Month: October 2026

A long-time concern in the US K-12 schooling system is that local property taxes within each school district are a primary source of funding. As a result, school districts in high-income areas with higher property values will tend to have more money to spend per student. While this was indeed a pattern 40-50 years ago, school finance issues are no longer that simple. Sarah Reber, Beyond Deng, and Gabriela Goodman explain in “School Spending and Equity since 1976″ (Center for Economic Security and Opportunity at Brookings, June 2026). They write:

Schools in high-poverty or predominantly non-white communities often fail to serve their students well. Many point to American schools’ reliance on local property taxes as the culprit, arguing the school finance system ensures that “affluent areas end up with well-funded schools and low-income areas end up with poorly funded schools,” (American University 2020). However, state governments now contribute about as much to school funding as school districts raise locally, and the federal government also contributes. Moreover, state and federal funding disproportionately benefits school districts serving low-income students, and decades of school finance reforms mean that schools’ spending is less tied to its property wealth than in the past. …

We present a comprehensive descriptive analysis of how school spending varies across districts depending on child poverty and racial composition and how that has changed since 1976. To make sense of these patterns, we also decompose differences in average spending into their between-state and within-state components. Average spending varies tremendously across states—some spend nearly three times what others do (Reber and Goodman 2025)—so we ask: When some districts spend more than others, is it because they are in states where all districts spend more or because they spend more than other districts in the same state? …

The analysis shows that between 1976 and the early 1990s the average level of spending increased, but the distribution of spending changed only modestly, becoming somewhat less progressive. After about 1995, spending within states was increasingly targeted to high poverty districts, though between-state differences increasingly favored lower-poverty districts. That is, low-poverty districts were more likely to be in states where average spending was higher, but they had lower spending relative to high-poverty districts in the same state. We also find that low-poverty and predominantly white districts were more protected from spending cuts during the Great Recession, and high-poverty or predominantly non-white districts were the least protected. Finally, differences in average spending between states remain a major driver of spending inequality overall, even though policy conversations often focus on within-state differences. …

The analysis does not speak to whether high-poverty or minority-serving schools have “enough” funding—or whether or under what conditions additional funding would improve student outcomes. Instead, we document what happened: Which districts spent more, and which spent less? How has the distribution of school spending changed? This nearly five-decade national perspective captures how spending patterns evolved as states reformed their finance systems, sometimes multiple times, during the school finance reform era.

Here are a few figures to illustrate their main themes. This figure looks at school districts across the country in 1976-77 and 2020-21, split up by quintiles in terms of poverty rates and share of nonwhite students. Per student spending for each group is shown above the bars. New York City is a national outlier in terms of how much is spent per student. As the authors write: “Before the 1990s, NYC actually spent less than its own-state average but still had spending well above the national average (because its own-state average was high). By the 2010s, spending in NYC was well above average for New York state, which itself was nearly double the national average spending. Throughout the period we study, spending in New York state grew faster than average (from a relatively high starting point), and spending became more progressive (at least for NYC) faster than in the average state. Together these trends moved NYC from a moderate to more extreme high-spending outlier.” Thus, the white rectangles show wha tthe numbers at the top end would be like if New York City was excluded. The 2020-21 data suggest that, at the national level, there is no linear relationship in which school districts with more poverty or a greater share of nonwhite student have the lowest level of per capita spending. Instead, there is a U-shaped relationship, although the lowest quintile is below the top quintile.

Some of the difference here results from large differences in K-12 spending across states: in 2020, for example, “ranging from about $9,000 per pupil in the lowest spending states to almost $30,000 in the highest spending states.” In addition, “There is some geographic correlation between average spending and the child poverty rate. For example, both high-spending states and low-poverty districts are concentrated in the Northeast. … Nearly all states have at least some school districts in each poverty category, though states
with higher average incomes and school spending have fewer high-poverty districts and vice versa.” Differences in per student K-12 spending can be divided up into variation within states and variation between states. Consider this table:

For 1976 and for 2020, the per pupil spending numbers in the first two rows match the number from the bar chart above (with New York City left out). The third row subtracts the second row from the first. The final row shows how the spending gap would change if every school in each state had the same per pupil spending–but the differences across states were the same as they they are now. In the 2020 data, for example, “Average spending for
the highest-poverty districts was $17,208, compared to $15,921 for the lowest-poverty districts, a difference of $1,287. If every district spent at its own-state average, that gap would have been $1,084 in the other direction. Within states, highest-poverty districts spent $2,371 more, on average, compared to their lowest-poverty counterparts.”

Thus, within states, high-poverty school districts have higher per pupil spending. But across states, high-poverty school districts also tend to be in states with lower per pupil spending, so if one looks at national-level data, the within-state efforts to spend more on low-income students are less apparent.

The bottom line is to be wary of common claims that school districts with greater poverty or more nonwhite students have lower per pupil spending. Within states, this claim is generally wrong. Across states, the claim is more complex, because It costs more to hire teachers and to staff a school in higher-income states, so some of the difference across states is about differences in cost-of-living, not actual resources (like numbers of teachers) available to students. The report digs into such adjustments in some detail. It turns out that studies that make claims about fewer resources for higher-poverty schools have a tendency to do idiosyncratic cost-of-living adjustments and also to exclude federal K-12 spending, which is weighted toward students from lower-income households.

Financial literacy is meant to be basic stuff. For an example of how basic, here are eight questions from what is called the GFLEC Personal Finance Index. More on the index and the results in a moment, but take a moment to read the eight questions and look at the share of correct answers.

