Study Links Smaller Classes To Higher Earnings

By Debra Viadero — October 25, 2000 2 min read

The long-term economic benefits of reducing class sizes in the early grades outweigh the costs, a Princeton University researcher says in a new report.

Alan B. Krueger’s projections, contained in a paper released last Thursday by the Washington-based Economic Policy Institute, add a new wrinkle to the ongoing debate over whether reducing class sizes can be an effective tool for improving learning.

In an effort to cut class sizes nationwide, President Clinton pledged in 1998 to provide federal funding to add 100,000 new teachers to schools, and Vice President Al Gore has promised to do more of the same if he wins the presidential election next month. But some policymakers and researchers argue that the expense of hiring enough teachers to staff those smaller classes might outweigh the benefits.

Mr. Krueger, a professor of economics and public affairs at Princeton, based his cost-benefit calculations on data from a landmark Tennessee study showing that students taught in classes of 15 to 17 students made greater learning gains than students from larger classes.

For More Information

The study, “The Class Size Policy Debate” can be ordered for $5 (plus shipping) by calling EPI at (800) EPI- 4844.

Since those students were followed only through high school, however, Mr. Krueger turned to other kinds of cost-benefit studies to calculate the projected impact of the students’ higher test scores on their lifetime earnings.

“What you find is that the increase in earnings is twice as high as the costs, so the benefits are twice as high as the costs,” Mr. Krueger said in an interview. He projects that a 10 percent increase in expenditures per student, enough to pay for reducing a class of 22 students to 15, would lead to a 1 percent increase in a student’s lifetime earnings.

The payoff, he concedes, is modest compared with some other types of financial investments.

“This is more like investing in the bond market than the stock market,” Mr. Krueger said.

Uncertain Assumptions

Eric A. Hanushek, a longtime critic of the studies favoring smaller classes, said Mr. Krueger’s projections were based on some uncertain assumptions.

“You simply wouldn’t want to commit billions of society’s resources to these back-of-the-envelope calculations,” said Mr. Hanushek, a senior fellow at Stanford University’s Hoover Institution. His paper is also included in the EPI report.

Schools might get a bigger payoff, Mr. Hanushek contends, from making other changes, such as improving the quality of teachers.

The problem with that school improvement strategy, Mr. Krueger counters, is that no one knows exactly how to produce better teachers or how to tell those teachers from less effective ones.

For his part, Mr. Krueger acknowledges that his estimates are far from concrete predictions. Real earnings, for example, may not grow at the 0 to 2 percent annual rate that he assumes, for example.

But he added: “To the extent that I erred, I probably erred on the side of overstating costs and understating benefits.”