Getting What You Pay For: The Debate Over Equity in Public School Expenditures

Using data from the 1997 Digest of Education Statistics, this teaching case addresses the relationship between public school expenditures and academic performance, as measured by the SAT. While an initial scatterplot shows that SAT performance is lower, on average, in high-spending states than in low-spending states, this statistical relationship is misleading because of an omitted variable. Once the percentage of students taking the exam is controlled for, the relationship between spending and performance reverses to become both positive and statistically significant. This exercise is ideally suited for classroom discussion in an elementary statistics or research methods course, giving students an opportunity to test common assumptions made in the news media regarding equity in public school expenditures.