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THE HIGH COST OF LOW EDUCATIONAL PERFORMANCE: New OECD Report Finds that 25 Point Increase in PISA Scores Could Lead to $40.6 Trillion Increase in United States’s GDP

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“This report provides powerful evidence that educational improvements make an important and lasting impact not only in the lives of students, but in the livelihood of nations.”

Relatively small improvements in students’ educational performance can have large impacts on a nation’s future economic well-being, according to a new international study from the Paris-based Organisation for Economic Co-Operation and Development (OECD). The study uses economic modeling to show that even modest and achievable gains in student learning yield large increases in gross domestic product over the long run.

“This report provides powerful evidence that educational improvements make an important and lasting impact not only in the lives of students, but in the livelihood of nations,” said Bob Wise, president of the Alliance for Excellent Education and former governor of West Virginia. “Combined with the Alliance’s past work linking improvements in educational outcomes to state and local economies, this OECD study makes it clear that whether you’re talking at the city, state, national, or even international level, education and the economy are inexorably linked—better educational outcomes mean better economic outcomes.”

The OECD study, The High Cost of Low Educational Performance: The Long-Run Economic Impact of Improving PISA Outcomes, was presented at an exclusive preview event sponsored by the Alliance in Washington, DC on January 19. Eric Hanushek, a coauthor of the report and the Paul and Jean Hanna senior fellow in education at the Hoover Institution at Stanford University, and Andreas Schleicher, head of the Indicators and Analysis Division of OECD’s Education Directorate, presented the findings. (Video and supplemental materials from that event, including PowerPoint presentations from both presenters, are available at https://all4ed.org/events/WebinarHighCostLowEducationalPerformance011910).

The OECD report examines three scenarios to estimate what the long-term effects of educational improvement, as measured by scores on the highly regarded Programme for International Student Assessment (PISA), would be on the nation’s Gross Domestic Product (GDP).

Under scenario one, the United States would boost its average scores on PISA by 25 points over twenty years. This relatively modest goal—less than Poland achieved in just six years,1 from 2000 to 2006—would result in an increase in the U.S. GDP of $40.6 trillion over the lifetime of the generation born in 2010, as shown in the chart below. Even this minor performance improvement represents a significant increase (25 percent) in GDP over what might be expected without raising the current level of student performance.

 

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The second scenario would involve the United States lifting its average scores to the average level of Finland. Finland is the highest-performing country on PISA, scoring about 50 points higher than the United States in mathematics and science. Raising U.S. scores to that level would increase GDP by $100 trillion over the lifetime of a child born in 2010.

Under scenario three, the United States would bring all of its students up to a minimum skill level. According to the report, the U.S. average score exceeds the PISA minimum level (400 on a 0-to-1,000 scale), but about 19 percent of U.S. students perform below those levels. Simply raising the cognitive skills of those students would add $72 trillion to GDP over the lifetime of a child born in 2010.

“Think about a child born this year,” said Wise. “If we act now to improve that child’s education, the nation will reap enormous benefits over the lifetime of that child. For that child’s sake, and for the nation, we cannot delay.”

The report notes that there is uncertainty in these projections, as in any projections. But even reducing the projections to allow for plausibly minimal estimates suggests very large implications of improved cognitive skills and human capital. By achieving just one-half the projected impact remains a remarkably important potential change in the economic growth of the United States, the report concludes.

“Results from countries achieving high and equitable learning outcomes in PISA—like Finland in Europe, Canada in North America, or Japan and Korea in East Asia—or from those that have seen rapid improvements in the quality of schooling (like Poland) underline that doing better is possible,” the report reads. “Concluding that change is ‘too difficult’ would imply foregoing enormous gains to the well-being of OECD nations.”

The complete report is available at https://all4ed.org/events/WebinarHighCostLowEducationalPerformance011910.

1 Between 2000 and 2006, Poland, with an increase of 29 score points in the reading assessment, had the largest performance increase in PISA scores.

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