Chapter 7
Signaling, Incentives, and School Organization in France, the Netherlands, Britain, and the United States

JOHN H. BISHOP

Cornell University

Despite similar standards of living, the secondary education systems of France, the Netherlands, Britain, and the United States produce very different levels and patterns of achievement. In primary school, Americans do not trail their European counterparts. Reading ability varies little across these four countries. When 14 year olds were compared at the beginning of the 1980s, however, the French and Dutch were about 1.3 to 1.5 grade-level equivalents ahead of the Americans in math and science. At the end of secondary school, performance differentials were even larger.

What causes differences in secondary school achievement across these four nations? The first section of this chapter describes these achievement differences. Seven hypothesized proximate causes are evaluated in the second section. Four hypotheses can be rejected. The rest cannot: teacher quality, priority given to academics, student engagement, and time on task.

The third section addresses a more fundamental question: Why do American students, teachers, parents, and school administrators place a lower priority on academic achievement than their counterparts abroad? Why, for example, is student engagement in learning higher in France and the Netherlands? Some people blame American culture, antiintellectualism, or historical tradition. Such

1  

Preparation of this paper was funded by grants from the German Marshall Fund of the United States, the Pew Charitable Trust, and the Center on the Educational Quality of the Workforce (agreement number R117Q00011-91, as administered by the Office of Educational Research and Improvement, U.S. Department of Education). The findings and opinions expressed here do not reflect the position or policies of the Office of Educational Research and Improvement or the U.S. Department of Education.



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--> Chapter 7 Signaling, Incentives, and School Organization in France, the Netherlands, Britain, and the United States JOHN H. BISHOP Cornell University Despite similar standards of living, the secondary education systems of France, the Netherlands, Britain, and the United States produce very different levels and patterns of achievement. In primary school, Americans do not trail their European counterparts. Reading ability varies little across these four countries. When 14 year olds were compared at the beginning of the 1980s, however, the French and Dutch were about 1.3 to 1.5 grade-level equivalents ahead of the Americans in math and science. At the end of secondary school, performance differentials were even larger. What causes differences in secondary school achievement across these four nations? The first section of this chapter describes these achievement differences. Seven hypothesized proximate causes are evaluated in the second section. Four hypotheses can be rejected. The rest cannot: teacher quality, priority given to academics, student engagement, and time on task. The third section addresses a more fundamental question: Why do American students, teachers, parents, and school administrators place a lower priority on academic achievement than their counterparts abroad? Why, for example, is student engagement in learning higher in France and the Netherlands? Some people blame American culture, antiintellectualism, or historical tradition. Such 1   Preparation of this paper was funded by grants from the German Marshall Fund of the United States, the Pew Charitable Trust, and the Center on the Educational Quality of the Workforce (agreement number R117Q00011-91, as administered by the Office of Educational Research and Improvement, U.S. Department of Education). The findings and opinions expressed here do not reflect the position or policies of the Office of Educational Research and Improvement or the U.S. Department of Education.

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--> ad hoc explanations cannot be ruled out, or in, by the analysis that follows. The purpose here, instead, is to propose an alternative explanation derived from economic theory and a few observations regarding the contrasting ways in which learning achievement is measured and then signaled to parents, school administrators, colleges, and employers in the five countries. The third section also shows how signaling theory, game theory, and agency theory provide a robust explanation of the learning deficits in American upper secondary schools. According to the economic theory developed below, the fundamental cause is the structure of incentives for learning and high-quality teaching of demanding material. American employers reward credentials, but they fail to recognize and reward what is actually learned in school. Admission to the best colleges depends on measures of relative performance—rank in class and grades—and aptitude tests that do not assess what is taught in school, not external assessments of competence in particular subjects. Only one of the 50 states has a system of subject-specific external exams similar to the Baccalaureat (Bac), the General Certificate of Secondary Education (GCSE), and the Dutch exams. The result has been grade inflation and students selecting undemanding courses where it is easy to get a high grade. Students pressure each other not to study, in part because they are being graded on a curve. Teachers are pressured to keep failure rates low, so passing standards are effectively forced down by peer pressure against studying. The final section of this chapter summarizes the analysis and comments on the implications for economic analysis of education policy. Differentials in Academic Achievement The differences in achievement levels at ages 13, 14, and 15 are summarized in Table 7.1. The table presents data from studies conducted in the 1980s and 1990s comparing France, the Netherlands, England, Scotland, and the United States. The International Association for the Evaluation of Educational Achievements (IAEEA) studies sampled students at particular grade levels, not at particular ages. Consequently, age-adjusted scores on its tests are reported where possible and information on the age of the sample is provided in the footnotes of the table. Reading. In the 1990–1991 IAEEA study of reading, age-adjusted scores indicated that American 9 year olds (see column 1 of Table 7.1) were reading about 58 percent of a U.S. standard deviation (SD) better than Dutch 9 year olds and about .20 SDs better than French 9 year olds. However, by age 14, differences between the countries (column 2) were tiny. Mathematics. In the 1981–1982 study of mathematics achievement of 13 to 14 year olds conducted by the IAEEA, Dutch and French 13 to 14 year olds ranked second and third, respectively, behind only Japan. Of the 17 industrialized nations participating in the study of 13 to 14 year olds, Americans were

