How much does financing matter for education? The Education Commission argued that to achieve access and quality education “will require total spending on education to rise steadily from $1.2 trillion per year today to $3 trillion by 2030 (in constant prices) across all low- and middle-income countries.” At the same time, the World Bank’s World Development Report 2004 showed little correlation between spending and access to school, and the World Development Report 2018 (for which I was on the team) shows a similarly weak correlation between spending and learning outcomes. (Vegas and Coffin, using a different econometric specification, do find a correlation between spending and learning outcomes up to US$8,000 per student annually.)
Sources: Left-hand figure is from WDR 2004. Right-hand figure is from WDR 2018.
And yet, correlation is not causation (or in this case, a lack of correlation is not necessarily a lack of causation)! Last month, Kirabo Jackson put out a review paper on this topic: Does School Spending Matter? The New Literature on an Old Question. This draws on a new wave of evidence from the United States’ experience, moving beyond correlations to efforts to measure the causal impact of spending changes. (Jackson and various co-authors have contributed significantly to this literature.) I’ll summarize his findings and then discuss what we might expect to be the same or different in low- or middle-income contexts.