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Tuesday, 8 November 2011

Wider benefits of education

A recent VoX EU piece reviews a growing body of literature that points to the wider benefits of education e.g. reduction in crime rates, improvement in health and greater civic participation. Unfortunately much of the evidence is US based, but useful nevertheless. 

Given recent budget problems around the world, many governments have proposed sharp cuts to education. What are the likely long-run costs of these cuts? Growing evidence suggests that the lasting impacts of reductions in early childhood investments, school quality, and educational attainment among today’s youth are likely to extend beyond declines in future productivity and earnings. Crime rates are likely to increase, health and mortality are likely to deteriorate, and political and social institutions may suffer.

Economists have long recognised and measured the lifetime benefits of education from improved learning opportunities (eg Card 1999, Heckman et al 2008). More recently, however, economists have begun to study the effects of education on other personal and social outcomes. A growing body of evidence I surveyed (Lochner 2011) and discuss here suggests that education can reduce crime, improve health, lower mortality, and increase political participation. The implied social benefits from these impacts can be sizeable.


Around the world, incarceration and conviction rates are high among the least educated. A number of recent studies find that this correlation reflects a causal relationship. For example, Lochner and Moretti (2004) estimate that increasing high school graduation rates by one percentage point in 1990 would have resulted in nearly 100,000 fewer crimes in the US, providing an annual social benefit valued at more than $2 billion (or $3,000 per additional male graduate). Notably, our estimates suggest that increases in education would reduce both violent and property crimes. In the UK, Machin et al (2011) estimate the social savings from crime reduction associated with increasing the population of individuals with an education qualification. Accounting only for benefits from property crime reduction, their estimates suggest a savings of over £10,000 per additional student qualification.

Open school enrolment lotteries and desegregation efforts appear to reduce crime rates by improving school quality. Deming (2009) estimates that reductions in arrests associated with offering better quality school options to a high-risk youth produces a roughly $16,000 social savings to victims over the next seven years. Because better schools are also likely to have reduced crimes that never led to an arrest, total victimisation savings may be 3-5 times higher. Total social savings would be still greater after factoring in savings on prisons and other crime prevention.

The long-run impacts of early childhood and school-age interventions on juvenile delinquency and adult crime can be substantial for disadvantaged youth. For example, estimates suggest that Perry Preschool produced a social benefit from crime reduction of roughly $150,000 per child (through age 40). Yet other model early childhood programs like Abecedarian produced no significant impacts on crime. Unfortunately, we do not yet understand these differences.


Recent evidence suggests that educational attainment also improves health. Mazumder (2008) and Oreoupolos (2006) estimate that an additional year of high school improves self-reported health outcomes by 15-30% in the US, while European-based studies (eg Clark and Royer 2010, Silles 2009, Kempter et al 2010) typically estimate more modest impacts. There is little consensus in the literature regarding the impacts of education on mortality. Estimates range from negligible to implausibly large (Lleras-Muney 2005 and 2006, Mazumder 2008, Albouy and Lequien 2009, Clark and Royer 2010). A number of studies, especially those analysing more recent years, estimate that an additional year of schooling reduces current smoking rates by at least 10% (see, eg, Kenkel et al 2006, de Walque 2007, Grimard and Parent 2007, Clark and Royer 2010). In contrast, some of these same studies find that education has little impact on obesity. Finally, there is limited evidence that parental education levels affect child health; however, estimates vary widely (see, eg, Currie and Moretti 2003, McCrary and Royer 2009).

We can value the estimated reductions in mortality associated with schooling using measures of the value of a statistical life. Based on typical life-value estimates of $3-5 million, if education reduces ten-year mortality rates by 0.01 (a figure within the range of recent mortality estimates and roughly consistent with the much larger set of estimates on self-reported health), and if half of that reduction is ‘paid for’ in the form of costly health investments and behaviour changes, then a ballpark figure for the mortality benefits of an extra year of school is probably on the order of $1,500-2,500 per year. The value of more general health improvements is also likely to be sizeable.

