Tackling the Endogeneity Problem when Estimating the Relationship Between School Spending and Pupil Outcomes
Department for Education and Skills, London, (2002)Abstract
The correct identification of the impact of spending on pupil attainment is essential for several reasons. A sound understanding of this link can help to improve the effectiveness with which resources are allocated to LEAs and schools. A more accurate estimate of the relationship between spending and feasible pupil attainment can also help to improve the effectiveness with which resources are deployed within schools. Virtually all of the studies that have estimated the impact of expenditure on pupil outcomes have been based on a single relationship called the educational production function. This shows the level of pupil attainment that can be achieved given the quantity and quality of resource inputs and the characteristics of schools and pupils. This research aims to develop a more sophisticated model of the educational system that takes account of all the factors that influence educational attainment; and look at how these relationships may be modelled using regression approaches. It also aims to look at the impact of ignoring these inter-relationships when regression approaches are applied and to develop a model that can be applied to existing DfES data to produce quantitative estimates of the importance of the different factors that determine educational achievements.