The Role of International Assessments of Cognitive Skills in the Analysis of Growth and Development

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1 The Role of International Assessments of Cognitive Skills in the Analysis of Growth and Development Eric A. Hanushek Stanford University Ludger Woessmann University of Munich, ifo Institute International Large Scale Assessment Conference Education Testing Service March 2011

2 Elements of Discussion Outcomes of education Determinants of education Hanushek, Eric A., and Ludger Woessmann. "The economics of international differences in educational achievement." In Handbook of the Economics of Education, Vol. 3, edited by Eric A. Hanushek, Stephen Machin, and Ludger Woessmann. Amsterdam: North Holland, 2011:

3 Participation in IEA and OECD tests (through 2007) 20 OECD non-oecd Number of countries Number of tests participated ( )

4 Studies of the Economic Consequences of Human Capital Data source individual earnings Economic Consequences equity aggregate outcomes TOTAL IEA OECD Other Combined TOTAL

5 Returns to Cognitive Skills (International Adult Literacy Survey) Poland Sweden Czech Norway Denmark Italy Hungary Germany Finland Chile Switzerland Netherlands US

6 Cognitive Skills and Economic Growth

7 Years of Schooling and Economic Growth With quality control Without quality control

8 Scenario 1 Growth Projections - Achievement improves by 25 points (1/4 s.d.)

9 60% Annual Gains from 25 PISA-Points Improvement (1/4 std. dev.) 50% Percent addition to annual GDP 40% 30% 20% 10% 0% Year

10 60% Annual Gains from 25 PISA-Points Improvement (1/4 std. dev.) 50% Percent addition to annual GDP 40% 30% 20% 10% 0% Year

11 60% Annual Gains from 25 PISA-Points Improvement (1/4 std. dev.) 50% Percent addition to annual GDP 40% 30% 20% 10% 0% Year

12 Scenario 1 Growth Projections - Achievement improves by 25 points (1/4 s.d.) - PV = 288% of current GDP - $123T for OECD - $43T for United States

13 Growth Projections Scenario 1 - Achievement improves by 25 points (1/4 s.d.) Scenario 2 - Everybody Achieves at Level of Finland - PV = 645% of current GDP in OECD - $275T for OECD - $112 trillion for United States

14 Growth Projections Scenario 1 - Achievement improves by 25 points (1/4 s.d.) Scenario 2 - Everybody Achieves at Level of Finland Scenario 3 - All students to 400 points (basic skills) - PV = 530% of current GDP in OECD - $226T for OECD - $86 trillion for United States

15 Trends in Test Scores Japan Korea Japan Korea Finland Netherlands N. Zealand Canada Australia UK N. Zealand Norway Australia Netherlands UK Finland France Belgium Canada Sweden Germany USA Sweden France Belgium Norway USA Germany 480 Italy Italy

16 Trends in Growth Rates vs. Trends in Test Scores

17 School Performance in Peru Never enrolled dropout gr 1-5 dropout gr 5-9 finish gr 9 w/o basic skills finish gr 9 with basic skills

18 Determinants of Human Capital Data source Determinants of Student Achievement family background plus school inputs Institutions within crosscountry within crosscountry country country Achievement equity TOTAL Unique Studies IEA OECD Other Combined TOTAL

19 Resources and Performance across Math performance in PISA Slovak Rep. Czech Rep. R 2 = 0.01 Poland R 2 = 0.15 Hungary Countries Korea Ireland Greece Finland Japan Netherlands Canada Belgium Switzerland Australia IcelandDenmark Sweden France Germany Austria Norway Spain USA Portugal Italy 400 Mexico Cumulative educational expenditure per student

20 Alternative Estimates of Least Effective U.S. Teachers on Student Achievement 1.00 s.d. performance gain Canada Finland % 2% 4% 6% 8% 10% 12% Percent deselected high estimate of teacher effectiveness low estimate of teacher effectiveness

21 Central Exams, School Autonomy, and Student Performance Math test score Yes 0 No School autonomy over teacher salaries Yes 0.0 No Central exams TIMSS + TIMSS-R

22 Central Exams, School Autonomy, and Student Performance Math test score Yes 0 No Teacher influence on resource funding Yes 0.0 No Central exams TIMSS + TIMSS-R

23 Measurement Issues to be Addressed Reliability at extremes (e.g., Peru) Intertemporal linkages Causation Panel of individuals Economic outcomes Labor market results Further schooling

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