Civic participation

More educated societies tend to be more democratic, but does education actually improve citizenship and political engagement? Three recent individual-based analyses suggest that it does – in the US at least. Dee (2004) and Milligan et al (2004) estimate that an additional year of schooling increases voter registration and voting in the US, with impacts typically ranging from 30% to 40%. By contrast, Milligan et al (2004) and Siedler (2007, 2010) estimate negligible impacts on voting in the UK and Germany. More generally, education appears to increase political interest and other forms of political participation, as well as the extent to which individuals are informed about politics. As with voting, impacts on these behaviours appear to be greater in the US than in Europe.

General lessons and caveats

Given the empirical strategies used to estimate the impacts of schooling on crime, health, and citizenship, we know much about the impact of additional years of high school but much less about the effects of higher education. There is good reason to believe that increases in college-going are not likely to yield dramatic benefits from crime reduction (at least in the near future), since studies have shown that education-based interventions and policies appear to reduce crime and delinquency most among the least able, most disadvantaged. A few studies have estimated significant reductions in smoking and improvements in political participation in response to additional years of college, but studies that measure the impacts of higher education on health or citizenship are the exception. There is growing evidence that preschool and school interventions at early ages can reduce delinquency and crime years later; although not all programs do.

Much of the evidence is US-based. While a number of very recent studies have begun to analyse the wider benefits of education in Europe, very few studies exploit data from developing countries where education levels are much lower. One might expect substantial differences in the impact of education on crime, health, and political engagement across countries with very different criminal justice, healthcare, and political systems. Indeed, comparisons across estimates from the US and Europe seem to suggest that education may improve health and mortality less in Europe, where healthcare tends to be universal and economic inequality is generally lower. Education also appears to impact voting and political participation less in Europe, where voter registration is often required and governments are more active in registering voters. While it is tempting to speculate about factors that might explain observed differences in estimates across countries, we are far from understanding them.

What role should government play? Crime reduction is an obvious externality that may justify expenditures on policies that improve the skills of the most disadvantaged (eg targeted preschool programs, improvements in school quality in low-income areas, or policies that encourage high school completion). Current evidence suggests that well-targeted education-based programs can be more cost-effective than traditional law enforcement policies once all costs and benefits are accounted for. Education policies targeted to the most disadvantaged have the added benefit of reducing economic inequality. There is little evidence of important education externalities in the health domain; most gains are private or, at least, contained within the family. As such, arguments for education interventions based on health gains are likely to be based on equity and social justice or on the argument that individuals are unaware of important health benefits when they make their schooling decisions. Even if youth are unaware of the health benefits associated with schooling, the social value of education-based initiatives is likely to be small if those benefits are largely achieved through greater health care expenditures or costly changes in behaviour. Unfortunately, we still know very little about how education improves health. Finally, it is clear that increases in political participation will affect the democratic process; however, it is difficult to know exactly how and even more difficult to put a value on this.

References :