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--> TABLE 7.1 Achievement in Lower Secondary School   1991 IEA Reading Age Adjusted 1982 IEA Math 1983 IEA Science 1991 IAEP Mathematics 1991 IAEP Science           Ages 14–15 (not adjusted for age) Adjusted for Age Difference Level Age 13 % Correct   Level Age 13 % Correct     Age 9 Age Mean 14 (SD) Ages 13–14 % Correct Mean (SD)   Mean (SD) Gain Age 9 to Age 13 Mean (SD) Gain Age 9 to Age 13 France 526 533 (68) 53.9 - - - 64.2 (20.3) - 68.6 (17.1) - Netherlands 494 523 (76) 57.1 63.7 (16.1) 62.2 - - - - - - England - - - 47.1 55.9 (15.7) 62.2 60.6 (21.4) 29.8 68.7 (17.5) 18.7 Scotland - - - 48.4 - - - 60.6 (20.3) 26.5 67.9 (16.5) 20.8 United States 543 528 (85) 46.4 53.7 (16.7) 53.7 55.3 (20.9) 25.4 67.0 (16.4) 17.2 Columns 1, 2, and 3 are the age-adjusted means and standard deviations of the overall reading score in the IAEEA reading study (Elley 1992). Column 4 is a weighted mean percent correct for students in the grade where the majority have attained 13:00 to 13:11 years by the middle of the school year from the Second International Mathematics Study (McKnight et al., 1987). The French, English, and American students all had the same mean age, 14.1. Mean age was 14.0 for Scotland and 14.4 for the Netherlands. Adjusting for the greater age of the Dutch students would have lowered their percent correct by about 2 points. Columns 5 and 6 are the percent correct and standard deviation for ninth graders on the full 50-item IAEEA science test (Postlethwaite and Wiley, 1992). An estimate of how U.S. students would have performed on the full test was made by subtracting 1.1 percentage points (the average difference between core and full test scores for England and the Netherlands) from the U.S. core test score. The mean age of students differed a great deal. Mean age was 14:2 for England, 15.3 for the United States, and 15:6 for the Netherlands. Column 7 is an estimate of scores for the full 50-item IAEEA science test for students who are 15.3 years old, the mean age of U.S. students. The age gradient used was the average for Sweden (4.3) and Italy (7.4), the two countries for which it was available. Columns 8, 9, 11, and 12 are the mean percent correct and standard deviation from the 1991 IAEP study of mathematics and science achievement of 13 year olds (IAEP, 1992a, b). Columns 10 and 13 are the increase in the percent correct on items common to the tests given to 9 and 13 year olds.

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--> ranked twelfth, English eleventh, and Scots tenth (McKnight et al., 1987). After adjusting for small differences in mean age, American 14 year olds scored 10.7 points below Dutch students, and 7.5 points below French students, of comparable age (see column 4). The 1991 International Assessment of Educational Progress (IAEP) mathematics study obtained similar results (columns 8–10). The gap between French and American 13 year olds was 42.6 percent of a U.S. standard deviation (about 1.3 U.S. grade-level equivalents).2 British students were about halfway between the French and the Americans (IAEP, 1992a). The gap remained roughly constant even though the math achievement of 13-year-old Americans improved by .20 SDs between 1982 and 1992 (NCES, 1994). The performance gap between the American and European students grows even larger during upper-secondary school (see Table 7.2). The Americans who participated in the Second International Math Study were high school seniors in college preparatory math courses, such as trigonometry, precalculus, and calculus. This very select group, representing 13 percent of American 17 to 18 year olds, got 39.8 percent of the questions correct. The 6 percent of English students studying mathematics at A-level got 59.8 percent correct (McKnight et al., 1987). Substantial proportions of French and Dutch secondary students specialize in mathematics and science; 20 percent of French youth are in the mathematics and science lines known as C, D, or E of the lycee general. The questions asked on their final examinations suggest that these students achieve at a very high level. Science. In the 1983 IAEEA study of science achievement of 14 to 15 year olds, the Netherlands ranked third and the United States ranked last among 17 industrialized countries. After a rough adjustment for age differences, American students lagged slightly more than half a standard deviation (about 1.4 U.S. grade-level equivalents) behind English and Dutch students (see column 5, Table 7.2). The 1991 IAEP science study found that at age 9 American students were ahead of students in Scotland, England, and most other European countries. Data for France and the Netherlands are not available for this age. By age 13, English, Scotch, and French students were ahead, although the differences were small and not statistically significant (IAEP, 1992b). The gap is smaller in the more recent study in part because overall science achievement of 13 year old Americans rose by .21 SDs between 1982 and 1992 (NCES, 1994). 2   If mean differences in achievement are to be given a grade-level equivalent (GLE) interpretation, an assumption must be made about the relationship between grade-level equivalents and the sample standard deviation for the test. This relationship varies across tests and across societies, depending on the age of the students tested, the character of the test, and the pace of instruction. The approximate number of GLEs per SD for 13 year olds is about four for NAEP assessments, three for the Iowa Test of Basic Skills (eighth graders), and 2.85 for the IEA science test. Where an estimate for the specific test is not available, I assume an SD on a test taken by 14 year olds equals 3 U.S. GLEs.

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--> TABLE 7.2 Achievement at the End of Upper Secondary School   1982 IEA Mathematics Final Year of Secondary School 1983 IEA Science—Final Year of Upper Secondary School               Physics     Chemistry     Biology         % Correct % Age Group % Time Math % Correct % Age Group Hr. Per Week % Correct % Age Group Hr. Per Week % Correct % Age Group Hr. Per Week Total Science Homework France - - - - - - - - - - - - - Netherlands - - - - - - - - - - - - - Belgium 50.0 10 20 - - - - - - - - - - Finland 60.6 15 14 37.9 14 2.0 35.9 16 1.0 50.2 41 2.0 3.1 Norway - - - 54.1 10 5.0 44.3 6 5.0 55.4 4 5.0 - England 59.8 6 21 62.4 6 5.1 69.3 5 5.2 62.4 4 5.2 7.2 Scotland 42.8 18 17 - - - - - - - - - - United States 39.8 12 14 45.3 1 5.0 37.7 2 5.0 38.1 12 5.0 2.8 Column 1 is a weighted mean percent correct for students in the final year of secondary school from the Second International Mathematics Study (McKnight et al., 1987). The mean age was 17:8 for the U.S., 18:1 for England, 16:9 for Scotland, 18:6 for Finland, 19:2 for Sweden, and 18:3 for Belgium. Column 2 is the share of the age cohort in advanced mathematics courses included in the study. Column 3 is the share of school time spent in mathematics classes. Columns 4, 7, and 10 give the percent correct for students studying each science subject in the final year of secondary school. Columns 5, 8, and 11 are the proportions of the age cohort taking each science subject in the final year of secondary school (for the U.S. it is the share of students taking their second year of the subject). Columns 6, 9, and 12 are the number of hours per week spent in classes in each science subject (Postlethwaite and Wiley, 1992). The mean age was 17:5 to 17:10 for the U.S., 18:0 for England, 18:7 for Finland, and 18:11 for Norway.

