Some researchers and journalists have become very excited about a new set of studies that claim to find a causal relationship between increasing school spending and improving student outcomes. These folks acknowledge that the vast majority of earlier research found no relationship between additional resources and stronger results, but that research was purely observational. Perhaps school systems with weaker outcomes tend to get a larger share of increased spending, creating the false impression that more money doesn’t help. That is, perhaps bad outcomes often cause more money, not the other way around.
There is a new wave of research that claims to find the causal relationship between school spending and student outcomes and those new results are much more positive. The problem is that the new research pretty clearly falls short of having strong causal research designs. Instead, the new research just seems to be substituting different non-causal methods with a different potential direction of bias for the old ones.
The new “causal” studies generally come in two types — regression discontinuity (RD) studies of bond referenda and instrumental variable (IV) analyses of court-ordered spending increases. While RD and IV designs can produce results that approximate a randomized experiment and can be thought of as causal, the RD and IV studies in this new literature generally fail to meet the requirements for those designs to effectively approximate randomized experiments. That is, the new “causal” research on school spending is not really causal.