Efficiency in Education: Research and Implications

In this paper we explore some of the policy issues related to the provision of primary and secondary education in the United States from an economic standpoint. We begin with stylized facts and a brief reference to the uniquely decentralized financing and delivery of public education in the United States, and the resulting issues of equity and quality that arise. As a reference point we review the basic efficiency and equity arguments for public financing and the provision of public goods in general, and education specifically, both of which suggest that current practices are unlikely to be efficient or equitable. These are issues that have motivated a number of policy avenues—the accountability movement, including No Child Left Behind, as well as recent efforts to establish higher and uniform standards for our public schools. We then turn to the sizable body of literature assessing school performance. We include an empirical example of this approach for Texas primary and secondary schools, with a focus on the many challenging issues involved with modeling and assessing educational performance. Our application demonstrates that research findings are highly sensitive to modeling choices, suggesting that a mixed methods approach is most likely to lead to effective education reforms.