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--> Few American upper secondary school students study science in depth (see Table 7.2). Only 1 or 2 percent of this age cohort takes two years of physics or chemistry. Despite the highly selected nature of this group, many of whom were taking the subject for advanced placement college credit, only 47.5 percent of the questions were answered correctly on the IAEEA physics exam and only 37.7 percent were correct on the IAEEA chemistry exam. The 4 or 5 percent of this age cohort of English youth who in their thirteenth year of schooling were studying these subjects for their A-level exams got 62.4 and 69.3 percent correct, respectively (Postlethwaite and Wiley, 1992). Teacher Quality, Time, and Engagement: The Proximate Causes of Achievement Differentials American elementary school students do not lag their counterparts in Europe. Indeed, in reading they are substantially ahead and in science slightly ahead (see rows 1 and 13 of Table 7.1). What, then, caused the large deficits in achievement in mathematics and science at the end of secondary school? Why does achievement lag in math and science but not in reading? Let us start by looking at seven proposed proximate causes of achievement differentials across countries: Diversity Restricted access to secondary education Teacher quality and salaries Overall spending per pupil Priority given to academic achievement Time devoted to instruction and study Engagement or effort per unit of scheduled time The purpose here is not to select a single most important explanation for U.S. students lagging their French and Dutch counterparts. Rather, the objective is the more modest one of narrowing the list of possible causes. Diversity Non-Hispanic whites score about .45 GLEs higher than the overall U.S. average on NAEP reading tests, about .56 GLEs higher on NAEP mathematics tests, and .98 GLEs higher on NAEP science tests. If all French and Dutch students are compared to the 77 percent of American students who are neither black nor Hispanic, the European advantage is smaller. For mathematics at age 13, the gap would be about 0.9 GLEs in both 1982 and 1991. In 1983 white U.S. 13 year olds were about 0.5 GLEs behind the Dutch in science and in 1991 about .6 GLEs ahead of French 13 year olds. But is it really fair to compare the non-Hispanic white population of the

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--> United States to the total population of France and the Netherlands? The United States is not the only country with a diverse student population. The Netherlands accepted 120,000 immigrants in 1990—twice the rate of immigration into the United States. In both France and the United States the share of students who are taught in a language different from their mother tongue is 6 percent; it is 5 percent in Scotland, 12 percent in Canada, 15 percent in Northern Italy, and 20 percent in Switzerland (IAEP, 1992a). If scores are adjusted for the demographic and socioeconomic backgrounds of students, why not hold parent's education constant as well? If this were done, the French/Dutch lead over the United States would increase. Access—Numbers of Students and Graduates It is sometimes said that low achievement is the price that must be paid for greater access. However, only the United Kingdom exhibits the expected trade-off between achievement levels and enrollment ratios (see Table 7.3). Only 43 TABLE 7.3 1991 Enrollment and Completion Rates   France Netherlands United Kingdom United States Percent enrolled full time in secondary school         Age 16 92.0 97.2 62.4 90.2 Age 17 86.4 90.0 43.1 74.7 Age 18 57.2 67.4 12.3 21.1 Age 19 31.6 41.5 3.4 5.0 FTE enrollment in tertiary education         Age 18 19.1 12.7 24.4 33.1 Ages 18–21 26.6 19.5 16.0 33.4 Ages 22–25 12.7 14.0 4.8 13.5 Ages 26–29 4.0 4.0 2.2 6.2 FTE years in school between ages 16 and 29a 4.6 4.9 2.3 4.1 School enrollment rate, Ages 5–29 57.7 55.2 52.7 55.2 Secondary diplomas awarded / population of theoretical completion ageb 75.8 82.2 74.4 75.5 First-degree graduates from universities / population of theoretical completion age 16.3 8.3 18.4 29.6 SOURCES: OECD (1993), NCES (1992), and Government Statistical Office (1992). a Calculated by summing the ratios of FTE enrollment to population for one-year age groups from ages 16 to 29. b The U.S. data do not include GED certificates. The labor market does not view the GED as equivalent to a high school diploma. GED-certified high school equivalents are paid 6 percent more than high school dropouts but 8 to 11 percent less than high school graduates. The graduation rate for the United Kingdom is spuriously high because it counts regular GCSE exams taken at the end of the eleventh year of schooling as graduation. If one or more A-level exams had been the definition of secondary school graduation, the graduation rate would have been 28 percent.

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--> percent of British 17 year olds and 12 percent of 18 year olds were attending secondary school full time in 1991. Students preparing for A-level exams achieve at high levels, but they represent a decided minority of their age cohorts. By contrast, French and Dutch youth have higher enrollment rates than American youth. For example, 86.4 percent of French and 90 percent of Dutch 17 year olds were in secondary school in 1991, but only 74.7 percent of American 17 year olds were. At age 18 enrollment in either secondary or tertiary education was 76 percent in France, 80 percent in the Netherlands, and 54 percent in the United States. Despite lower college attendance rates in France and the Netherlands, larger shares of 18 to 21 year olds in France (52.2 percent on a full-time equivalent [FTE] basis) and the Netherlands (56.4 percent) are enrolled in school (either secondary or tertiary) than in the United States (40.4 percent). Between ages 16 and 29, the average American spends 4.1 FTE years in school, British youth 2.3 years, French youth 4.6 years, and Dutch youth 4.9 years (OECD, 1993). These statistics contradict the widely held belief that the American education system, despite all its faults, at least achieves higher levels of participation than the European systems. Not only are secondary school graduation standards higher elsewhere than in the United States, graduation rates are higher as well. In 1991 the graduation rate was 82.2 percent in the Netherlands, 75.8 percent in France, and 75.5 percent in the United States. The large proportions of 18 to 19 year olds attending secondary school in France and the Netherlands indicate how high graduation standards are made compatible with high graduation rates. Students having difficulty with the fast-paced curriculum do not drop out; rather, they repeat grades and thus gain extra time to prepare for the demanding external exams. Many participate in vocational programs and apprenticeships, which currently account for 54 percent of French and 70 percent of Dutch upper secondary students (OECD, 1993). The benefit of earlier completion of secondary school in the United States is that large numbers of students enter tertiary education at a young age. However, some of the material covered during the first two years of college in the United States is covered in upper secondary school in France and the Netherlands. More bachelor's degrees are awarded in the United States, but some doubt that the B.A.s awarded by America's second-rank universities represent the same standard of achievement as comparable European degrees. Hard evidence on this issue is not available. Teacher Quality and Compensation The quality of the people recruited to teach is very important. A teacher's general academic ability and subject knowledge are the characteristics that most consistently predict student learning (Hanushek, 1971; Strauss and Sawyer, 1986; Ferguson, 1990; Ehrenberg and Brewer, 1993; Monk, 1992). Secondary school teaching is not a prestige occupation in the United States,

