November 23, 2014

Mail Bag: Why Do The Affluent Refuse to Help Poor School Districts When It Is In Their Best Long-Term Interest?

I woke up at 3:30 a.m. today and, sitting at my kitchen counter with my first pot of coffee brewing, though I’d take a crack at one of the more detailed questions.

Joshua,

Mail Bag Joshua Kennon PenI love the site.  I have a question about morality and money and I would appreciate your thoughts if you have the time.

When someone becomes successful and makes a lot of money they invest more in their kids’ education.  This isn’t too surprising but what does surprise me is they become unwilling to look beyond their own school district and appear to actively work to keep out the poor.  How can they accept this or live with themselves especially if they were raised without money themselves?  What happens that causes them to wake up one day and say, “I got mine now your kids can go screw themselves?”  What am I missing?

Please don’t publish my name.

R.M.

When you talk about education funding, particularly property taxes, “the rich” really refers to the top 20% or so in household income.  As of 2010, the last year the data was available, you’re basically talking about any household with a median pre-tax income of $112,800 per annum, or $9,400 per month.  To understand the motivation of the behavior you describe, you need to look at the demographic profile of the people you’re trying to analyze.

Households falling into that upper quintile are overwhelmingly made up of married, highly educated, relatively conservative people who have at least one child.  The men and women in these households emphasize values that are much different than those held by the general population.  They are far less likely to smoke, drink, gamble, or be obese.  They are much more likely to read to their kids at night, pick a neighborhood based on the quality of education in the local school district, spend time reading or listening to non-fiction in audio book format to absorb new skills, and constantly improve themselves by picking up a wide range of hobbies or activities.  In a very real sense, it is because the people behave like this they end up in the upper quintile, not the other way around (look at lottery winners – despite their sudden influx of capital, it doesn’t change their habits so they usually end up back where they started).  By and large, the top 20% of income were the folks who did well in college, went on to become dentists, doctors, accountants, managers, chemists, geologists, or professors; who made sure to research things like the optimal nutrition for their newborn; to read the fine print on their 401(k) enrollment papers.  They were the dependable, smart kids in class who may not have been particularly popular or glorious but who end up winning the race of life.

When people in this demographic group look for a house, they have demonstrated a remarkably consistent willingness to pay premium prices for quality homes in neighborhoods with good school districts, and tolerate relatively high property tax assessment rates to support those school districts.  This makes sense given they, collectively, put a higher emphasis on the value of education than the general population.  They are more likely to view it as an investment rather than an expense.  The money they sacrifice to vote their values is money they could have used to take vacations, buy new clothing, purchase a new car, or give to their local church or synagogue, but they keep shipping it off to the school board so their local elementary, middle, and high schools have shiny facilities, good teachers, and plenty of extracurricular activities.

The Three Conditions That Lead to the Outcome You Are Describing

With that in mind, it’s easy to see how three conditions and mental models mixed together lead to the outcome you lament:

  1. The legal system in the United States makes it so that school districts are overwhelmingly local.  Individual schools, in individual communities, vary greatly by approach, resources, and philosophy so that individual families in that community can create an educational system that appeals to their views.  For example, during my childhood when I lived in a farm town, the elementary school students were taught about farming techniques as there was a good chance a large percentage of the graduates would someday return to run family farms.  I doubt this was going on in New York City.
  2. The school system in the United States is overwhelmingly funded with property taxes assessed against residences.  How much money is available for your school depends on how much property tax your school district can raise.
  3. Individuals like being around other people similar to them.  It’s called assortative self-selection and it’s everywhere.  When shopping for a place to live, most people have demonstrated that they value being around people they understand, with whom they fit in, with the same cultural values, speech patterns, educational backgrounds, and life ambitions they have.  Exceptions exist, of course, but for most this is a demonstrably consistent behavioral pattern that is just as much a part of human evolution as any other trait that naturally arises.  It’s the entire reason business models like “Senior Living Communities” work so well or why strangers of different nationalities waiting on the same flight tend to congregate around each other at international airports despite having never met.  The upper 20% of income in society tends to want to be around other college educated, relatively conservative, family-oriented, education-valuing people, meaning they tend to be around other members of the top 20% as they share common bonds.

