31/07/2019
𝗘𝗱𝘂𝗰𝗮𝘁𝗶𝗼𝗻 - 𝗽𝗲𝗿𝗵𝗮𝗽𝘀 𝘁𝗵𝗲 𝗯𝗲𝘀𝘁 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗳𝗼𝗿 𝗮 𝘀𝗼𝗰𝗶𝗲𝘁𝘆
At the most basic level, education has ROI for the individual who is educated, in the form of increased earnings (wages) over a life time. This is referred to as ‘private or individual return’. The next level is benefit to the individual who is educated in other forms of well-being, referred to as ‘externalities’ in economic literature, e.g. better health, increased life expectancy, and more productive professional and social networks. These benefits are not in money terms, but some part of these benefits can be monetised.
Illustratively, better health would result in less cost to the individual and the system. It must be explicitly stated that such ‘monetisation’ captures only a part of these benefits, e.g. money alone cannot capture the overall effect of better health on the individual and their families.
The societal level benefits of education are, again, only partly measurable in money terms (referred to as ‘social return’). These accrue from many sources, e.g. the greater productive capacity of an educated workforce, the technological boost to economic activity, innovation driven by research and knowledge development, greater participation of women in more productive work, better public health outcomes, lower rates of incarceration, reduced infant mortality, improved family planning, and enhanced life expectancy, among many others. There are many other important nuances within the economic perspective of education. For example, higher ROI in education across demographic/social groups, e.g. for women, for those in poverty, and for disadvantaged regions. These ROIs mentioned are in the standard way that they are measured and stated, i.e. as ‘%’, which denotes percent return on investment for each year of education, up to college education.
Each year of education yields a return of around 6-12% to earnings of individuals. The ROI is particularly large for women and for disadvantaged groups: ROI for women are, on average, one percentage point more than those of men. Particularly for early childhood education, the returns are larger at about 13% on an average, and range from 7%-18%; this is due to the larger advantages gained by individuals with early childhood care and education (ECCE). 𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁𝗶𝗻𝗴𝗹𝘆, 𝘁𝗵𝗲 𝘀𝗼𝗰𝗶𝗲𝘁𝗮𝗹 𝗹𝗲𝘃𝗲𝗹 𝗿𝗲𝘁𝘂𝗿𝗻𝘀 𝗼𝗳 𝗲𝗱𝘂𝗰𝗮𝘁𝗶𝗼𝗻 𝗰𝗼𝘂𝗹𝗱 𝗺𝗲𝗮𝘀𝘂𝗿𝗲 𝘂𝗽𝘁𝗼 𝟯-𝟰 𝘁𝗶𝗺𝗲𝘀 𝗵𝗶𝗴𝗵𝗲𝗿 𝘁𝗵𝗮𝗻 𝗽𝗿𝗶𝘃𝗮𝘁𝗲 𝗿𝗲𝘁𝘂𝗿𝗻𝘀.