What is a highly effective teacher actually worth to students?

The number one variable impacting student learning is the quality of the teacher in the classroom.  Stanford University's professor, Eric Hanushek, set out to determine the the impact of value added from highly effective teachers upon the future economic earnings of students. It is important to note that he was not seeking to solely isolate value added, as in the achievement gains, but rather the aggregate differences on lifetime earnings for students derived from having the highly effective public school teachers to less effective teachers expressed in percentiles.

His ideas are basically this: the current salary structure for public school teachers provides financial incentives based upon experience and advanced degrees and these factors are uncoupled from any systemic influence on student achievement.  His study examines the aggregate impact of effective teachers upon students' future economic earnings points towards two important variables, teacher effectiveness and class size.  The figure below illustrates this correlation in more detail.

Dr. Eric Hanushek is the Paul and Jean Hanna Senior Fellow at the Hoover Institution of Stanford University and according to his webpage is, "a leader in the development of economic analysis of educational issues, and his work on efficiency, resource usage, and economic outcomes of schools has frequently entered into the design of both national and international educational policy."  He explained his concepts recently in a podcast on Econ Talk. The entire podcast can be found online here.

Dr. Hanushek's ideas are expanded in more detail by examining his recent paper, "The Economic Value of Higher Teacher Quality," by Eric Hanushek. Urban Institute, National Center for Analysis of Longitudinal Data in Education Research, Working Paper 56, December 2010. Published version can be found at Economics of Education Review, volume 30, Issue 3, June 2011, pp. 466-479.