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Education and Inequality: Global and Local

by Elliott R. Morss, Ph.D.
 
Introduction
 
The latest global results on reading, math and science achievements have just been reported by the OECD[1]. These educational achievements of young people are probably a pretty good leading indicator on how countries will fare in the 21st Century. In this article, these results are coupled with information on income inequality to draw interesting conclusions.
 
Education
 
The test scores for selected countries are presented in Table 1. They are ranked by the final column – the average score on all three subjects.
 
Table 1. – Education Test Score Results, 2009
Country
Science
Math
Reading
Average
Hong Kong-China
549
555
533
546
Finland
554
541
536
544
Korea
538
546
539
541
Japan
539
529
520
529
Canada
529
527
524
527
New Zealand
532
519
521
524
Australia
527
514
515
519
Netherlands
522
526
508
519
Switzerland
517
534
501
517
Estonia
528
512
501
514
Germany
520
513
497
510
Belgium
507
515
506
509
Macao-China
511
525
487
508
Poland
508
495
500
501
Norway
500
498
503
500
United Kingdom
514
492
494
500
Denmark
499
503
495
499
France
498
497
496
497
Ireland
508
487
496
497
United States
502
487
500
496
Sweden
495
494
497
495
Portugal
493
487
489
490
Italy
489
483
486
486
Spain
488
483
481
484
Greece
470
466
483
473
Russia
478
468
459
468
 
What do these findings tell us? Note the dominance of Asian countries at the top of the table. And note where most European countries and the US end up. Europe and the US had a tremendous head start on other nations. But now, does anyone in Europe or the US really care about how well educated their children are? These finding suggest the answer is no.
 
Does the amount spent per student in primary and secondary school influence scores? It does. For the 25 countries that the OECD has both scores and per student expenditure data, expenditures are positively correlated with scores and explain 47% of the variance in scores.  
 
Table 2 provides information on average scores and total primary and secondary school expenditures per student for selected countries.
 
Table 2. – Test Scores and Student Expenditures[2]
 
Country
Average Scores
 
Expenditures
Finland
544
14,063
Korea
541
13,297
Japan
529
16,007
New Zealand
524
10,608
Netherlands
519
16,800
Switzerland
517
23,193
Estonia
514
8,927
Germany
510
13,390
Belgium
509
16,355
Poland
501
7,653
Norway
500
21,919
United Kingdom
500
17,114
Denmark
499
18,851
Ireland
497
16,276
France
497
15,576
United States
496
21,531
Sweden
495
17,481
Portugal
490
11,845
Italy
486
15,387
Spain
484
15,263
 
Does the pattern seen in Table 2 look familiar? For anyone who has read my pieces on US health care, it does. The US spends tremendous amounts on health and education with a small return.
 
Education and Income Inequality
 
I hypothesize that educational attainment and income inequality are related: in countries with high income inequality, test scores will be lower. What is the basis for this hypothesis? In all countries, most students attend public school. But in countries with high income inequality, rich families will send their kids to private schools: and as a result, they don’t care about the quality of public schools and won’t want to support them.
 
What is the evidence? The Gini Coefficient measures income inequality. A Gini with a zero value means everyone has the same income. As the Gini increases, income inequality grows. Using a sample of 56 countries and data from the OECD, the Gini coefficient explains 22% of the variation in average educational attainment: as the Gini (income inequality) grows, educational attainment falls.
 
US Youth
 
Two final points on young Americans:
 
  • nearly 25% of students fail the written exam to join the US military;
  • 75 percent of those aged 17 to 24 don't qualify for the military because they are physically unfit (25% of American youths are obese), have a criminal record or didn't graduate high school.


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.