Making Schools Better: A Conversation with Rick Hanushek

Episode Summary

Executive Summary: Russ Roberts and Rick Hanushek discuss why U.S. education spending has risen sharply without corresponding gains in student achievement. Hanushek argues that teacher quality—not class size, degrees, or experience after the first year—drives learning, and that schools need stronger incentives, accountability, and competition to retain good teachers and remove weak ones.

Main Topics: Rising spending, flat outcomes (Priority: 5/5): U.S. per-pupil spending has climbed dramatically over decades, yet standardized achievement has remained largely unchanged, suggesting inputs alone do not improve learning. Teacher quality as the central driver (Priority: 5/5): Hanushek argues that effective teachers materially raise student achievement, while credentials and years of experience beyond the first year are poor predictors of performance. Class size and the limits of traditional reforms (Priority: 4/5): Even the best-known class-size reduction evidence shows only small early gains that fade, and broader statistical studies generally find little systematic effect. Incentives, merit pay, and accountability (Priority: 5/5): Hanushek advocates pay and retention systems tied to performance, with principals also held accountable, rather than uniform salary schedules based on experience and graduate credits. Testing, cheating, and what should be measured (Priority: 3/5): He supports better assessments and test banks that cover the intended curriculum, arguing that teaching to a good test is appropriate while cheating must be monitored. Competition, unions, and school choice (Priority: 4/5): Public schools are insulated from market pressures; Hanushek says competition, charters, and choice could weaken union rigidity and improve outcomes, especially for disadvantaged students.

Key Arguments: Per-pupil spending in U.S. schools has increased substantially, but student test scores have stayed flat, implying that more money has not translated into better outcomes. Traditional reforms like smaller class sizes, more experience, and advanced degrees for teachers do not reliably predict student achievement. Teacher quality varies greatly and is the strongest school-based determinant of student learning. A good teacher can offset the achievement gap associated with low-income family background over a few years. Current salary schedules reward inputs such as experience and education rather than effectiveness, insulating poor performance. Merit pay can work only if principals and school leaders also have performance-based incentives and discretion. Better testing is necessary, but tests should be broad, high-quality, and publicly transparent rather than narrow and simplistic. Competition from charter schools and other choice mechanisms can improve accountability and reduce union power. Private schools appear to use hiring and retention more selectively than public schools, though evidence is limited by data access.

Data Points: Real per-pupil spending since 1960: more than tripled - Hanushek says U.S. education spending per student rose sharply in real terms over the long run. Achievement trend since 1970: virtually constant / flat - Standardized test scores in reading, math, and science have shown little change despite higher spending. Teachers with master's degrees: more than half - Used as evidence that teacher credentials have risen over time without improving outcomes. Pupil-teacher ratio: dramatically down - Class sizes have shrunk over time, yet performance has not risen accordingly. Tennessee class-size experiment: 23–24 students vs. 15 students - Random assignment study comparing regular and smaller classes in the mid-1980s. Class-size gains: small, modest gains in kindergarten or first grade only - Effects from smaller classes were limited and did not compound in later years. Teacher quality comparison: 85th percentile vs. 50th percentile - Example of moving from an average teacher to a good teacher in the achievement distribution. Teacher tenure in some states: as early as the second year - Example of weak accountability protections for teachers, especially in California. Tennessee and Arkansas examples: small districts / privately funded experiments - Hanushek cites localized attempts at performance-based pay and teacher identification. Chicago cheating example: identified in Freakonomics - Referenced as an example of test-based accountability creating incentives to cheat.

Pivotal Quotes: "What we've seen is that test scores of students have been virtually constant or flat from 1970 through today." — Rick Hanushek: Explaining why increased spending has not produced better educational outcomes. "We should just try to figure out how can we keep the good ones in the classroom and how can we get rid of the bad ones." — Rick Hanushek: Summarizing his policy preference for incentives and retention based on performance. "If we had a good test that covered the range of material that we were interested in ... there's nothing wrong with teaching to the test." — Rick Hanushek: Responding to concerns that accountability will narrow education.

Implications: The discussion suggests education policy should shift from spending and credentials toward measuring effectiveness, rewarding strong teachers, enabling school choice, and building better accountability systems—especially to improve outcomes for low-income students.