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Acknowledgments
"What D'Ya Know?" was written by W.
Michael Cox and Richard Alm. The essay is based on research conducted by
Cox, senior vice president and chief economist, Federal Reserve Bank of
Dallas. Alm is an economics writer in the Bank's Research
Department. Julia K. Carter, an economic analyst at the Bank, provided
important research assistance on the project. Charlene Howell assisted with photo research.
Notes
- The hierarchy of
human talents is discussed in greater detail in the Dallas Fed's 2003
Annual Report essay, "A Better Way: Productivity and Reorganization
in the American Economy."
- For more on the issue of
school choice, see "The Theory and Practice of School Choice" [PDF],
by Paul E. Peterson, in The Legacy of Milton
and Rose Friedman's Free to Choose,
Dallas: Federal Reserve Bank of Dallas, December 2004, pages 37–54.
- Price Pritchett,
chairman and CEO of Pritchett LP in Dallas, coined the term 3-pound tool to describe
the brain.
Exhibit Notes and Data Sources
All dollar amounts in text and exhibits are in 2004
U.S. dollars; international data are adjusted for purchasing power.
Exhibit
1
Data in the table are for
year-round, full-time workers. Lifetime
earnings are estimated assuming 40 years of full-time work at average
annual earnings prevailing in 2003. Census Bureau, Current Population
Survey (CPS), 2004 Annual Social and Economic Supplement, table PINC-04.
"Schooling, Experience Reduce
Unemployment"
Bureau of Labor Statistics (BLS), unpublished 2003
data.
"Helping Economies Grow Richer"
Estimating the relationship between state per capita income and the percentage
of population age 25 and over that holds a bachelor's degree gives INCOME
= $11,903 + 729.17 * BACHELOR'S, with the coefficient t values
of 6.24 and 10.42, respectively, and 
= .68.
Census Bureau, CPS, historical table A-1 and table 13 (2003). Bureau of Economic
Analysis, national income and product accounts and regional economic accounts
(2003).
Exhibit
2
Average starting salary for bachelor's degree: National Association of Colleges and Employers, Salary Survey, Fall 2004. Average salary for experienced workers: BLS, Occupational
Employment Statistics, May 2003.
Exhibit 3
The vertical axis scale is logarithmic to the base
2. Estimating the relationship between per capita GDP, years of schooling and
economic freedom (which ranges from 1 to 5, with 1 being freest) gives the result
= 13.92 + .30 * SCHOOLING – 1.10 * FREEDOM, with the t
values on SCHOOLING and FREEDOM being 9.63 and –9.18, respectively,
and
= .79. Each of the solid lines represents the per capita GDP levels predicted
within that peer group—from the freest countries (in green) to least free
(in orange)—holding the economic freedom index constant at the median
within-peer-group values of 2.00, 2.95 and 3.74, respectively.
Robert Barro and Jong-Wha Lee data set (2000), Center for International Development,
Harvard University. World Bank, World Development Indicators (2000). 2002
Index of Economic Freedom, Gerald P. O'Driscoll, Jr., Kim R. Holmes and
Mary Anastasia O'Grady, eds., Washington, D.C.: The Heritage Foundation/Wall
Street Journal (2000 scores).
Exhibit
4
Census Bureau, CPS, historical table A-1.
Exhibit 5
"American Students Lose Ground…"
Council on Competitiveness, www.compete.org.
"…Despite Hefty Outlays for Schooling"
Estimating the relationship between the average of math, science and reading
scores for 15-year-olds and per student expenditures gives SCORES = 443
+ .01 * EXPENDITURES, with the coefficient t values of 26.04 and
3.36, respectively, and
= .29.
Organization for Economic Cooperation and Development, Education at a Glance
2004.
"Teaching Gets Less of the Money"
U.S. data on educational expenditures are for public
schools only. National Center for Education Statistics, Digest of Education Statistics, 2003.
Photo Credits
ATI
Technical Training Center, Dallas, TX, 214-352-2222;
University of Wisconsin;
Blonde Productions Group.
The picture on page 15 was taken
at a Mi Escuelita Preschool
in Dallas.
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