A final consideration that is often included in economic models of district spending is student achievement. The assumption behind this control variable is that per-pupil spending and academic achievement are positively correlated. Districts that set and achieve a higher performance standard for their students would thus be spending more to realize that result, and we should therefore control for variation in achievement between districts.
This is a theoretical construct borrowed from market economics, and it is not obviously applicable to public schooling. In competitive markets, it is true that more expensive products and services are generally, though not always, of higher quality, holding constant the amount of the product or service being consumed. But the corresponding assumption that higher spending is significantly correlated with higher student achievement in public schools is not supported by the empirical evidence. Numerous studies have found little or no link between per-pupil spending and achievement.[*]
Because of this empirically demonstrated absence of a significant correlation between public school spending and achievement, it did not seem worthwhile to build an index of overall student achievement from the many available state test results (which would have been necessary in order to include achievement in the model). A future version of this study, however, will include a school achievement control variable for the sake of completeness.
[*] One of the most elegant studies in this field has regrettably
received very little attention from scholars or the media: Stephen Childs and
Charol Shakeshaft, "A Meta-Analysis of Research on the Relationship Between
Educational Expenditures and Student Achievement." Journal of Education Finance, vol. 12 (1986), no. 3, pp. 249-63. Also see the research of Eric Hanushek, including Eric A. Hanushek, "Assessing the Effects of School Resources on Student Performance: An Update," Educational Evaluation and
Policy Analysis, vol. 19 (1997), no. 2, pp. 141-164. Most recently, see Andrew
T. LeFevre, Report Card on American Education: A State-by-State Analysis, 1981-2003 (Washington, DC: The American Legislative Exchange Council, 2004), chapter 3.