When schools spend less do families spend more? The responsiveness of supplemental education spending to changes in the local schooling context

Abstract

We explore the correlates of families’ supplemental spending, which we define as spending on substitutes for or complements to traditional public education. Our particular focus is on estimating the links between supplemental spending, local public education spending, and local public school demographics. We combine data from the Common Core of Data with data on total family education expenditure, which combines school-related expenses and other schooling expenses, from the Panel Study for Income Dynamics and use school finance reforms to instrument for local context. We use OLS models to examine spending decisions, before using instrumental variables to generate causal estimates of the link between supplemental spending and local context. We cannot rule out the possibility that supplemental spending is independent of local public education spending. We also find that families spend more when they reside in districts with higher fractions of minority students. This result is driven by the families with the highest spending, who we suspect are purchasing private schooling.

* This article is a revised, peer-reviewed version of the International Partnership for the Study of Educational Privatization working paper originally published by the National Education Policy Center. http://nepc.colorado.edu/publication/ipsep-working-paper-1