Parents, principals, education experts all seem to agree that teacher quality is the single most important determinant of a child’s education, considerably more important than class size. The Obama administration has taken this to heart, pushing to incorporate merit pay for teachers and other school officials. But despite the consensus on the importance of having good teachers, we have only the most tenuous grasp of what that quality is worth. How much should we pay for this valuable attribute?
Eric Hanushek, an economist at Stanford University, has taken a stab at this question. One thing that jumps up is that good teachers should be paid much much more.
First he considered studies measuring the impact of higher cognitive skills, as measured by tests, on lifetime earnings. He meshed them with data on the impact of teacher quality on kids’ cognitive ability and produced an estimate of what a good teacher is worth: having a teacher ranked in the 75th position on a scale of 1 to 100 for one year would boost the lifetime earnings of a student by $15,000, compared to what she would have earned if she had been taught by an average teacher instead. Multiplying this gain by 20 students per class would suggest that this 75th-ranked teacher was worth $300,000 more, per year, than the average one.
I doubt that teacher pay will ever get to this level. Elementary school teachers earn $53,150 on average. And those in the 75th percentile of pay make only $10,500 more. But Hanushek suggests it might make sense to rev up pay significantly for the best. He suggests that replacing the bottom 8 percent of teachers with average teachers would add $102 trillion to future American GDP.