Value of Education Isn't Measured Only by Earnings

(Bloomberg View) -- George Mason University economist Bryan Caplan continues to grab the occasional headline with his thesis that formal education is mostly wasted time and money. Caplan’s book, “The Case against Education: Why the Education System Is a Waste of Time and Money,” has been highly controversial.  I have taken issue with his premise that people pay for college in order to  “signal” to other people, including employers, and that it explains why it raises people’s pay (the actual signaling model of education postulated by economists is very different from the sort of wasteful credentialism that Caplan postulates). But Caplan’s more general case doesn’t hinge crucially on the particulars of that theoretical model -- it’s a far-ranging indictment of the education system on a wide range of grounds.

Rebutting, or even properly addressing, Caplan’s overall thesis would require an equally voluminous book. Education is a complex, difficult issue, for a number of reasons. First, education is really a bundle of many different services. Elementary schools act as day-care centers that allow parents to enter the workforce. Schools teach specific skills like reading and math, but also less easily quantifiable ones like critical thinking, attention and focus, and time management. Schools are a group environment where kids can become socialized. Compulsory education keeps potentially troublesome teenagers off of the streets and out of mischief. When you buy a pizza, you’re getting something very simple and easily understood, but when you get an education, you’re getting a hodge-podge of many things. To evaluate whether education is really worth the price, all of these must be identified and calculated.

Second, education represents a short-term investment for a very long-term, hard-to-observe return. Unlike a pizza, an education doesn’t fully pay off until many years later, in the overall sweep of your career and life. Since schooling has effects that can persist across generations, the total social reward may never be known. Many of education’s effects may be hard to observe -- did you get a job because of the skills you learned in school, because of your credentials because you’re a good worker, or just because you happen to look like the person doing the hiring? And since education can have positive side effects, such as the synergy that comes from having a society full of well-educated, well-socialized adults, the true social benefit is not even fully observable, even by the most careful economists.

So an overall cost-benefit calculation for education, or a complete critique of Caplan, is a vast undertaking. But in the meantime, as new high-quality research comes out that sheds light on the effects of education, it should be added to the debate. And economists Aaron Chalfin and Monica Deza have contributed an important piece to the puzzle.

Instead of studying the effect of education on earnings, as is commonly done, Chalfin and Deza look at juvenile delinquency. Childhood bad behavior -- assault, theft, etc. -- is an important outcome measure, because it reflects not just kids’ economic contributions, but a holistic picture of how likely they are to become the kind of citizens that we presumably want schools to produce.

Education presumably keeps kids off the streets, reducing delinquency directly. But Chalfin and Deza want to measure something more subtle -- the degree to which education improves culture over the long-term. So they measure the effect of parents’ education levels on their kids’ likelihood of committing crimes. In order to make sure that they’re measuring causation instead of just correlation, they look at the impact of changes in U.S. compulsory education laws between 1914 and 1974 on the delinquency of the children of people who were affected by the laws.

They found that parental education has a significant effect on kids’ delinquency. On average, one additional year of mandatory schooling for parents reduces kids’ tendency to commit assault by 1.3 percent, shoplifting by a similar amount, and property damage by 1.8 percent.

That’s a substantial effect. There are several channels through which education might reduce delinquency down through the generations. It could raise parental income, providing better environments for kids. It could make parents care more about keeping their kids in school. Or it could change family culture, making people more respectful toward the norms of society -- a culture they then pass down to their children.

Chalfin and Deza’s isn’t the only recent paper to study the link between education and crime. A 2012 paper by economists Costas Meghir, Mårten Palme and Marieke Schnabel found similar results in Sweden, with compulsory education reducing crime not just among the people subject to the law, but among their children as well.

Results like these don’t prove that education is always worth the price, or even that the current U.S. education system passes a cost-benefit test. But they do show that the value of education extends far beyond the simple calculations of tuition and salary that tend to dominate discussions of the issue. Education isn’t just about making us wealthier -- it’s about making us better human beings.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Noah Smith is a Bloomberg View columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.

To contact the author of this story: Noah Smith at nsmith150@bloomberg.net.

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