50 Years after Landmark Study, Returns to Education Remain Strong | (News and Research 337)
50 years after landmark study, returns to education remain strong | This year marks the 50th anniversary of the publication of Returns to education: An International Comparison by George Psacharopoulos. The book led to a revolution in analyses of the returns to education by showing that the average payoff to education is higher in less developed than in advanced countries. In comparing the social rate of return to human capital with that of investment in physical capital such as infrastructure, it was discovered that in less developed countries the rate of return to human capital is much higher. This suggests that less developed countries should attempt to stimulate economic growth by pumping more resources into human capital. Rate of return-based decision-making benefits low-income, rural, and female students.
Education is more than an expenditure line item: it is an investment – in teachers and students, but also in a country’s future work force. Education brings a return of about 9-10%. This means that every year of learning generates about a 10% increase in earnings annually. But the value of education is much more than just the earnings it delivers. Education expands choices. It transfers social values between generations. It elevates consumption in the present – and in the future. Through education, youth can make better choices – to value the future and the world. As shown in recent research, a higher level of education improves behaviors and policy choices in favor of pro-climate outcomes. One additional year of education increases pro-climate beliefs, behaviors, policy preferences, and green voting – with voting gains equivalent to a substantial 35% increase. Research also shows that equitable access to quality education supports innovation. For instance, inventors are more likely to come from highly educated backgrounds and countries with higher quality schooling produce more innovators. Moreover, countries with good education systems that promote equity and quality are best prepared for the innovation challenge. Reforms that improve quality and distribute opportunity fairly increase enrollment and help countries prepare for the future. Major reforms like those introduced in Finland in the 1970s and Poland in the early 2000s suggest that massive and persistent investment in education leads to significant increases in innovation, while making growth more inclusive. [More]
ECA Talk Returns to Education Turns 50 on March 29, 2023, Event Replay. Watch the discussion from earlier this week reassessing progress made on measuring the benefits of education 50 years after the publication of George Psacharopoulos’ pivotal study Returns to Education. Timestamps for remarks and panel discussions during the event replay are marked under the Agenda tab.
Submit a Manuscript to the Journal Education Economics for a Special Issue on the 50th Anniversary of the Returns to Education: An International Comparison | Manuscript deadline: 31 October 2023 | Special Issue Editor: Harry Patrinos, World Bank | Submit An Article | This year is the 50th anniversary of the publication of the book, Returns to Education: An International Comparison, by George Psacharopoulos (assisted by Keith Hinchliffe). Education Economics is publishing a special issue to mark this occasion and the contributions of Professor Psacharopoulos. The focus of this special issue is research on the returns to education. Research on international comparisons and /or returns to education in less developed economies are especially welcome.
A college degree is worth the cost — and then some | Christopher Eisgruber | According to repeated analyses by economists at the Federal Reserve Bank of New York, a four-year degree generates an annual return of 14 percent over a 40-year career. And yet 56 percent of Americans today don’t think a college degree is “worth the cost,” according to a survey by the Wall Street Journal and the independent research institute NORC at the University of Chicago. The same survey 10 years ago found that 40 percent of Americans felt that way, which means faith in the value of college in this country is plummeting, even as the actual value remains incredibly strong. What is happening? … “hyperbolic discounting,” in which people overstate upfront costs and discount future payoffs. It doesn’t help that higher education has a complicated pricing model, based on tuition rates that only a minority of students pay in full. Most undergraduates are offered financial aid or other discounts. According to a College Board study, an average year of public or private college today costs less than it did five years ago, despite rising sticker prices.