What exactly are the benefits of education?
This might seem like an obvious question or a trivial topic,
but, in fact, it involves some very deep economic and even philosophical issues.
First of all, education increases human capital in the labor force
and that raises wages.
Workers who can read and write very well are more productive
than workers who cannot.
Workers who have a master's degree or PhD degree in electrical engineering
are also more productive.
Furthermore, these workers may be more innovative
and innovation is one of the major drivers of economic growth.
An educated workforce is also more able to accept and use
the innovations generated by others.
Imagine, for instance, education helping a worker work with computers.
Many of the most important benefits of education are often quite intangible.
For instance, education seems to develop a greater sense of conscientiousness
both in the school, but also ultimately, later, in the workplace
and also in individuals' roles as citizens.
If you look at our video units on corruption,
there it was found that societies which have greater degrees of trust
and greater degrees of cooperativeness can also be less corrupt.
So, through these indirect channels,
a well-educated society may become a less corrupt society
and thus a society better able to enjoy the fruits of economic growth.
Education may also make for better voters, better informed voters,
and a more involved citizenry.
Work by economist Bryan Kaplan has shown that if individuals are educated,
they are more likely to understand the perspectives of economists
on economic growth and act accordingly when they get involved in politics.
That may sound pretty obvious,
but part of the puzzle is that when we look at the numbers,
it's surprisingly difficult to discover what exactly is the causal connection
between education and economic growth.
There are at least two major problems.
The first is trying to figure out cause and effect.
It's obvious that wealthier nations have more education.
But did they become wealthier nations because they're more educated
or are people simply more educated because they live in a wealthier nation?
The second problem arises once we consider that
it's the quality of education which matters
and not just the number of years that a person has gone to school for.
So, if it's quality of education that matters,
the problem, then, is the quality of educational institutions tends
to be correlated with the quality of a lot of other institutions
in a given country.
So, it's difficult to figure out whether it's the quality of education
that's contributing to economic growth
or the quality of institutions in the country more generally.
Pretty much everyone agrees that education yields
substantial private returns for people who undergo the education.
That is, if you graduate from a good degree from a good university or college,
you will earn considerably more money.
But that's quite different from thinking that getting more educated for yourself
is going to benefit a lot of other people in society,
and when it comes to estimating that social return from education,
we are still somewhat in the dark.
Sometimes, I think about the social returns to education
in Michael Kremer's O-ring model.
And, by the way, see Alex's video unit on the O-ring model of economic growth.
Here's a way to think about how this works.
That education matters,
but for education to really push a developing economy into take off,
that economy has to get a lot of other things right also.
So, if that economy has improved its system of education
and done everything else wrong,
well, that additional quality education doesn't really matter much.
Think of take-off economic growth as a process requiring a developing nation
to get 10, 20, or 30 different things right including education.
So, education does really matter, it's one of the things you have to get right.
But, getting education right alone might in fact yield quite small social returns.
There are many different sources you can read on this topic,
stretching all the way back to the classic writings on education,
from the Ancient Greeks.
But, nonetheless, for a start on some contemporary sources
using economic reasoning, I would point you to these articles.