increase in size, its new volume is proportional to the cube of the multiplier and its new surface area is proportional to the square of the multiplier."  So if you double the size of a tank in a brewery, the cost of the materials to make it (stainless steel) increases fourfold but the volume increases eightfold.  So if you have the production to support it, you get double the bang for your buck in tankage - thus the average cost per ounce of beer decreases (all else equal - like just as easy to clean and maintain as smaller tanks).  Now you know.


And for my students - after these two posts, I have now made attending my class today almost entirely redundant, but as it already happened you cannot act on this knowledge - so my ego is safe for another day.  

OSU Economics: We Rock!

The National Research Council (the research arm of the National Academies of Science) has released its assessment of research-doctorate programs in the United States.  OSU, being one of the smallest in the country is not among the top programs by a long shot.  Its ranking range is 70-104.  But when you control for size, funding and the like and just look at the metric that matters, research productivity, OSU's economics department ranks in the 21-31 range.  In other words, in terms of the quantity and quality of our research we rank similarly to some heavy hitters like Cornell, Minnesota and Michigan.

Unfortunately, in the judgement of the OSU administration we weren't worth supporting and our graduate programs have been shut down.  This, in spite of the fact that our graduate programs were essentially self-funding and thus revenue neutral to the university.  [How? Simple: Graduate Teaching Assistants are a good deal for the university - they do a lot of teaching for a bargain price.  And this is not exploitative, by the way, because they get more than just a wage but also a very valuable degree in the end.] In fact, spite is just about the right word to use.  Sadly, one of the professors who contributed a lot to departmental research left when the grad programs were shut down, but most of us are still here.  

The good news is that OSU undergrads (and e-campus students!) have access to a world class collection of research economists.  Come and check us out.

Oh and by the way, where does U of O economics rank in this metric?  In the 39-66 range.  ;-)