How important is the inequality in educational spending on our kids?

The Associated Press published a story yesterday about the variations and changes in parents’ spending on their children’s education in the United States. Spending on education by those in the top 10 percent increased by 35 percent during the Great Recession, while spending by the bottom 90 percent stayed constant.

As the piece notes, the distribution in education spending across the U.S. income spectrum has been unequal for quite some time while the differences in spending by those at the top of the ladder compared to everyone else has been rising for decades. But education spending is just one part of the story of how much parents spend on their children. What’s more, the effectiveness of this spending is still uncertain.

As we’ve noted before, overall spending on children is unequal. Data from the U.S. Department of Agriculture show that rich parents spend much more on their children, though that spending takes up a smaller percentage of their income. The largest driver of the difference is not spending on necessities but rather spending on what researchers “enrichment expenditures.”

These expenditures generally complement spending on education. Examples include books, movies, and summer camps. Children learn in the classroom, but that process doesn’t stop there. By giving their children more opportunities to engage in activities that help develop knowledge or inter-personal skills, parents can strengthen the efforts made in the classroom.

Research by economists Greg Duncan of the University of California-Irvine and Richard Murnane of Harvard University shows that the inequality of enrichment expenditures has gone up over the decades. In 1972-1973, the average family in the bottom 20 percent of the income spectrum spent $835 on these goods and services compared to $3, 536 spent by those families in the top 20 percent—a ratio between the two of 4.2.

By 2005-2006, the average family in the top 20 percent spent $8,872 on enrichment expenditures while the average family in the bottom 20 percent spent $1,315. Spending in both groups increased, but the ratio between the two increased quite a bit to 6.7. The study did not look at spending over the past eight years, but given the increasing inequality in educational spending since the Great Recession noted in the AP story and the unequal economic recovery from the recession, it wouldn’t be shocking to see a similar increase in the gap in enrichment expenditures, too.

Of course, the amount of money parents or the government spends on children is far from the only determinant of successful outcomes or upward mobility—the amount of time parents spend with their children in educational activities is hugely important, too. But the question of how much this inequality on dollars-and-cents spending matters is still up for debate.

Maybe the differences in parenting in the very early years of a child’s life can explain more of these gaps. Equitable Growth gave Ariel Kalil of the University of Chicago a grant to look in to that question. Or perhaps equalizing the amount of government spending on education would help reduce the inequality of educational outcomes. University of California-Berkeley economist Jesse Rothstein will look into this very question with funding from our grants program. Or perhaps even another factor is critically important to understand. Research is needed to guide the way.

October 1, 2014



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