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--> and it apparently does not attract the same level of talent as in France and the Netherlands. Since university admission standards are higher in Europe, the university graduate pool from which European secondary school teachers are recruited is better educated on average than the college graduate pool out of which American teachers are recruited. Furthermore, American teachers are generally not the most talented members of the pool of college graduates. In 1977–1978 the mathematics Scholastic Aptitude Test (SAT) score of intended education majors was .38 standard deviations (SDs) below the overall average, 1 SD below engineering majors, and 1.2 SDs below physical sciences majors. The verbal SAT scores of intended education majors were .30 SDs below the overall average (NCES, 1992). In this respect, Britain is similar; entrants into programs to prepare primary school teachers have significantly lower A-level grades than average for university entrants (O'Leary, 1993). In France, by contrast, secondary school teachers must do a double major in the two subjects for which they seek certification and then pass rigorous subject matter examinations. In 1991 only 31.3 percent of those who took the written exam for the Certificat d'Aptitude au Professorat de l'Enseignement du Secondaire, the most common of these examinations, passed. The best teaching jobs go to those who pass an even more rigorous examination, the Agregation Externe, which in 1991 had a pass rate of 17.7 percent (Ministere de l'Education Nationale et de la Culture, 1992a and 1992b). French and Dutch secondary school teachers tend to be recruited from the middle of a pool of graduates of tertiary education, which in turn is a more selected sample of the nation's population. Furthermore, American teachers are often not expert in the fields they teach. Recent college graduates recruited into math or science teaching jobs spent only 30 percent of their college career taking science and mathematics courses. Since 46 percent had not taken a single calculus course, the prerequisite for most advanced mathematics courses, it appears that most of the math taken in college consisted of reviewing high school mathematics (NCES, 1993). The graduates of the best American universities typically do not become secondary school teachers because the pay and work conditions are relatively poor. Compensation. The high academic standards for entry into upper secondary school teaching in France and the Netherlands are sustainable only if wages and work conditions are attractive. Data on the relative compensation of secondary school teachers are presented in rows 1 and 2 of Table 7.4. American upper secondary school teachers start at a wage that is 14 percent below that of the average worker, and after 15 years of experience they earn only 33 percent more. Starting salaries are equally low in England. However, the starting salaries in France are 6 percent above the average for all workers and in the Netherlands they are 39 percent higher. In France, England, and Scotland, upper secondary school teachers with 15 years of experience are paid 61 to 63 percent more than the average worker, and in the Netherlands they are paid 132 percent more than

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--> TABLE 7.4 Teacher Compensation and Conditions of Work   France Netherlands England Scotland United States Compensation-Teacher/All Employeesc           Upper secondary school teacher-starting 1.06 1.39 .87 91 .86 Mid-career (15 yr) 1.61 2.32 1.63 1.61 1.33 Lower secondary school teacher-starting .95 1.12 .87 .91 .86 Mid-career (15 yr) 1.44 1.58 1.63 1.61 1.33 Primary school teacher-starting .93 .97 .87 .91 .84 Mid-career (15 yr) 1.34 1.39 1.57 1.61 1.30 Teacher Class Contact Hours/Yeard           Upper secondary school 532 943 776 887 825 Lower secondary school 706 943 776 887 748 Primary School 875 1014 1013 950 1098 Class Sizee           Upper secondary school 29 24 16 15 25.6 Lower secondary school 24 28 16 20 26.8 Primary School 23 25 25 20 24.0 Secondary School Students/Teachersf 14.0 15.9 14.7 14.7 15.5 Secondary School expenditure/student relative to GDP per capita 28.1 24.7 28.0 28.0 29.4 Share of staff not classroom teachersg 36% 20% - - 47% SOURCES: Nelson and O'Brien (1993), OECD (1993), Ministere de l'Education Nationale et de la Culture (1992a and b), and NCES (1992). a Compensation of secondary school teachers was calculated by multiplying their salary by the ratio of compensation to wages for manufacturing workers. This estimate of teacher compensation was then divided by the average compensation of all workers. The figure for French upper secondary school teachers is a weighted average of salaries for Agregé (20%) and others (80%). b Mean number of hours teaching a class per week times the mean number of weeks in the school year. Time devoted to preparation, in-service training, and to nonteaching activities is not included in this total. c Mean number of students in each class. d The ratio of the number of FTE pupils enrolled in public and private secondary schools to the number of FTE secondary school teachers. e Share of all staff employed in publicly funded elementary and secondary schools and ministries of education that are not classroom teachers. The nonteaching staff includes administrators at all levels, teachers aides, guidance counselors, librarians, nurses, custodial staff, food service workers, bus drivers, and clerical workers. The Dutch figure is for all three levels of schooling. The French figure is for secondary education only. The U.S. figure is for public elementary and secondary schools and does not include people working for state departments of education. In the U.S. teachers aides account for 8.8 percent of school staff. the average worker. For primary school teachers, by contrast, American pay levels are comparable to their Dutch and French counterparts (see row 6). The lower pay in the United States is not compensation for more attractive work conditions (see rows 7–13 of Table 7.4). French upper secondary school teachers are in front of a classroom only 532 hours per year. Their American counterparts teach 825 hours per year. Teaching hours in England and Scotland are similar to U.S. levels, 776 and 886, respectively, but class sizes are substantially

