Cost data in education have many uses, and equally many misuses. This study by Jay P. Greene explores several ways to estimate the costs to society of the lack of basic skills in Michigan. In this essay, I will discuss the effort he makes and try to place his work and others, including my own, in a basic cost/benefit framework for clear policy thinking.

Prior work, cited by the author in the first footnote of this study, notes that William Haarlow and I have estimated the national cost of remedial education to be about $1 billion annually, while Ronald Phipps estimates the number to be closer to $2 billion. In the Executive Summary, which is all many people will read, Greene puts his estimate at "around $16.6 billion."49 At first glance, one would assume that these different studies have come to wildly different conclusions, but that is not so. Indeed, his figure of $16.6 billion and ours of $1 or $2 billion are comparisons of apples to oranges. Let me explain why.

The $1-billion figure in our work was based on a request that I received several years ago from Diane Ravitch of the Brookings Institution. She was preparing a series of papers for an edited volume that was primarily devoted to articles analyzing the failure of U.S. K-12 public schools to perform satisfactorily on academic measures of student progress.50 My chapter concluded the volume, and I was asked to estimate the cost to the taxpayer of remedial education as a result of K-12 failure. This was a very precise question about costs, far less encompassing than an estimate of the total costs to society, including poverty, welfare, crime, and other forms of social dysfunction associated with poorly educated people.

While the question was precise, the available data were terrible, and I made an extrapolation to the United States based on reasonable cost data collected in two states, Maryland and Texas. There were no readily available data on costs in private colleges and universities, so my estimate was limited to public two-year and four-year colleges and universities. The Maryland data were collected by the state directly from the institutions, based on their own estimates of costs. The Texas data were based on state appropriations. My extrapolations based on these two different methods were remarkably close, at about $1 billion, which gave me some sense of confidence that the number was not too far off the mark.51

It should be emphasized that when Greene makes the same precise extrapolation to the United States based on his data for Michigan, he reaches a figure less than ours, $773 million.52 So, on an apples-to-apples basis, we now have three estimates that are relatively close, and in particular, Greene's number and ours are very close. His work, therefore, further supports the answer I gave to the question that Ravitch posed to me, and I am delighted to have confirmation based on data from a third state.

I went on to conclude that an outlay of $1 billion against a total outlay of state appropriations for public higher education of $113 billion, or less than 1 percent, made remedial education a good investment from the public's perspective. In short, I was invoking an implicit cost/benefit analysis, without doing the detailed work of estimating the benefits, but arguing that any such estimate would vastly exceed, in present value terms, a cost of $1 billion. I believe that Greene's work further makes the same case.

I have belabored this comparison because a hasty read of Greene's paper might lead the reader to the wrong conclusion, namely that remedial education is a horribly expensive waste of the public resources. To the author's credit, that does not appear to be his view, for he argues, as do we, that "remedial education is effective and relatively cheap, there is no reason to favor curtailing it.."53 But this conclusion is easily lost in his effort to generate multiple ways to estimate the costs, each method increasing the previous total, until he reaches the grand estimate of $16.6 billion. He fails, as have all efforts focused solely on costs, to balance the costs with estimates of the benefits. Given that this issue has become highly political (consider, for example, the case of City University of New York), it seems that the likely impact of this study will be to give further ammunition to those who seek to limit options for remedial education for those who clearly need it. And that policy decision, I argue, would be totally misguided.

I will not spend much time commenting on his multiple ways of computing costs for two reasons: First, as long as one is clear about what one is computing, as the author is, I have no quibble with his estimates. Second, and more important, however, exploring the cost side is only part of what analysts should be doing when we seek to give a serious response to the public's concern about this problem. No one, thus far, has tackled the benefit side, and whether the costs are $1 billion or $5 billion, or even $16 billion, we won't know how to evaluate that number without contrasting it with the benefits that society receives from the expenditure. Indeed, in the author's first footnote, mentioned earlier, he includes in his listing as costs items that might more correctly be viewed as benefits. For example, the expenditures related to remedial education may lead to a reduction in expenditures on more costly programs such as welfare, prisons, and state-provided medical care. These socially costly outlays accompany the conditions of poverty that correspond in today's economy to conditions of failed basic education.

The author is right in turning attention in the concluding section to the question of how the need for remedial education might be reduced. Certainly, no right-thinking person can argue against doing what we can to reduce the number of youngsters who graduate from high school (or drop out before graduation) unable to read, write, and compute. Investments at the K-12 level that improve student performance would almost certainly pay off in any cost/benefit calculation, and would be superior to the second-best method, remedial education. The author trots out two approaches favored by some—charging the costs back to the student's high school, and introducing greater school choice at the K-12 level. But now we are into territory where none of the authors who have worked on cost estimates have any particular expertise to bring to the table. I could just as easily argue that evidence suggests that high-quality teachers are the best way to improve student performance and argue that wage levels for teachers are too low to attract the quality into the profession that we need. The point is made, however, that we have every economic and moral reason to continue to work on the improvement of K-12 education, not a particularly surprising or striking conclusion. People will choose their preferred approach as much on ideological grounds as on evidence.

I close with one historical observation. Remedial education has been part of higher education since the founding of Harvard—this is not a new concern. It has grown in importance, however, as the needs of the economy call for a better educated work force, and as we have responded by moving from an elite to a mass form of higher education. The quickest way to solve the remedial education problem would be to return to a smaller, elite system, renouncing the effort, begun with the post-WWII GI Bill, that vastly expanded access to higher education. Few serious people, however, would accept that approach. Given that fact, we are faced with the messy reality that many students enter college less than well prepared. The path of wisdom is to work on the problem at the K-12 level, as we have been doing as a nation for the last 15 years, while simultaneously making remedial opportunities available to those who failed to learn the first time around.