Chapter 1 of this study discusses sources of educational inequality in terms of criteria for resource allocation, definitions of educational equity, and equity and efficiency in the classroom. Following the second chapter's review of literature on how resources affect learning, chapter 3 offers a theory of resource allocation education. The fourth chapter's attention to students' decision-making and their home and classroom time allocation is followed in chapter 5 by a look at parents' investments of time and money in their children's educations, and at their influence on schools. Chapters 6 and 7, respectively, address questions of diversity and uniformity in classrooms and resource allocation and the curriculum. Finally, chapter 8 discusses the goals and content of education, as well as interactive relationships and incentives in public education. The first of three appendixes describes the study's research design, its population, and sampling procedures. Conducted over a 3-year period, the study involved 20 randomly selected school districts in the Chicago area, including 23 schools, 62 classrooms, and 253 public school fifth grade students. Appendix B provides a sample of a complete parent interview; appendix C briefly examines resource allocations within classrooms. The report contains approximately 50 tables. (JBM)