Researchers studying school district spending generally like to control for the possibility that demand for education may vary in systematic ways from one district to another. In a district where there is greater demand or higher expectations for education, public officials may choose to spend more per pupil to meet that demand. This response, of course, would lead to variations in spending from one district to another that are unrelated to district size. Hence, it is wise to try to take into account any such variation in educational demand from one district another.
But data on a community’s attitudes towards education spending and its educational aspirations are not generally available, so it is necessary to find and control for some other characteristic that is measured numerically and related to education demand. As it happens, the education literature has shown income to be correlated with demand for education, so economists typically control for average family income as a proxy (or “stand-in”) for educational demand.
In keeping with that traditional practice, aggregate household income per capita (i.e., average income) is included as a control in the model. Average income data are taken from Census 2000 “Summary File 3.”