Achievement Gaps Drag Down Economy, Study Asserts

By Alyson Klein — April 22, 2009 3 min read

The achievement gap between U.S. students and those in other nations—and among different groups of students in the United States—is a significant, long-term drag on the economy, according to a national research group’s study that seeks to quantify that impact.

The McKinsey & Co. study released last week estimates that the nation’s gross domestic product, or GDP, would have been $1.3 trillion to $2.3 trillion higher in 2008—9 percent to 16 percent of overall GDP—if the United States had closed the gap on internationally benchmarked tests in recent years.

“The underrealization of human potential is the equivalent of a permanent recession,” Bryan Hancock, a partner at the research and consulting organization, said at a press briefing in Washington also attended by U.S. Secretary of Education Arne Duncan. While Mr. Hancock said that gauging the effect of the lagging student achievement on GDP is “necessarily imperfect,” he said it’s clear that the problem has “a profound impact on the overall economy.”

The report, “The Economic Impact of the Achievement Gap in America’s Schools,” studied the effects of four different “achievement gaps” on the overall economy.

First, it looked at the difference between the United States as a whole and nations that outscore it on math, science, and reading on the internationally benchmarked Program for International Student Assessment, such as Finland and South Korea.

The report also examined differences in student achievement within various American populations. Those included the gaps between black and Latino students and their white counterparts, the gap between students of different income levels, and the differences in outcomes between similar groups of students educated in different school systems, or regions.

Cost to GDP

The report found that if the gap between the performance of black and Latino students and that of white students in the United States had been closed between 1983 and 1998, the nation’s GDP as of 2008 would have been between $310 billion and $525 billion higher in 2008 dollars, or 2 percent to 4 percent of GDP.

The results from the gap between students in different socioeconomic circumstances were similar. The researchers found that GDP would have jumped over that period by between $400 billion and $670 billion, or a 3 percent to 5 percent increase of GDP, if that gap was closed.

If the gap between America’s low-performing states and the rest of the nation were closed, the GDP would rise by $425 billion to $700 billion, or 3 percent to 5 percent of GDP, the report says.

The report hands a compelling argument to those seeking to reshape education policy, said Joel I. Klein, the chancellor of the 1 million-student New York City public school system.

“It adds a financial urgency to the moral urgency” of improving outcomes for all students, said Mr. Klein, who is also founder of the Education Equality Project, a national advocacy group. Mr. Klein helped provide guidance on the McKinsey report.

But at least one researcher questioned the study’s methodology and conclusions, even while praising its focus on improving outcomes for minorities and children from low-income families.

“They’ve used fairly naive approaches to estimating the economic implications,” particularly in making international comparisons, said Henry Levin, a professor of education and economics at Teachers College, Columbia University. “This report argues that we’re down to a science on comparing” the correlation between students’ achievement on standardized assessments and their income, he said. “It’s just not a settled area.”

Mr. Levin said standardized tests generally ignore noncognitive factors that can be an equally good, if not better, predictor of future income, such as work ethic and the ability to cooperate with others.

And, he said, the McKinsey report’s estimates on GDP leave out any expenditures the United States would have to make to improve educational outcomes.

“They talk about the benefits, but without any costs,” he said.

But Eric A. Hanushek, a senior fellow at the Hoover Institution at Stanford University, and an adviser on the study, said that “there’s no evidence that producing more cognitive skills” will detract from noncognitive skills.

Mr. Hanushek, a researcher in education and economics, said no one has come up with a good figure for how much money it would cost to close the gap between the United States and foreign nations that outperform it.

“We just don’t have a good estimate on the cost side,” he said. “What it takes is doing things better, as opposed to just putting more money into it.”

A version of this article appeared in the April 29, 2009 edition of Education Week


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