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--> smaller. Dutch upper secondary school teachers are the only group that clearly have heavier teaching loads than American teachers (Nelson and O'Brien, 1993). When the salaries of college graduates are compared, those who enter teaching come out at the bottom. The starting salaries of U.S. mathematics and physical science majors who entered teaching were 42 percent below the salaries of those who obtained computer programming and system analyst jobs and 35 percent below the starting salaries of those obtaining jobs in mathematics or the physical sciences (NCES, 1993). University graduates who majored in a physical science earned 78 percent more and economics majors earned 92 percent more than education majors over the course of their working lives (Kominski and Sutterlin, 1992). Since Americans with university training in mathematics and science can earn much more outside teaching, those with talent in these areas are difficult to recruit into high school teaching. The result is that most American teachers of mathematics and science are less well prepared than their Northern European counterparts. This may help explain why American students lag French and Dutch students in mathematics and science but not reading. The fact that American primary school teachers are paid almost as much as French and Dutch teachers may also help explain why American 9 to 10 year olds compare favorably to their counterparts abroad. There is a deeper question, however. Why are the academic standards for entry into upper secondary school teaching in the United States set so low? Why are salaries so low? These questions will be addressed later. Overall Spending per Pupil Data on pupil-teacher ratios and spending per pupil are presented in rows 13 and 14 of Table 7.4 Pupil-teacher ratios are quite similar in the five countries, as are the ratios of spending per pupil to per-capita gross domestic produce (GDP). Consequently, ''low" overall levels of spending on K-12 education are not the cause of the lag in U.S. student achievement. Priority Given to Academics If American spending per pupil is comparable to that in our four comparison countries, why are salary levels lower? What happens to the money saved by paying lower teacher salaries? It is used to hire additional nonteaching staff. Nonteachers account for nearly one-half of the employees in public education in the United States but only one-fifth in the Netherlands and 36 percent of secondary education employees in France (see bottom row of Table 7.4). These staff members perform services (such as bus transportation, sports activities, before- and after-school day care, counseling, and occupational training) that are provided by other governmental organizations or the private sector in some other nations. The money also pays for the more attractive buildings, sports facilities,

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--> a grade or to a compressed and accelerated curriculum scored 75 percent of a standard deviation higher on tests (a few years later) than the matched non-accelerated students. Repeating a grade effectively lowers learning goals and reduces the retained child's achievement a few years later by about 30 percent of a standard deviation (Holmes, 1989). Over 100 experimental studies have been conducted of the effect of goal difficulty on various kinds of achievement. The effects are quite large. On highly complex tasks such as school and college course work, specific hard goals raised achievement by 47 percent of a standard deviation (Wood et al., 1987). In the laboratory and field settings used by psychologists conducting this research, the subjects generally accepted the goal set for them by the researcher. Achievement went up, but the probability of failing to reach the goal rose as well. In most studies more than two-thirds of those in the "hard goal" condition failed to achieve their goal (Locke, 1968). Most studies examined behavior over relatively short periods of time. One would imagine, however, that if such experiments lasted a couple of years, those who consistently failed to achieve their goal might lower their goals or give up altogether. Stedry (1960) found that when subjects who had already set their own goals were assigned even higher ones by the study director, they rejected the assigned goal and achievement did not rise. This appears to be what happens in American secondary schools. Most students reject the goals that teachers set because the rewards for success are small. Others reject them because they appear to be unattainable. How do European education systems induce students in upper secondary schools to set difficult learning goals and work toward them? They do not, as some have proposed for the United States, set a single high yea-nay standard that everyone is expected to meet. Young people are too different from each other for such a policy to work.9 When exams are graded pass-fail and the same passing standard applies to all, many students are able to pass the standard without exertion and will, therefore, not be stimulated to improve by the need to pass the exam.10 Many other students will think they are now so far behind and the effort required to achieve the standard so great that the costs of the effort are larger than the possible reward. They will reject the goal of meeting the standard. When the variance of performance is large, only a few students will find the reward attached to a single absolute passing standard an incentive to study (Kang, 1985). 9   On the criterion-referenced IAEP mathematics scale, 15 to 17 percent of American 13 year olds had better mathematics skills than the average 17-year-old student, and 7 to 9 percent of 13 year olds scored below the average 9 year old (NCES, 1992). The variance of achievement is roughly comparable in Europe and East Asia (IAEP, 1992a, b). 10   In the United States, minimum competency tests are taken in ninth or tenth grade, and most students pass them on the first sitting. Thus, for the great majority of students, such exams have no further effect on incentives to study. Incentives effects are focused on the small minority who fail the test on the first round.

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--> External exams need to signal the level of a student's achievement, not just whether the exam was passed. Dutch external exams are graded on a scale of 1 to 10. Excellence on the Baccalaureat exams results in the award of a Mention Tres Bien, a Mention Bien, or an Mention Assez Bien. Once information on performance levels becomes available, employers and institutions of higher education will tend to base their selection decisions on it. Graduates with the strongest exam results have options not available to those with weak results, and the outcome is a system of graduated rewards. When the variance of achievement is high, incentives for effort are stronger on average under a graduated rewards system than under a single large reward attached to achieving a fixed standard (Kang, 1985). The English GCSE and Scottish "Lowers" Examinations are taken by 90 percent of 16 year olds. As recommended by Kang's model, they generate substantial and graduated rewards for learning what appears on the exams. Indeed, the rewards for doing particularly well on these external exams appear to be larger than those in the Netherlands. 11 Why then are English and Scottish 13 year olds assigned less homework than their American and Dutch counterparts? Why is their achievement in mathematics and science at age 13 significantly lower than in the Netherlands? As the time for the exam approaches in Britain, teacher demands and student effort increase substantially. At age 13, however, standards are low. Why do the backwash effects of the secondary school graduation exams extend further back in the pupil's schooling in the Netherlands and France than in Britain? Redoublement as Mastery Learning and an Incentive to Study One explanation for low British standards for 10 to 13 year olds is the lack of immediate rewards for doing well in classes. The external exams are three to six years away. Students are promoted to the next grade no matter how well they do in the previous grade. Those who fall behind inevitably slow the pace of the class in succeeding years. Primary school teachers do not feel accountable for how well students do on exams taken after four years of attendance at a secondary school. Secondary schools tend to be large, and the teachers who handle the first-year students lack a sense of accountability for performance on exams that are more than three years in the future. 11   In the United Kingdom, access to sixth form programs preparing for university, various vocational technical programs, and employment depend on a student's performance on the GCSE and Scottish lowers. Since A-level results are not available at the time initial university admission decisions are made, GCSE results influence which university and which field of study a student is admitted to. In the Netherlands the passing standard is high, but exceeding it by a large margin generates few rewards because the external exam results are only part of the student's overall grade, and access to the most popular university fields of study is on a first-come/first-served basis. In addition, there is much less variation in the quality and reputation of Dutch universities than of British universities.

