Public Education: Reply
回应Perkins的评论，回顾1970年代教育财政法律争议，解释学区财富弹性估计的意义，并说明学区权力均等化公式如何影响教育支出与财富的关系。
To understand the significance of the and wealth elasticities estimated in my 1975 article and reestimated for a variety of samples by George Perkins, it is useful to recall the legal controversy that surrounded education finance in the early 1970's. In the historic and much publicized case of Serrano vs. Priest (1971), the California Supreme Court held that California's system of educational finance violated California's state constitution because local educational outlays were related to local property values. Similar cases were being introduced in the courts of other states and in the U.S. Supreme Court. Perhaps the most commonly discussed legal remedy in cases like Serrano was a plan referred to as power (DPE) by its original advocates, J. E. Coons, W. H. Clune, and S. D. Sugarman in their very influential book (1970). District power equalization is a matching grant formula that makes each percentage point of tax rate levied on the market value of local property produce the same revenue, independent of the actual local tax base. To be more precise, let W, be the tax base (wealth) per pupil in school district i and 6i be the tax rate chosen by school district i. The per pupil tax raised locally would therefore be Ti =61iWi. District power equalization would make the total per pupil revenue of district i proportional to 6i but independent of W, or Ri = 6iW*, where W* is the equivalent tax base implicitly assigned to all school districts by the DPE matching rate formula. The matching rate for district i (min) is the number of state level dollars given to district i for every dollar of revenue that they raise locally; therefore 1 + mi = R/Ti = W*/Wi. The DPE formula is important because it implies that the local price of educational outlays is proportional to wealth. If district i's of buying educational outlays is defined as the amount that the district must produce in local tax revenue per dollar of total spending, the DPE formula implies pi = TIRi = WJ/W*. In terms of the pricewealth elasticity of my earlier paper and Perkins' comment, district power equalization implies v =-1. My reason for estimating and wealth elasticities of demand for local school districts was to answer the following two questions. First, if the courts required the state governments to finance education in a way that eliminated the currently observed association between local wealth and educational outlays, what would be the appropriate matching formula? Second, if the courts mandated the district power equalizing rule, what would be the resulting association between wealth and educational outlays? To make these ideas more precise, I decided to measure the association by the elasticity of per pupil education outlays with respect to per pupil wealth and called this elasticity the degree of wealth neutrality. By applying Theil's famous formula for specification bias, I showed that the wealth neutrality (a) can be written