It isn’t difficult to do the math.  With the affluent tending to congregate around themselves, and local towns being funded by local property taxes, a wealthy community with relatively fewer students, and far higher assessed values, combined with a population that holds education in high esteem and is willing to pay a higher rate in general on those higher value properties, leads to a situation where per capita resources for the school districts are much higher than a school in a working class neighborhood.

In other words, while there is sometimes intent, I think more often than not the this is a naturally occurring by-product of the human condition and the incentive system of parents investing the resources at their disposal into the future of their children.  It’s not some grand Machiavellian scheme, it’s people being people.

Why the Affluent Tend to Fight Property Tax Redistribution to Poorer Districts

Given the emphasis the affluent put on education, and their active decision to seek out neighborhoods where the school districts are well-funded and well-run, any time a government bureaucrat comes in and demands they take money they are investing in their children and invest it in other children, they don’t take it well.  It’s not that they don’t care about the poor students – in fact, they are probably very sympathetic to their plight – it’s that they care more about their own kids and you’re dealing with a zero-sum game.  Every $1 taken from the local schools’ art supplies, tennis courts, and textbooks is gone forever.  It’s a real disutility, made even more real by the fact it’s your money they are taking.  It’s one thing to pay taxes and drive by the building, seeing where you cash goes.  It’s another for it to be sent off to an area you never visit and that is nothing more than an abstract idea.

I’m not saying it is necessarily right but millions of years of evolution have resulted in this parental bond causing people to want to give their offspring the best chance at a good life they can.  That’s why trying to fight over property tax dollars is a losing game.  If it ever got bad enough, the rich would incorporate their own towns, lower property taxes to nothing, and setup private schools with $20,000+ per year tuition.  The reformers have no chance of winning under the current system.

Lake Forest IL High School Public

This is one of the best public high schools in America, in a very rich town called Lake Forest, Illinois. The school has a water polo team for heaven’s sake. The parents who live in this district are not building this to try to show off for the poor, they’re doing it because they value their children’s education as it, statistically, played a very important role in their own success. If the state or Federal government tried to come in and make them redistribute their wealth to poorer school districts, I think it’s a safe bet to say most of the families would leave and create an alternative, private system to run right alongside the public school.  The wealthier you are, the more you are interested in pouring money into the education of your children.  Other peoples’ children simply don’t matter as much, as horrible as that sound, just like most families spend more on their own kids at Christmas than they do the children of strangers.  It’s human nature.  (To learn more about the building and see more pictures, visit Perkins+Will.)

If I wanted to change it, how would I go about it?  After looking at it for years, the only system I’ve seen that would have any chance of success would be following in Finland’s footsteps and forcing the rich and the poor to attend class together, banning all private schools and integrating districts.  Why?  It solves a mathematical problem – a mental model you should all know from economics and insurance – called adverse selection that causes school competition to fail under a traditional capitalism model with the most capable opting out entirely.  When the children of the rich are in the same boat as everyone else, human nature kicks in and these better educated, more affluent parents begin to invest in the local school for the benefit of their kid, but in a way that happens to provide lots of benefits to poor kids, too.

Would I do it if I had the power?  No.  I can’t get around the terrifying political implications of nationalizing the school system and making opt-out impossible.  I’ve read enough history to know what happens when you give a central government the power to indoctrinate entire generations of students and take away any countermeasures.  Perhaps I spent too much time in case studies of the 20th century but it rarely ends well for a society as large as the United States.  (It could work in a nation such as Finland, where you’re dealing with only 5.4 million people in a relatively small geographic area.)

Some integrated districts like this do exist naturally, though they are often geographic quirks.  Aaron and I attended one in high school.  There were some poorer areas of town, but the school itself was funded with the higher property tax dollars of the richer areas where the doctors, attorneys, and business owners lived.  The other high schools constantly complained about how our school “got” more stuff, and it probably did as it had tennis courts, multiple computer labs, an attached water park that was being constructed toward the end of my time there, and air conditioned annexes.  The only rational course of action would have been to move to the district.  Complaining about it wouldn’t do any good.

Central High School

The high school Aaron and I attended was an example of a naturally mixed economic district where the higher property values created a better education outcome for the poor and middle class who were in the same geographic area.  I used to skip class and sit on the wings of the front steps steps to read in the middle of the day (back before the Columbine shootings when they began locking everyone down and treating high school students like children).  All four of my parents’ kids graduated from here and I’d be more than happy to send my own children there when we become parents.