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--> The situation is very different in France and the Netherlands. Pupils who fail more than one of their courses are generally required to redouble or repeat the grade. In 1990 Dutch redoublement rates were 7.5 percent per year in academic lower secondary schools, 5.1 percent per year in LBOs (junior secondary vocational education institution), the vocational lower secondary schools, and 13.3 percent per year in academic upper secondary schools (Central Bureau Voor De Statistiek, 1993). French rates of redoublement ranged from 6.8 and 11.0 percent per year during the four years of general lower secondary education, 12.1 to 18.4 percent per year in the three-year academic upper secondary schools, and 8.4 percent per year in the first two years of vocational upper secondary schools (Ministere de l'Education Nationale et de la Culture, 1992a). According to Lewis (1985), the "basic motivation is to help the child himself, to ensure that the pupil is sufficiently well prepared so that he may fully benefit from work at a more demanding level" (p. 5). For French teachers, redoublement is a form of mastery learning, a way of allowing some students extra time to achieve very demanding learning goals. Consequently, at age 19, 31.6 percent of French and 41.5 percent of Dutch youth are still in secondary school, compared to 3.4 percent in Britain and 5 percent in the United States. Redoublement is not something that is inflicted only on children from lower-class backgrounds. Often high aspirations can be achieved only by redoublement. The two Dutch professors with grown children with whom I have discussed this matter both had a child who was required to repeat a grade. In France selective upper secondary schools serving upper-middle-class communities have grade-repeating rates that are nearly as high as schools serving lower-income communities. For example, Lycee Charlemagne, an upper secondary school serving one of the richest neighborhoods in Paris, asked 14 percent of its entering class to repeat the year in 1992. For French and Dutch teenagers the threat of having to repeat a grade is a strong incentive to study. When I asked how the students who must redouble feel about it, I was told that they feel "dishonored." Since redoublement is a public event, parents also feel stigmatized, so they have an incentive to see that their child studies hard. In the Netherlands, students struggling with the fast-paced VWO or HAVO curricula are often given a choice: either repeat the year or transfer to a less demanding school. At the VWO I visited in the Netherlands, one-third of the entering class transfers to a HAVO or a less demanding VWO before the beginning of the third year. VWOs offer a fast-paced six-year university preparation program. Parents who want their child to enter a VWO are generally accommodated even when primary school teachers advise against it. The child's performance in school determines whether the parents' aspirations are realized or whether a transfer to a less demanding type of school is necessary. Being forced to transfer to an HAVO or MAVO does not foreclose university attendance. With good grades at the end of the five-year HAVO program, a student can transfer to a VWO, complete the final two years, and then enter a

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--> university. In addition, numerous vocationally oriented higher education options are open to HAVO and MAVO graduates and transfers to a university are feasible with good grades. While other routes to a university education are possible, pupils who choose the fast track in seventh grade, a VWO, do not want to be forced "to get off the train." Students in the Netherlands and France are formed into classes that take most subjects together and remain intact for two years and sometimes longer. Friendships tend to develop within this class. When I asked a Dutch student who, despite long hours of study, had been required to repeat a grade, why she had studied so hard, she responded, "I wanted to stay with my class!" Students do not want to have to repeat the grade because it threatens to sever the friendships they have made in class. Apparently, trying to keep up academically or accepting the academic goals of the school is viewed positively by peers because it is an expression of commitment to the group. Those who refuse to study are apparently seen as rejecting the group. In these two countries peer pressure seems to encourage lagging students to study, not discourage them as in the United States. 12 Choice of Specialization as Goal Setting All education systems give upper secondary students and their parents the right to select a specialty and the right to choose the rigor and difficulty level of either the school, the academic program, or specific courses. In France four academic lines—literature and languages (A), economics and social sciences (B), mathematics and physical sciences (C), and biology (D)—have roughly equal numbers of students and together account for most of the Baccalaureat Generales awarded. The mathematics-physics-chemistry line (C) is the most difficult, carries the greatest prestige, and gives one the best chance of being admitted to a preparatory school for one of the elite Grandes Ecoles. Admission to the C line within a lycee is generally highly competitive. The Netherlands has a similar though less elaborate system of specialization within general 12   One would not expect the study effort of primary school pupils to be influenced by the prospect of being retained. The hypothesis of significant threat-induced incentive effects applies to students in small secondary schools or large schools organized into small classes that take most subjects together and remain intact from year to year. Since most American students are in large high schools where peer relationships are not tied to taking particular courses, failing two courses does not sever peer relationships the way it does in Europe. Consequently, one would not expect the threat of failing courses to be the powerful motivator that it appears to be in France and the Netherlands. The argument against retention is that it effectively lowers the learning goals being set for the student in subsequent years. Within-school cross-sectional studies have established that subsequent learning is reduced by retention (Holmes, 1989). It also, apparently, increases the risk of dropping out before graduation (Grissom and Shepard, 1989). Consequently, it is not clear that higher retention rates would increase achievement levels at a given age in the United States