These eight questions are the public face of a longer 28-question survey, which has now been given to large groups for a decade. Paul J. Yakoboski, Annamaria Lusardi, Andrea Sticha, and Fran Mastry provide and overview and background in “A decade of tracking
financial literacy in America: Findings from the 2026 TIAA Institute–GFLEC Personal Finance Index” (June 2026).

For these eight questions, roughly half or less are answered correctly–a level that hasn’t changed much for a decade. Here’s a breakdown of the scores on the 28-question version of the test in the last decade. In more detailed breakdowns, some groups do better than other–for example, those who are older tend to do better–but no subgroup is especially covered in glory.

In the modern US economy, people have access to a wide range of financial decisions. Here’s a short list. Do you systematically look over your household budget and set some priorities, or does the money just vanish? How much credit card debt are you carrying over every month? Under what conditions is college tuition a good long-term investment? When buying a car, new vs. old, and borrow, pay in cash, or lease? How to search for a bank that pays higher interest? What is your credit score and how does it affect your options? Is sports gambling a fun way to spend some entertainment money, or a plan to build wealth? How large a house mortgage should you take out? Should you buy life insurance, or long-term care insurance? How much to put into a retirement account–and what kind of account? How should savings intended for shorter-term uses or an emergency fund be invested, as compare with savings intended for medium-term uses, or saving intended for long-term retirement? At what age should you start taking benefits from Social Security? Should you opt out of traditional Medicare in favor of a Medicare Advantage plan? After retirement, how much should you withdraw from your retirement account each year?

These questions don’t have cookie-cutter correct answers. But the answers can have substantial real-world consequences, and if you can’t answer the basic financial literacy questions, the chances of answering the questions in a way that works best for you are not especially good. Those with less financial literacy report spending more time worrying about financial questions–and have good reason to do so. Figuring out how to help people make informed personal finance decisions, from the high school and college classroom and on through the key financial decision-making nodes that life brings, is an undervalued social opportunity.

Tyler Cowen serves up the questions in “Gita Gopinath on Trade, Currencies, and Economic Transformation” (Conversations with Tyler, September 25, 2026). Gopinath has just returned to Harvard after a stint at the IMF, and as usual is full of interesting and wide-ranging commentary. Here are a few of the many remarks that caught my eye:

Because world trade is mostly conducted and invoiced in US dollar, not just in the US but everywhere, changes in US dollar exchange rates have a muted effect on levels of imports and exports.

The value-added component of trade has declined over time, and because of the dollar’s dominant role in the trading system, everybody is pricing their goods to each other in dollars. In a way, the way you want to think about it is that when China is exporting some certain goods to the rest of the world, if its imports are priced also in dollars, then those inputs that are going into its production function are priced in dollars and sticky in dollars, then you have an incentive to just price in dollars, and your dollar price is not going to move that much because the exchange rate adjustment is not doing much, because an important part of your cost of production is also in dollars.

That’s the reason why we see a fair amount of dollar pricing in the world. The sense that somehow China should be able to, or any other country should be able to, cut their dollar prices by a lot when their currency depreciates is not the case, because they are also importing inputs from the rest of the world that are priced in dollars, and they don’t have that much of a margin to squeeze. Now, of course, there’s variation across goods. Some goods rely more on inputs that are dollar-priced, some depend less, and you do see in the data that that variation matters.

Can Argentina continue the progress it has made against inflation?

That’s actually a lesson we learn every time with countries that are in this disinflation process where you’re starting off with inflations of three-digit numbers. Two years ago, I think Argentina’s inflation was around 150%, so coming down to 30 percent, that was tough. Bringing it down is impressive, but it’s always the last mile going from here to anything like a single-digit number, always takes much, much longer. This is nothing special about Argentina. Now, in the case of Argentina, what would it take to bring it down much faster? Firstly, I think there’s got to be a lot more confidence in policy continuity. I think what the Milei administration has done very well compared to the previous administrations is recognize that the problem was fiscal, that as long as Argentina was running the kinds of deficits that they were doing and using monetary financing, basically money printing to pay for it, there was no possibility of getting out of this trap. He has been running primary surpluses since he came to power. He’s absolutely completely committed to it. I remember I had conversations with him when I was at the IMF. This is something he absolutely will not budge from, but there are questions whether the rest of the political class has signed on to this. 

What are the economic reasons for concern about trade imbalances?

[T]he trade imbalance in and of itself is not something that we should be focused on. I think what we care about is welfare, and welfare involves jobs and consumption, what’s inflation, purchasing power, and so on. People do not wake up in the morning saying, “Okay, my current account deficit is too big, or my current account surplus is too big.” If all of your policies that were delivering good outcomes for your country were to bring along a deficit or a surplus, that’s perfectly fine. There are lots of good reasons to be running deficits and surpluses we know. There’s nothing that tells you that you shouldn’t.

The problem arises when you have policies that countries have in place that are inconsistent with any kind of a balanced growth model, and they manifest themselves in that trade deficits and surpluses. This is what I’m saying as an economist … . [I]n both the case of the US and China, we’re very far from the world where countries are doing good policies … China’s [trade] surpluses are a reflection of things going wrong in China. It’s not a reflection of strength in China. It’s a reflection of weak consumption. It’s a reflection of misallocated resources going into different sectors. They did that with their property markets. Now they have a huge property market problem that they haven’t been able to fix in five years. They have this now with other markets, including EVs and the other sectors. They have the problem with inflation being too low. They’re trying to do so called anti-involution policies, bringing companies together and telling them, “You’ve got to keep prices higher than what you’re doing right now.” This is not the world where they’re playing good policies, and this is all comparative advantage, and this is the outcome that we see. I wouldn’t push the argument that this is, “Oh, we should be just happier with cheaper goods from China.”