School Funding Really Doesn’t Solve the Problem

What makes this so interesting from an economic perspective is that school funding is really somewhat meaningless.  Doubling the per student dollars available does not double test scores.  There is a large body of academic evidence that examine the factors that determine how well a child does.  As the economists behind Freakonomics paraphrased it, it’s not so much the fact a parent is spending large amounts of money on books about parenting, designer strollers, and consumer research for car seat reviews, it’s that the type of parent who would do something like that is more likely to be actively involved in his or her child’s life, taking an interest, guiding them, supporting them, and giving them a head start.

In fact, there is a growing body of evidence that I find somewhat compelling showing that a middle class, two-parent, intact household where the children were wanted and cared for do better than a single parent, rich household or a household in which the rich parents are always absent due to work or neglect.  In other words, the researchers had gotten it wrong: It wasn’t income that correlated with better child outcomes, it was the behavior of people who happened to generate a high income that tended to correlate with better child outcomes.

If money alone solved the education problem, the Kansas City school district would be the Harvard of public schools.  Instead, it’s a laughingstock.  Back in 1985, a Federal judge ordered the city to spend a staggering $2 billion to create one of the highest funded per capita districts in the world (PDF).  Yet, decades later, the standards are so bad that the district lost accreditation and now you have a bunch of underperforming students with Olympic swimming pools and top-of-the-line facilities.  Throwing money at the problem doesn’t do any good because money can’t make up for the one variable that matters the most: The level of investment by the parents in terms of time.

How is a parent to behave in the meantime?  Realize that society won’t fix it for you and do whatever you can to move to a good school district, while actively participating in your own child’s education.  It may be difficult, if not impossible, but there is simply no other guaranteed way to make sure your kids have a good foundation.  The irony, of course, being that a parent willing to sacrifice everything to go to a better school district is likely going to end up with better kids, anyway, so the mere demonstration of this willingness says more about how much energy you’re putting into your children, which bodes well for them.  It’s a bit of a chicken-or-the-egg problem.

  • Anon

    Here’s a good summary. The reason the affluent aren’t lining up to throw money at poor school districts is because ~70% of the money will go to waste or have no impact.

    The money will be wasted on trying to help kids that are beyond help, wasted on trying to change things that are not bad parents, and wasted on extravagant expenses (iPads, gym, pool, etc.).

    • http://www.joshuakennon.com/ Joshua Kennon

      Kansas City certainly proved that point. The problem is no one wants to admit that some kids are beyond the help that money alone can fix because it will require some very uncomfortable changes and a societal shift in terms of education structure, as well as an admission that the civilization has let them down. In a lot of ways, you can’t help the ones who are already in high school because you need to be focusing on the earlier years, like the Harlem Children’s Zone did in New York with its amazing work (I wish they’d take over the public district in Kansas City; give them total carte blanche to implement whatever they want to try). People want to at least pretend they are trying to do something. It makes them feel better. It’s action bias.

      The sad fact is, teachers can’t make up for in a few hours what a child lacks in his or her home life. It’s a given fact, based on cold, hard, irrefutable numbers that if you have one parent, are living with an alcoholic, don’t have food in your belly, don’t have parents who can help you with your algebra homework … you’re just at an enormous disadvantage that money alone cannot fix. It doesn’t mean you can’t become wildly successful – Barack Obama ended up in the White House, Jared Leto just accepted his Academy Awards – it just means it’s going to be a heck of a lot harder than it otherwise would have been.

      The New York Times did a good job examining the economic model back in 2012 when it published an article called Two Classes in America, Divided by ‘I Do'” illustrating the mathematics of intact households, which provide a sort of demographic “cheat code” on all sorts of life outcomes. It’s predicative ability is astounding. You’ll live longer, do better in your career, be less likely to use drugs, be less likely to go to prison, be more likely to avoid government benefits, be more likely to avoid single parenthood yourself, be less likely to smoke, have higher grades, be more likely to graduate from high school, be more likely to get a college degree, etc. It’s the closest thing to a panacea as I’ve ever found in the economic field but nobody wants to recommend it because nobody wants to make single parents, who are doing the best they can and are often great people, feel bad. It’s a sort of Catch 22.