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--> upper secondary education. As in France, the math-science line has the reputation of being the most difficult. In France and the Netherlands, picking one's school and specialization effectively sets a specific learning goal. The prevalence of grade repeating and transfers to easier schools suggests that most students and parents initially set very difficult goals. The goal-setting literature tells us that working toward a specific and difficult goal leads to greater effort and performance than being told to ''do your best" or setting easy goals. Thus, the continental European pattern of setting highly ambitious goals maximizes average achievement levels even while it increases the number of students who fail to achieve the goal they initially set. Why do French and Dutch parents select secondary schools and programs that are so challenging that many must repeat grades to keep up or transfer into easier programs and schools? There are three reasons. First, the goal selected is visible to parents, relatives, and neighbors and going for difficult goals confers prestige. Second, achieving difficult learning goals is rewarded by admission to preferred universities and fields of study and access to better jobs. Finally, the choice is generally made by the parent, not the child. Parents are better informed about the long-term benefits of achieving difficult goals, and their own prestige rises when their child attends a selective school or pursues a difficult line of study. Parents may view the extra studying necessary in a rigorous specialty as a plus not a minus. In America, by contrast, selecting difficult goals generates much weaker rewards. Everyone in the neighborhood attends the same school. Students select individual courses, not programs or schools. Subjects are taught at vastly different levels, but the rigor of the courses is not well signaled to parents, relatives, neighbors, employers, or colleges. Admissions staff at selective colleges learn how to read the transcripts of high schools they recruit from and evaluate grades in that light. However, many colleges have, historically, not factored the rigor of high school courses into their admissions decisions. Almost no employers do. Consequently, most students not aspiring to attend a selective college avoid rigorous courses and demanding teachers. As one student put it: My counselor wanted me to take Regents history and I did for a while. But it was pretty hard and the teacher moved fast. I switched to the other history and I'm getting better grades. So my average will be better for college. Unless you are going to a college in the state, it doesn't really matter whether you get a Regent's diploma. (Ward, 1994, p. 1) Another student who had avoided the harder courses even though she was sure she could do the work explained her decision with, "Why should I do it [the extra work] if I don't have to?" (Ward, 1994). Some students, the minority who want to attend selective colleges, sign up for demanding courses. Most students choose courses that have the reputation of being fun and not requiring much work to get a good grade. Teachers know this and adjust their style of teaching, assignments, and grading standards with an eye to maintaining enrollment levels.

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--> Summary and Lessons In the Netherlands and France, learning in secondary school is assessed by difficult subject-specific external examinations, and doing well on the exams generates large rewards for the student. The reputations of teachers and schools are affected by student achievement on the exams. Parents base their selection of the upper secondary school their child will attend and which academic or vocational program he or she will pursue, in part, on these reputations. Parents tend to set difficult goals for their children, so most students are placed in programs of study that for them are very demanding. Students are grouped into classes that take all their subjects together, remain intact for two years or more, and become the student's circle of friends. Students who are not progressing at the rate necessary to succeed on the external exam are asked to either switch to an easier curriculum or repeat the year. Students do not want to be forced to sever the friendships they have developed in their class, so they are strongly motivated to keep up with their studies. In the United States, students are ranked relative to their classmates, not assessed against an external criterion, so they pressure each other not to study. Teachers are expected to pass almost all students, and if the class fails to study hard, the teacher is forced to lower the passing standard of the course. Subjects are taught at vastly different levels, but the rigor of the courses and the learning achievements that result are not well signaled to parents, neighbors, colleges, or employers, so rewards for setting difficult goals are small. The French and Dutch models of secondary education combine in one system many of the most drastic reforms that have been proposed for the United States: Externally set subject-specific achievement exams taken by almost all secondary school graduates that supplement not displace teacher assessments of students. Grades on the external exams need to matter to the student, but they need not be the sole or primary determinant of desired outcomes, such as college admissions and access to the best jobs. Parental choice of upper secondary school and special field of study with money following students. Mastery learning with teeth. Those who fail two subjects in secondary school are required to either repeat the grade or transfer to a less demanding school or program. Secondary teaching is available only to those who demonstrate very high levels of competence in their subject. High entry standards are sustained by offering high wages and good working conditions. High standards for admission to the next stage of education. This system of incentives and school organization appears to work for France and the Netherlands. A similar system, lacking only the externally set exit

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--> exams, also works well in undergraduate education in the United States. At the secondary level, however, such reforms are controversial. Successful implementation of any one of these reforms would be a major political undertaking. Implementation of the whole package of reforms is not politically feasible at present. Yet the analysis here suggests that in Britain when just two elements of the package—mastery learning with teeth and attractive teacher salaries—were missing and a third element—school choice—was only recently introduced, achievement levels were substantially lower than in the Netherlands and France. Consequently, from a practical policy point of view, the message is not very positive. School climates and education standards do not change rapidly and easily. France and the Netherlands have not discovered a cheap and painless route to higher achievement. The important lesson is that incentives, both their strength and structure, matter. There are less controversial ways of increasing the rewards for academic achievement, so the analysis here should not cause American reformers to despair. Reforms tailored to the American context have a greater chance of successful implementation than any effort to replicate the French or Dutch systems of secondary education. President Clinton, former President Bush, and most of the nation's governors support the development of a system of European-style achievement examinations for upper secondary students. Everyone recognizes, however, that the decentralized character of American education and the controversial nature of specifying and assessing what young people should know and be able to do requires a slow, consensus-building approach. Consequently, it will probably be decades before external examinations in specific subjects are widespread in the United States. School cultures are resistant to change, so significant improvements in achievement will take even longer. Lessons for Economic Analysis of Education Issues Much of the economic research on elementary and secondary education has employed a production function paradigm. Conventionally, test scores measuring academic achievement are the outputs, teachers are the labor input, and students are goods in process. Even though I have written papers in this tradition myself, I am concerned that many of the inputs that conventionally appear on the right in these models are really endogenous and that severely biased findings may result. This paper points in different directions. Schools are viewed as worker-managed organizations producing multiple products. In the classroom/school team production unit, students are as much workers as the teachers. Students are also consumers who choose which goals or outputs to focus on and how much effort to put into each goal. The behavior of each of the system's actors—teachers, administrators, school board, students, and parents—depends on the

