Adjusting for Differences in the Costs of Educational Inputs

Eric A. Hanushek
William J. Fowler, Jr.
Published Date
Selected Papers in School Finance, 1997-1999
pp. 17-27
Various important policy decisions, fund allocations, and contractual provisions rely on the calculation of price differences, implying that the estimation and use of different price adjustment mechanisms have serious repercussions. Accordingly, controversies about the best way to proceed also exist. A simple but powerful example is the recent debates about the accuracy of the Consumer Price Index (CPI). There are not only technical disagreements but also political disputes owing to the important uses of the CPI in both public programs and private contracts. The discussions about price adjustments in education, while mirroring the technical complexity, have not received the same public attention as the CPI debate, because their implications are considerably less. Nonetheless, the general issues have been widely discussed within the education sector.