      The education problem cannot be solved without the marriage problem in the lower and lower-middle classes being solved. The disparity between out of wedlock births between that group and the upper classes has reached a tipping point where the gaps in things like income inequality are only going to get larger.

  • Lord Squidworth

    Schools have become to bureaucratic. Throwing money at them solves nothing, they need to be trimmed down and returned to being educators, and not just prepping kids for this test or that test.

    The high school I graduated from in 2007 has fewer students, but has hired more administration. Administration got their 3% raises, the teachers got offered 0.5%.

    The college I graduated from cut student services by $500k, hired more administration, administration had their raises, professors had been without a contract for a couple years.

  • innerscorecard

    The entire educational system is an industrial revolution era relic. This includes the Ivy Leagues and other elite schools, which I am well familiar with. In all of these institutions there is good, but not compared to the sheer amount of waste.

    • TheLonelyHumanist

      I’ll agree to that.

  • Richard Garand

    It seems like the specific school or district isn’t the most important variable (except at the extremes). Maybe the type of parents who would put in the effort to live in the best-funded school districts could re-focus their energy towards doing more education themselves.

  • Scott McCarthy

    I’m a pretty free-market kinda guy, but speaking as someone who attended a public middle school where (literally – I couldn’t make this stuff up) the water coming out of the drinking fountains was not potable, and the playground was radioactive, and who went to a public high school where about 15% of the kids in my freshman class were also in my graduating class … I would feel personally offended if any of my tax dollars ever go to fund a school water polo team. Regardless of whether I had a kid there or not.

    (and btw – those schools were both in urban Massachusetts, not Cambodia.)

    • Lord Squidworth

      My middle school was nicknamed the duck tape school by the students, for obvious reasons…

      • Gilvus

        Sounds like you went to an aerospace engineering school, then :p

        If NASA had a patron deity, it would be a roll of duct tape.

    • Gilvus

      A radioactive playground?! How elevated above background radiation are we talking about here? Bananas are radioactive enough to trigger anti-terrorism alerts at security checkpoints (you’d need a lot of bananas), but we don’t generally consider them to be dangerous.

      • Scott McCarthy

        Enough that it was fenced off for all 3 of my years there. Our “playground” was a delivery driveway and about 2 feet of grass between the driveway and fence.

        • Gilvus

          Yeah, great science project. As a bonus, I’m sure you’ve always wanted a kid with eleven toes on each kidney too.

          Seriously though – remediation is a surprisingly expensive prospect, even for tiny properties. Every step in the process is heavily regulated, which drives up labor costs and necessitates a lot of third-party services. Then there’s risk premiums, insurance, and unions. And the presence of radionuclides means you have to comply with Homeland Security and NRC standards in addition to the standard environmental agencies.

          If you’re a municipal bean counter, you’d see the choice as:
          A) paying the annual salaries of multiple city workers,
          B) remediating another site which could then be sold for a lump sum and taxed for a revenue stream, or
          C) restoring a playground for a bunch of kids (who have no voting power) and who’d rather be indoors on Facebook or playing video games anyway.

    • TheLonelyHumanist

      We had trash cans everywhere to catch the rain as it came through the roof.

  • Eric

    I am a firm believer that teachers have been stripped away with the ability to properly discipline their students. Kids truly don’t have any consequences for their actions and behavior. Now, some kids will have inherant consequences because their parents actually care and are involved with their kids. The major issue is when the Parents could care if their kids are acting up in class. When parents do that, the teacher has even less authority.

    You can throw money at schools all you want. It doesn’t matter if you have the most advanced technologies, counselors, teachers and so forth. If a kid knows they don’t have any consequences for their actions, it is hard for learning to ever take place. It makes it hard for a teacher to teach.

    Can you imagine coaching a baseball team and the First Baseman just stands their with his arms crossed and never attempts to make a play? Maybe you can imagine that, but can you imagine not being able to take him out of the game and allowing him to continue to stand their with his arms crossed? Again, there is no consequences and it continues to get worse.

    • TheLonelyHumanist

      What would be an appropriate discipline?

