Testing the Correlation Between Government Educational Spending and Students' Academic Achievement

1. Introduction:

Human capital refers to the stock of competences, knowledge and personality attributes embodied in the ability to perform labor so as to produce economic value. It is the attributes gained by a worker through education and experience, according to Sullivan and Sheffrin (2003). A raise in educational level improves competences and increases knowledge required for a population to perform efficiently and productively. It is a worldwide belief that the more productive the labor force is, the more prosperous the economy will be; hence, there is large public investment in education in both developed and developing nations. The common belief brings out a general question - does an increase in education investment necessarily improve educational outcome? This paper specifically focuses on testing the correlation between government educational spending and students’ academic achievement in Washington State under K-12 education system with a least square regression.

In order to answer the question, one must treat education as an economic good, because education is not easily obtainable and thus needs to be apportioned, as Olaniyan and Okemakinde (2008) stated. Like other capital goods, education has its supply function where government spending on education is one input and its output is students’ academic achievement. Because of education’s positive externalities, a society would gain from educated populace as human capital and the driving forces of technique progress. Nonetheless, excessive expenditure on education is a waste for both households and society, so it is significant to derive the accurate relation between education spending and students’ academic performance, and then maximize the return on education based ...

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