More Money, Worse Results?
Mississippi spends less than half of what New Jersey does on education. So why are Mississippi fourth-graders performing better on standardized reading and math tests?
Northwestern University's economist Kirabo Jackson, whose research has reframed the school spending discussion, shed light on the issue in an interview with urban education writer Julie O'Connor of NJ Spotlight News.
"Money definitely matters, but how you spend it absolutely matters," said Jackson, the Abraham Harris Professor of Human Development and Social Policy at the School of Education and Social Policy. "Individual districts need to be thinking: OK, what are the specific needs of the students in my community? How can I direct the money toward the needs in a way that's high-leverage, high-value?"
For decades, people have debated whether spending more money on schools actually makes a difference for kids. In 2015, Jackson co-authored a study through the National Bureau of Economic Research that found spending more on schools — especially in lower-income areas — leads to real, measurable improvements in children's lives well into adulthood.
The research was considered one of the most important education policy studies in decades because it settled a long-standing debate. A landmark 1966 report — the Coleman Report — had essentially concluded that school spending didn't matter much, a belief that dominated education policy thinking for nearly 50 years.
Jackson's study directly challenged and largely overturned that conclusion with far stronger data and methods. Since its publication, it has been heavily cited in school funding lawsuits across multiple states and has influenced legislative debates about education funding equity. It also changed how many economists and policymakers think about education investment.
Why is MIssissippi out performing New Jersey?
But if spending more helps, what's going on in Mississippi? Jackson suspects Mississippi's better early results with poor kids largely reflect a smarter instructional approach to reading, not proof that New Jersey is wasting money. Moreover, New Jersey may have structural cost differences related to:
- Labor costs — median salaries are much higher in New Jersey, which alone explains roughly a third of the spending difference.
- Special education — New Jersey classifies far more students for special services, which is extremely expensive.
- Teacher pensions and wraparound services — things like guidance counselors may help long-term outcomes but don't show up in third- or fourth-grade test scores.
Jackson also noted the gains narrow as students get older, and that comparing a dense urban state to a rural one involves very different student needs — including more English language learners and different challenges around chronic absenteeism.
"Is it worth spending the money to improve the educational and life outcomes of kids?" he asked. "The answer based on the research is yes. It’s also true that we could do better at making sure the dollars we spend are already going to the most efficient practices and policies possible."
Jackson served as a member of the White House Council of Economic Advisors from 2023-2024. He has been elected to the American Academy of Arts and Sciences and the National Academy of Education.