Has the US been short changing education spending?

When people talk about education in the US, the one idea that receives almost unanimous support is that we need to spend more money on education.  Historical data from the BEA and the UN World Population Prospects Database show that educational investment has been rising at the same time the student age population has been shrinking relative to the working age population.

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When looking at per pupil aged growth rates, the change was rather extreme in 60’s and 70’s when more women and minorities started getting access to college and has since evened out with the spending per pupil increasing at the rate of GDP.  Considering that the population is growing, this means that education spending is rising faster than GDP.

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The increased investment has increase the size of the population with Bachelor degrees and high school diplomas as these charts from the US Census show:

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Part of the increase is from higher current educational attainment, while part of the increase is from the older less educated population dying off. This is demonstrated by a snapshot of the Census’s 2008 data:

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Education spending has held up over time, with the amount spent on the student aged population rising with GDP.  Whether or not more education spending is needed depends on whether education spending is growing aggregate human capital or if the marginal education spending is more related to signaling and status.  

About

I studied Bioengineering at the University of California at San Diego. While there I served as a trustee on the investment committee of the UCSD Student Foundation, a group that manages an endowment to fund scholarships. While in college I applied my interest in finance and economics by working as a summer associate at Clarium Capital Management, working part time my senior year, and joining full time when I graduated in 2006, staying there through August 2010. I am currently working as a portfolio manager at another global macro hedge-fund in the Presidio (And blogging about more directly market related ideas at their restricted blog). I’ve been focusing on quantitative finance, currencies, commodities, the interplay between finance and politics, demography and other long term trends.

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