Saturday, October 27, 2007

And You Thought Oil Prices Were High?

(Note: Graph and post have been updated.)

Using these data from the U.S. Department of Education and oil prices from Global Financial Data, the graph above (click to enlarge) shows expenditures per pupil in public elementary and secondary schools from 1929-2007, adjusted for inflation, and oil prices during the same period, also adjusted for inflation. Both series are price indexes set to equal 100 in 1929.

The data for public school spending are only available through the 2001-2002 school year from the Department of Education, and I was unable to find a comparable series through 2007, but I extended the series from 2002 through 2007 by assuming that the trend in spending for education would continue (about a 3% per year real growth rate).

Conclusion #1: Oil prices in real dollars have increased 2.4X since 1929 (the inflation-adjusted price index in the graph above goes from 100 to 240).

Conclusion #2: On the other hand, the average cost of educating a student in U.S. public schools today is about 10X the cost in 1929, measured in real dollars (the inflation-adjusted price index in the graph goes from 100 to 1000).

Conclusion #3: Consider also that the quality of a barrel of oil has probably remained the same since 1929, and we probably can't say that about the quality of public school education over the last 78 years. For example, see this 8th grade exam from 1895; how many high school students could pass this today?

21 Comments:

At 10/27/2007 2:15 PM, Anonymous Anonymous said...

point 1: real oil prices are about the same as in 1980.

But the chart shows that real oil prices are less then half their 1980 value.

You should at least try to be consistent in a little short piece llike this.

 
At 10/27/2007 2:33 PM, Anonymous Anonymous said...

Anonymous: The graph ends in 2001, not 2007. If you assume that real oil prices have doubled since 2001, then the assertion that real oil prices are *now* (in 2007) about the same as in 1980 is accurate.

If you read the piece, you'd see he tried to be consistent but couldn't find a suitable graph going past 2001.

 
At 10/27/2007 3:19 PM, Blogger Mark J. Perry said...

Thanks to the second anonymous. I have now updated the graph through 2007 using actual oil prices, and projected school expenditures, to avoid any confusion.

 
At 10/27/2007 3:47 PM, Anonymous Anonymous said...

OK, now trying a comparison of public expenditures per pupil to private school expenditures per pupil.

My point is that education has no productivity growth. But we have a very large scale private education system that has no productivity either. So make a comparison that makes some economic sense. Show how the public sector compares to the private sector. If you show a big difference you have a valid complaint against the public sector. But if there is not a significant difference the problem is not the public sector.

 
At 10/27/2007 4:27 PM, Blogger Mark J. Perry said...

Anonymous:

1. The Chicago Board of Education, which has 3,300 employees, is larger than the entire Japanese Ministry of Education.

2. The New York City public schools system has 250 times as many administrators as the New York Catholic school system (6,000 administrators in public school system versus 24 in Catholic school system), even though New York public schools have only four times as many students as the Catholic schools.

Public shcools are an inefficient monopoly with a huge bloat administration, that is certain.

I don't know if comparable, historical expenditure data are available for private school spending, but I'll look for it.

 
At 10/28/2007 8:02 AM, Blogger Thomas Blair said...

Dr. Perry,

What software are you using to generate this graphs? They look quite nice.

 
At 10/28/2007 8:22 AM, Blogger Mark J. Perry said...

Thomas Blair:

I am using EVIEWS software for my graphs, I think it is infinitely better than EXCEL for graphs, i.e. much more user-friendly for creating graphs, and much more visually appealing graphs:

http://www.eviews.com/index.html

 
At 10/28/2007 8:37 AM, Blogger Downes said...

This is a fallacious comparison. You are comparing spending with prices.

It would be more accurate (and more revealing) to see the amount of money *spent* on gas per capita since 1929.

 
At 10/28/2007 9:21 AM, Blogger Mark J. Perry said...

The comparison is between: a) real spending/price to educate one student in a public school and b) real spending/price to purchase one barrel of oil.

Even without using oil as a comparison, we can still say that REAL spending to educate one student in a public school has increased by a factor of 10.

 
At 10/28/2007 9:36 AM, Anonymous Anonymous said...

But you are comparing apples and auto tires. The price of a commodity is different than the PER CAPITA expense of performing a task. At the very least you should compare the PER CAPITA cost of consumption of oil versus the PER CAPITA cost of educating a student. (You'll find some of the discrepancy there, as students now ride buses, have air conditioning in schools, etc.)

You might compare the cost of sugar with the PER CAPITA expense of road building too, but the comparison wouldn't demonstrate anything at all. Embarrassing that an economics teacher wouldn't know how to make a valid statistical comparison.

 
At 10/28/2007 12:10 PM, Blogger Mark J. Perry said...

Like I said before, we can leave the real price of oil out of the analysis, and still conclude that the real cost/price of educating one student in U.S. public schools has increasded by a factor of 10X, with declining quality of the service provided.

Since World War II, the real price per public school student has increased by almost 40% each decade.

My point was that rising oil prices get a lot of media attention, even though real oil prices are the same today as 1980-1981. During the same period, the real price per public school student has doubled, and receives significantly less attention in the media.

