Schooling and Economic Well-Being: The Role of Nonmarket Effects

Standard estimates of the economic value of additional schooling, based on earnings differences associated with differences in the level of schooling attained, cover only a portion of the total effects of education that are valued by citizens. We first identify a catalog of nonmarketed effects, many of which have been recently studied by economists, and then propose a procedure for estimating a willingness-to-pay value for these effects. Using empirical estimates of the magnitude of a selection of these effects found in the literature, we calculate willingness-to-pay values using our proposed procedure. These illustrative calculations suggest that standard estimates of the benefit of incremental schooling substantially understate the full value of such investments.

[1]  D. Metcalf.  Pay Dispersion, Information, and Returns to Search in a Professional Labour Market , 1973 .

[2]  Richard R. Nelson.  Recent Exercises in Growth Accounting: New Understanding or Dead End? , 1973 .

[3]  J. Tinbergen.  Income distribution: Analysis and policies , 1975 .

[4]  R. M. Smith.  Economic Aspects of Education , 1919 .

[5]  F. Juster,et al.  Education, income, and human behavior , 1974 .

[6]  J. Conlisk.  A Bit of Evidence on the Income-Education-Ability Interrelation , 1971 .

[7]  M. Rosenzweig,et al.  Education and contraceptive choice: a conditional demand framework. , 1982 .

[8]  C. Lindsay.  Measuring Human Capital Returns , 1971, Journal of Political Economy.

[9]  R. Michael.  The effect of education on efficiency in consumption , 1970 .

[10]  A benefit/cost model to evaluate educational programs , 1968 .

[11]  Finis Welch,et al.  Education in Production , 1970, Journal of Political Economy.

[12]  R. Murnane.  New Evidence on the Relationship between Mother's Education and Children's Cognitive Skills. , 1981 .

[13]  H. Birch,et al.  Disadvantaged children; health, nutrition & school failure , 1970 .

[14]  Robert J. Willis,et al.  A New Approach to the Economic Theory of Fertility Behavior , 1973, Journal of Political Economy.

[15]  Herbert Gintis,et al.  Education, Technology, and the Characteristics of Worker Productivity , 1971 .

[16]  G. Becker,et al.  An Economic Analysis of Marital Instability , 1977, Journal of Political Economy.

[17]  Mark V. Pauly,et al.  Doctors and Their Workshops: Economic Models of Physician Behavior , 1981 .

[18]  R. Hauser,et al.  Education, occupation, and earnings : achievement in the early career , 1976 .

[19]  M. Grossman,et al.  An Exploration of the Dynamic Relationship between Health and Cognitive Development in Adolescence , 1980 .

[20]  W. Huffman.  Decision Making: The Role of Education , 1974 .

[21]  A. Schwartz.  Migration, Age, and Education , 1976, Journal of Political Economy.

[22]  Lung-fei Lee.  Health and Wage: A Simultaneous Equation Model with Multiple Discrete Indicators , 1982 .

[23]  P. Lindert.  SIBLING POSITION AND ACHIEVEMENT , 1977 .

[24]  M. Grossman,et al.  The Relationship between Children&Apos;S Health and Intellectual Development , 1980 .

[25]  P. Wachtel.  The Effect of School Quality on Achievement, Attainment Levels, and Lifetime Earnings , 1975 .

[26]  J. Coleman,et al.  Education and political development , 1966 .

[27]  Lawrence Southwick,et al.  The Economics of Education. , 1973 .

[28]  S. Dresch.  Demography, Technology, and Higher Education: Toward a Formal Model of Educational Adaptation , 1975, Journal of Political Economy.

[29]  G. Psacharopoulos,et al.  Investment in Human Capital. , 1972 .

[30]  Richard B. Freeman,et al.  The overeducated American , 1976 .

[31]  Zvi Griliches,et al.  Education, Income, and Ability , 1972, Journal of Political Economy.

[32]  Angus Campbell,et al.  The American voter , 1960 .

[33]  Y. Ben-Porath.  The Production of Human Capital and the Life Cycle of Earnings , 1967, Journal of Political Economy.

[34]  Stanley L. Friedlander.  Labor Migration and Economic Growth: A Case Study of Puerto Rico , 1965 .

[35]  Anita A. Summers,et al.  Do Schools Make a Difference , 1977 .

[36]  R. Lucas.  Hedonic Wage Equations and Psychic Wages in the Returns to Schooling , 1977 .

[37]  D. Tray,et al.  Child Quality and the Demand for Children. , 1973 .

[38]  Richard A. Easterlin,et al.  Population, Labor Force, and Long Swings in Economic Growth: The American Experience , 1969 .

[39]  George Psacharopoulos.  Estimating Shadow Rates of Return to Investment in Education. , 1970 .

[40]  J. Behrman,et al.  Determinants of child mortality, health, and nutrition in a developing country. , 1982, Journal of development economics.

[41]  E. Lazear.  Education: Consumption or Production? , 1975, Journal of Political Economy.

[42]  W. Lee Hansen,et al.  Total and Private Rates of Return to Investment in Schooling , 1963, Journal of Political Economy.