Markets network member Eric Hanushek is the Paul and Jean Hanna Senior Fellow at the Hoover Institution of Stanford University. A leader in the development of economic analysis of educational issues, his work on efficiency, resource usage, and economic outcomes of schools has frequently entered into the design of both national and international educational policy. Hanushek introduced the idea of measuring teacher quality through the growth in student achievement that forms the basis for the development of value-added measures for teachers and schools. He is chairman of the Executive Committee for the Texas Schools Project at the University of Texas at Dallas, a research associate of the National Bureau of Economic Research, the area coordinator for Economics of Education of the CESifo Research Network, and a research fellow of the IZA Institute of Labor Economics.

Describe your area of study and how it relates to current policy discussions surrounding inequality.

The main thrust of my work is the investigation of the economics of education. This includes both the economic impact of education for individuals and for nations and how economic policy relates to improved education.

While there is a long history of research involving education, generally subsumed under the title “human capital,” the modern era of such research can be traced to Gary Becker and Jacob Mincer. They expanded thought on this topic in theoretical and in empirical directions. With Mincer’s analysis of how human capital could reasonably be measured by school attainment, a wide range of empirical studies have developed.

Unfortunately, the Mincer work was probably too successful in that human capital became virtually synonymous with years of schooling. The problem is three-fold. First, years of schooling is a very crude measure of the learning and skills of an individual that ignores any issues of school quality. Second, we have known for a long time that individual skills and achievement are strongly influenced by other factors including families, peers, and neighborhoods – factors that are likely to be highly correlated with attainment and thus will affect any policy conclusions. Third, by ignoring quality concerns the research is removed from most of the current policy debates.

My research has focused on cognitive skills as a measure of human capital. It turns out that this is an extraordinarily useful measure of national skills and can explain three-quarters of the variation in long run growth rates across countries.[1]  (In contrast, years of schooling explains one-quarter of the variation and is insignificant once achievement of the population is measured). Cognitive skills also explain considerable of the variation in individual incomes, and the variation in returns to cognitive skills across countries provides useful insights into income inequality and the role of national institutions.[2]

The international evidence on cognitive skills and growth are particularly relevant for issues of income distribution as the United Nation’s Sustainable Development Goals place heavy emphasis on issues of equity, poverty, and distributional issues in general – but they will not be feasible without economic growth. Similarly, dealing with long run distributional issues will not be feasible if large portions of the population lack basic skills.

What areas in the study of inequality are most in need of new research?

All of the work on long run inequality in many dimensions indicates that skills are key. My research has emphasized cognitive skills, but there are many open questions about other elements of skills including noncognitive skills. Getting a better understanding of the range of individual skills, and the impacts of policy on these skills, is a clear research priority.

Policy usefulness also depends on having a better understanding of what actions will enhance skills. This work is progressing, but there are enormous gaps in how major institutions – such as greater parental choice, local autonomy, and alternative accountability systems – affect skills.

What advice do you have for emerging scholars in your field?

Speak to policy with evidence, not ideology.

[1] Hanushek, Eric A., and Ludger Woessmann. 2015. The knowledge capital of nations: Education and the economics of growth. Cambridge, MA: MIT Press.

[2] Hanushek, Eric A., Guido Schwerdt, Simon Wiederhold, and Ludger Woessmann. 2015. "Returns to skills around the world: Evidence from PIAAC." European Economic Review 73(January): 103-130; anushek, Eric A., Guido Schwerdt, Simon Wiederhold, and Ludger Woessmann. 2017. "Coping with change: International differences in the returns to skills." Economic Letters 153(April): 15-19.