  • Andrew

    There is another factor compounding this issue which further complicates the matter and makes it practically untenable to change. The fact is, because of genetic issues heavily weighing predisposition, interest, behavior, and of course intelligence, the children of the parents *who tend to do better* because they have heavily involved, caring parents, would *tend to do better* even if they came from a broken household versus other children from broken households. It sometimes borders politically incorrect to discuss, because it certainly doesn’t make for good political talk – but twin studies show that genetics are extremely determinate in adult behavior.

    • http://www.joshuakennon.com/ Joshua Kennon

      I hesitated to even mention this for a myriad of reasons, but there is no doubt it’s there in the data. Everyone who looks at this sort of thing sees it, there is no refuting it, yet to avoid the discussion of eugenics through natural selection, nobody brings it up outside of closed discussions with trusted colleagues. It’s Mokita (a word in the Kivila language, spoken in Papua New Guinea, which means, “the truth we all know but agree not to talk about.”)

      • Anon

        Now I know where the Mokita blog post came from!

        Thanks, Andrew, for prompting Joshua to write it!

  • Jeb

    I appreciated the link to the KCPS write up. At first I was very opposed to a single judge over-ruling the will of the people but realize this is where the checks & balances we learned in 5th grade government work. Whether it was right or wrong, he made a ruling and did spend much effort and good intentions at following through. 30 years later, it appears that the district and state are still struggling with the effect. Clearly they failed miserably in every measure so I will write no more on that.

    The investment-in-a-best-long-term-interest premise is where I have a problem on a purely business sense. I would be extremely skeptical to invest in a business where the officers, board or employees could never be fired for incompetence or wrong-doing, such as with tenured teachers and a teachers union. Where the employees, in this case the teachers, are not held accountable nor merited on results. Until these practices are ended, I will never vote for any school referendums, property tax increases to fund schools, or anything similar in nature. It is NOT a good investment and is throwing money away.

  • TheLonelyHumanist

    Yes, yes, a thousand times yes. (Knowledge Master c1996, anyone?) Education funding should not be so local. But opting out is a basic act of freedom. I have lived on unemployment and foodstamps while I came to this very site to learn more, to understand my mistakes, and to see where I could do better. Meanwhile I was waking up at 6 and driving a good distance to take my kids to a charter school. Today I own the business that hired me then. You can put me anywhere, in any economy, in any state of health, and eventually (as long as the information is available to me [thank you again, Joshua]) I will find my way through. Knowing that, what do think my children will be like?

    • Anon

      Unfortunately, that’s not enough information for anyone to form a belief about your children’s future.

      (For purposes of guesstimating success, you’d have to consider looks/appearance, income/wealth, location, personality, etc.)

  • JJ

    So the real question is… How can parents from affluent districts that care about their own kids… how can these parents be encouraged to donate some of their time (not money) to struggling kids in poorer districts?

  • alphabetmom

    Even more than money provided to the local schools through property taxes above state educational spending, there are also the PTA and other schools foundations who actively raise money for education expenses from field trips to physical renovation projects to salaries; this can be seen in NYC public schools – all of which are theoretically under the same governing city agency – which were able to retain teachers and low class sizes in wealthy areas of the city while poorer areas without as much additional fundraising access lost programs and staff. Here in my little corner of “Hipsturbia”, we have four fundraising organizations – the PTA, a schools foundation (who recently provided all 7th and 9th graders in the district with Chromebooks and will continue to do so in coming years), a group which raises money to provide grants to lower income residents in the district so kids can participate in all school and local activites (like paying for music instrument rental, overnight school trip fees, town summer camp enrollment, etc) and an advocacy group for parents of Special Education students. Even those who no longer have children in the schools contribute as much to be “part of the community” -the fundraisers are hugely popular social events – as to maintain the quality of the schools so their property values continue to increase. It is a big,selling point in the local real estate market that in an era of school budget cuts our schools added Spanish language classes from second grade on and are bringing in more advanced programs for the middle school. But these extra programs are not paid for by property taxes but by these “foundations”, giving my kids and their friends additional advantages above the ones they already have in terms of family stability, housing stability, food stability, etc. And we are far from the wealthiest district in our area – nearby districts spend loads more than we do on per pupil funding even before the foundations get involved and have ammenities we can only dream of along with all the inherent advantages that come with them. So the local parents and property owners agree to higher taxes and increase their fundraising to continue to improve the local schools…leaving other schools behind.

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