Gradual increases in the real price per public school student receive less attention than the often dramatic increases in oil prices, even though the historical increases in real price per public school student are significantly greater.

 
At 10/28/2007 3:28 PM, Blogger Malcolm Kirkpatrick said...

A second sort of inflation has occurred in the education industry: the time which the law requires that sub-adults spend in school. The age span has increased from around six years (say,8-14) to around 12 years (typically 6-18). Across the US, the coefficient of correlation(age-start, score) is negative, where "age-start" is the age at which States compel attendance at school and "score" is NAEP 4th or 8th grade Reading or Math scores. Early education may offer benefits. Early compulsory schooling is counter-indicated.

Please read this Marvin Minsky comment on school and this article on artificially extended adolescence by Ted Kolderie.

 
At 10/28/2007 4:09 PM, Blogger Malcolm Kirkpatrick said...

Sorry. Should be: " the coefficient of correlation(age-start, score) is positive.."

Early compulsory attendance is counter-indicated.

 
At 10/28/2007 6:34 PM, Blogger juandos said...

"Early compulsory attendance is counter-indicated"...

Oh yeah?!?! Not by anything shown in the indicated comments listed here by Minsky or Kolderie...

In fact it seems to me that Minsky's and Kolderie's comments are just two more indictments of the present day public school system...

So Malcolm Kirkpatrick I'm hardly the sharpest knife in the drawer, can you enlighten me with regards to your comment please?

 
At 10/29/2007 12:28 AM, Blogger Malcolm Kirkpatrick said...

States which compel attendance at 6 have lower 4th and 8th grade NAEP Reading and Math scores than States which compel attendance at age 7.

According to a US DOE official quoted in a CATO Institute study of homeschooling, the rate of dyslexia in a population is inversely related to the age at which reading instruction is institutionalized. Later is better.

Studies which find a positive effect from early education compare children of deficient parents who attend supplemental education programs to children of deficient parents who do not; generalization to the population at large is not valid. By analogy, rotten meat and polluted water may enhance longevity--of people starving in the desert.

Early education may be important but early compulsory attendance is counter-indicated.

 
At 10/29/2007 11:52 AM, Anonymous Anonymous said...

//During the same period, the real price per public school student has doubled, and receives significantly less attention in the media.//

And when it does receive attention, the attention invariably characterizes the public schooling system as being short-changed, and Americans as being skin-flints where "the children" and "education" are concerned.

Never mind that some of us consider the g-school system (and the majority of their "private" proxies) to be far from either child- OR learning-friendly -- and pretty anemic in the "education" department, too.

 
At 10/30/2007 7:40 AM, Blogger Silvia said...

People sure are sensitive when it comes to public education, eh? The govt is inefficient at probably everything it does. If you'd compared anything else to the oil prices, I wonder what the reaction would have been.

 
At 10/30/2007 1:01 PM, Blogger Liz said...

While I agree with your central point that education spending has increased without a commeasurate increase in performance, looking at the 1895 eighth grade exam as proof is a bit problematical

Readers may be interested in the Snopes (the urban legend-busting site) review of the validity of the high school exam listed.

Mark J. Perry wrote:I don't know if comparable, historical expenditure data are available for private school spending, but I'll look for it.

Mr. Perry, the problem would be mixing up apples and oranges. Unlike public schools, private schools exist in a bewildering array of configurations. How can you compare spending by a set of parochial schools (very much supported by the diocese) with spending from a set of long-established country day schools, with large endowments and equally large expenditures?

Further, public schools must admit all comers. Many private schools refuse to admit students with specific learning disabilities, students who are notoriously more expensive to educate.

 
At 10/31/2007 10:16 AM, Blogger ninjadroid said...

Citing that particular snopes link is mendacious. Up at the top, in bright red, it says "false." But the document is, in fact, authentic. What the snopes article declaims as false is the argument that the exam demonstrate declining quality of education --- hardly the sort of thing that falls under the "urban legends" umbrella.

 
At 3/17/2008 12:10 PM, Anonymous Family Life Educator said...

In reference to Liz...You make the statement that private schools refuse to admit disabled or learning disablities students. I would love to see the data on that one. That could'nt be farther from the truth.

IF such a situation has occured its because private schools are "private" and therefore do not receive the same benefits as public. That means every program or an extra attention has to be paid by the parents. Why not allow the private schools to recieve funding for these special needs students? Its certainly not that private schools do not want them.

Both my sons are attending a private school and this year was the first year the need for a disablilites instructor arose. The school did what they always do, they pulled together in time of need, had major fundraisers for the ONE CHILD and hired a teacher just for him. This kind of philosopy of "kids come first" permeates private schools. The sacrifice from parents of money for tuition, time for school lunches, recess and classroom duty etc. hardly makes this school system unconcerned with the welfare of children.

It would be really nice if my tax dollars were able to go for my son's education instead of into a system that has alot of money with little results.

 
At 7/01/2008 6:32 AM, Anonymous Anonymous said...

The proportion of the population who completed education in the 20s was a fraction of the level it is today. Spending has increased as the proportion of the educated population has increased.

If you read the advisory reports from industry to FDR, you'd be astonished how uneducated the general public was. The most common complaint was an inability to read or count beyond 10.

 

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