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--> incentives facing them. The incentives, in turn, depend on the cost and reliability of the signals that are generated about the various outputs of the system. The discussion above demonstrates the relevance of agency theory, game theory, signaling theory, and other elements of economic theory to the understanding of how schools and students operate, but it only scratches the surface. Deeper plowing of these furrows will yield a large crop of new insights into education and education policy. References Adler, M., and G. M. Raab. 1988. "Exit choice and loyalty: the impact of parental choice on admissions to secondary schools in Edinburgh and Dundee." Journal of Educational Policy 3:155–179. Bishop, J. 1990. "Incentives to study: why American high school students compare so poorly to their counterparts overseas." Pp. 17–51 in Research in Labor Economics, vol. 11, D. Crawford and L. Bassi, eds. Greenwich, Conn.: JAI Press. Bishop, J. 1993. "The Impact of Academic Competencies on Wages, Unemployment and Job Performance." Carnegie/Rochester Forum, B. Malkiel, ed. Bradley, A. 1993. "Not making the grade: teacher firing spurs debate over standards and expectations for students." Education Week, Sept. 13, Pp. 1, 19–21. Central Bureau Voor De Statistiek. 1993. Education Statistics. The Hague, Netherlands: Central Bureau Voor De Statistiek. Cooper, H. M. 1989. Homework. White Plains, N.Y.: Longman. Costrell, R. 1994a. "A simple model of educational standards." The American Economic Review 84(4):956–971. Costrell, R. 1994b. "Centralized vs. decentralized educational standards under pooling." Department of Economics, University of Massachusetts, Amherst. Ehrenberg, R., and D. Brewer. 1993. Did teacher's race and verbal ability matter in the 1960's? Coleman revisited. School of Industrial and Labor Relations, Cornell University, Ithaca, N.Y. Elley, W. 1992. How in the World Do Students Read? The Hague, The Netherlands: International Association for the Evaluation of Educational Achievement. Ferguson, R. 1990. Racial Patterns in How School and Teacher Quality Affect Achievement and Earnings. Kennedy School of Government, Harvard University, Cambridge, Mass. Frederick, W. C. 1977. "The use of classroom time in high schools above or below the median reading score." Urban Education 11(4):459–464. Frederick, W., H. Walberg, and S. Rasher. 1979. "Time, teacher comments, and achievement in urban high schools." Journal of Educational Research 73(2):63–65. Gamoran, A., and M. Barends. 1987. "The effects of stratification in secondary schools: synthesis of survey and ethnographic research." Review of Education Research 57:415–435. Goodlad, J. 1983. A Place Called School. New York: McGraw-Hill. Government Statistical Service. 1993. Education Statistics for the United Kingdom: 1992. London: Her Majesty's Stationery Office. Graham, A., and T. Husted. 1993. "Understanding state variation in SAT scores." Economics of Education 12(3):197–202. Grissom, J. B., and L. A. Shepard. 1989. "Repeating and dropping out of school." Pp. 34–63 in Flunking Grades: Research and Policies on Retention, L. Shepard and M. L. Smith, eds. New York: Falmer Press. Hanushek, E. A. 1971. "Teacher characteristics and gains in student achievement: estimation using micro-data." American Economic Review 61(2):280–288.

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--> Hollenbeck, K., and B. Smith. 1984. The Influence of Applicants' Education and Skills on Employability Assessments by Employers. National Center for Research in Vocational Education, Ohio State University, Columbus. Holmes, C. T. 1989. "Grade level retention effects: a meta-analysis of research studies." Pp. 16–33 in Flunking Grades, L. Shepard and M. L. Smith, eds. New York: The Falmer Press. International Assessment of Educational Progress. 1992a. Learning Science. Princeton, N.J.: Educational Testing Service. International Assessment of Educational Progress. 1992b. Learning Mathematics. Princeton, N.J.: Educational Testing Service. Kang, S. 1985. "A formal model of school reward systems." In Incentives, Learning and Employability, J. Bishop, ed. Columbus, Ohio: National Center for Research in Vocational Education. Kominski, R., and R. Sutterlin. 1992. What's Its Worth? Educational Background and Economic Status: Spring 1990. U.S. Bureau of the Census, Current Population Reports, P-70, No. 32. Kulik, J., and C. L. Kulik. 1984. "Effects of accelerated instruction on students." Review of Educational Research 54(3):409–425. Lewis, H. D. 1985. The French Education System. New York: St. Martin's Press. Locke, E. 1968. "Toward a theory of task motivation and incentives." Organizational Behavior and Human Performance 3:157–189. Longitudinal Survey of American Youth. 1989. Data File User's Manual. Dekalb: Public Opinion Laboratory. Lundberg, I., and P. Linnakyla. 1993. Teaching Reading Around the World. The Hague: International Association for the Evaluation of Educational Achievement. Madeus, G., and T. Kelleghan. 1991. Student examination systems in the European Community: lessons for the U. S. Report to the Office of Technology Assessment. McKnight, C. C., et al. 1987. The Underachieving Curriculum: Assessing US School Mathematics from an International Perspective. Champaign, Ill.: Stipes Publishing Co. Ministere de l'Education Nationale et de la Culture. 1992a. Reperes and References Statistiques sur les enseignements et la formation . Paris: Ministere de l'Education Nationale et de la Culture. Ministere de l'Education Nationale et de la Culture. 1992b. L'Etat de L'Ecole. Paris: Ministere de l'Education Nationale et de la Culture. Monk, D. 1992. Subject Area Preparation of Secondary Mathematics and Science Teachers and Student Achievement. Department of Education, Cornell University, Ithaca, N.Y. National Center for Educational Statistics. 1992. The Digest of Education Statistics: 1992. Washington, D.C.: U.S. Department of Education. National Center for Educational Statistics. 1993. The Condition of Education: 1993, vol. 1. Washington, D.C.: U.S. Department of Education. National Center for Educational Statistics. 1994. Occupational and Educational Outcomes of Recent College Graduates 1 Year After Graduation: 1991. NCES 93–162. Washington, D.C.: U.S. Department of Education. Nelson, H., and T. O'Brien. 1993. How U.S. Teachers Measure Up Internationally: A Comparative Study of Teacher Pay, Training, and Conditions of Service . Washington, D.C.: American Federation of Teachers. Nijhof, W. J., and J. N. Streumer. 1988. "The Netherlands." In The Encyclopedia of Comparative Education and National Systems of Education . Oxford: Pergamon Press. O'Leary, J. 1993. "Universities reduce A-level score needed for degree courses." The Times, July 12. Organization of Economic Co-operation and Development. 1989. Employment Outlook. Paris: OECD. Organization of Economic Co-operation and Development. 1992. Education at a Glance. Paris: OECD. Organization of Economic Co-operation and Development. 1993. Education at a Glance. Paris: OECD. Peter D. Hart Research Associates. 1994. Survey of Teachers Represented by the American Federation of Teachers. Postlethwaite, T. N., and D. E. Wiley. 1992. Science Achievement in Twenty-three Countries. London: Pergamon Press.

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