The Efficiency of the Supply of Public Education
Theodore C. Bergstrom, Judith Roberts, Daniel L. Rubinfeld, Perry Shapiro
NBER Working Paper No. 1901
The question of whether governments spend too much or too little has been a frequent subject of debate, but has been infrequently analyzed.This paper proposes and then applies a methodology which checks to see whether the "Samuelson condition" for the efficient provision of local public education is satisfied, i.e. whether the sum over the school district of individual marginal rates of substitution between public education and a private numeraire equals the marqinal rate of technical substitution between these two qoods. The econometric methodology uses a micro-based approach to the estimation of marginal rate of substitution functions which accounts for possible biases associated with the selection of school districts by individual households.
Published: Published as "A Test for Efficiency in the Supply of Public Education", Journal of Public Economics, Vol. 35, no. 3 (1988): 289-308.