School expenditures have increased by 17 per cent from 2001 to 2009, while student performance has declined by 2.5 per cent – equivalent to about one third of a year of schooling – according to a report in September’s Australian Economic Review.

Authors Dr Ben Jensen, Dr Julian Reichl and Mr Andrew Kemp from the Grattan Institute say in the report that the push for reduced class sizes has lead to increased expenditure, but it is not a cost effective policy for improving educational outcomes.

“There is a distinct lack of cost-effectiveness analysis in school education programs and policy-making. There appears to be little analysis of the costs and benefits of various policies that would lead to a better understanding of a more effective allocation of resources.”

While the authors agree more research is needed on the topic, increased teacher salaries are not one of the main culprits increasing school expenditure. “It is clear that increasing teacher salaries has not been a policy lever that has driven expenditure increases.”

The funding of public and private schools from a policy perspective was the main theme in the September edition of the Australian Economic Review. Edited by Prof Ross Williams AM from the Melbourne Institute of Applied Economic & Social Research at the University of Melbourne, the AER is the peak economic policy review journal in the country.

The report “What Determines Private School Choice?” found that if a child’s parents attended a private school, the child is up to 20 per cent more likely to attend a private school.

Report authors Professor Lorraine Dearden from the University of London, Dr Chris Ryan from the Melbourne Institute of Applied Economic and Social Research and Luke Sibieta from the UK Institute of Fiscal Studies, found that families with multiple children are more likely to attend Catholic schools, however large families and children of single parents are less likely to attend independent private schools. Additionally, families where at least one parent identifies as religious are more likely to have children in private schools.

Other reports in the September edition of the Australian Economic Review include:
· Professor Diderik Lund of the University of Oslo and Professor Jerry Hausman of MIT discuss the hypothetical results of the ALP’s unpopular Resource Super Profits Tax;

· Simon Loertscher and Tom Wilkening from the University of Melbourne explain why auctions are so important for Governments to sell assets;

· Paul Simshauser from the Griffith Business School and AGL examines the cost of generating electricity from wind.

The September edition is available from http://www.wileyonlinelibrary.com/journal/aere