Albouy, Valerie and Laurent Lequien (2009) “Does Compulsory Education Lower Mortality?” Journal of Health Economics 28(1):155-168.
Card, David (1999) “The Causal Effect of Education on Earnings”, in Ashenfelter, O and D Card (eds), Handbook of Labor Economics, Vol. 3, Part A, 1801-1863.
Clark, Damon and Heather Royer (2010) “The Effect of Education on Adult Health and Mortality: Evidence from Britain”, Working Paper.
Currie, Janet and Enrico Moretti (2003) “Mother’s Education and the Intergenerational Transmission of Human Capital: Evidence from College Openings,” Quarterly Journal of Economics, 118(4):1495-1532.
de Walque, Damien (2007) “Does Education Affect Smoking Behaviors?: Evidence Using the Vietnam Draft as an Instrument for College Education,” Journal of Health Economics, 26:877-95.
Dee, Thomas S (2004) “Are there Civic Returns to Education?” Journal of Public Economics, 88(9-10):1697-1720.
Deming, David (2009) “Better Schools, Less Crime?” Working Paper.
Grimard, Franque and Daniel Parent (2007) “Education and Smoking: Were Vietnam War Draft Avoiders also more Likely to Avoid Smoking?” Journal of Health Economics, 26:896-926..
Heckman, James J, Lance Lochner, and Petra Todd (2008) “Earnings Functions and Rates of Return,” Journal of Human Capital, 2(1):1-31.
Kemptner, Daniel, Hendrik Jurges, and Steffen Reinhold (2010) “Changes in Compulsory Schooling and the Causal Effect of Education on Health: Evidence from Germany,” Working paper 10200, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim.
Kenkel, Donald, Dean Lillard, and Alan Mathios (2006). “The Roles of High School Completion and GED Receipt in Smoking and Obesity,” Journal of Labor Economics, 24(3):635-660.
Lleras-Muney, Adriana (2006) “Erratum: The Relationship Between Education and Adult Mortality in the United States,” Review of Economic Studies, 73(3):847.
Lleras-Muney, Adriana (2005) “The Relationship Between Education and Adult Mortality in the United States,” Review of Economic Studies, 72(1):189-221.
Lochner, Lance (2011) “Non-Production Benefits of Education: Crime, Health, and Good Citizenship,” in Hanushek, E, S Machin, and L Woessmann (eds), Handbook of the Economics of Education, Vol. 4, Ch. 2, Amsterdam: Elsevier Science.
Lochner, Lance and Enrico Moretti (2004) “The Effect of Education on Crime: Evidence from Prison Inmates, Arrests, and Self-Reports,” American Economic Review, 94(1): 155-189.
Machin, Stephen, Olivier Marie, and Suncica Vujic (2011) “The Crime Reducing Effect of Education,” Economic Journal, 121(522), 463-484.
Mazumder, Bhashkar (2008) “Does Education Improve Health? A Reexamination of the Evidence from Compulsory Schooling Laws”, Economic Perspectives, 2-16.
McCrary, Justin and Heather Royer (2009) “The Effect of Female Education on Fertility and Infant Health: Evidence from School Entry Policies Using Exact Date of Birth,” NBER Working Paper No. 12329,.
Milligan, Kevin, Enrico Moretti, and Philip Oreopoulos (2004). “Does Education Improve Citizenship? Evidence from the United States and the United Kingdom,” Journal of Public Economics, 88(9-10):1667-1695.
Oreopoulos, Philip (2006) “Estimating Average and Local Average Treatment Effects of Education when Compulsory Schooling Laws Really Matter,” American Economic Review, 96(1):152-175.
Siedler, Thomas (2007) “Schooling and Citizenship: Evidence from Compulsory Schooling Reforms,” Discussion Papers of DIW Berlin 665, DIW Berlin, German Institute for Economic Research.
Siedler, Thomas (2010) “Schooling and Citizenship in a Young Democracy: Evidence from Postwar Germany,” Scandinavian Journal of Economics, 112(2):315-338.
Silles, Mary A (2009) “The Causal Effect of Education on Health: Evidence from the United Kingdom,” Economics of Education Review, 28:122-128.

1 comment:

  1. Overall I think that this is a really good article, just may require some adjustment to Zambian demographics and circumstances. For example, identifying the "most disadvantaged" for targeted education is probably premature, given the overall lack of education for the masses in general. Investment in this area probably will indeed reduce crime rates, but that is hardly the primary reason for increased investment for Zambians that need marketable skills and information to improve productivity in current vocations. If the typical citizen can achieve even a fraction of the quoted $3-5 million "life-value" estimates for earnings potential, then the nation will be well ahead of where it is now. Certainly improved health outcomes may help to achieve this, but in context the benefits of disease awareness and prevention are far more imminent than the predominant concerns over issues like exercise and diet that prevail in more developed economies.

    Of the benefits listed in the article, perhaps the most relevant to Zambian economic development along sustainable lines will be the Civic Participation aspect. It is becoming increasingly vital that communities chart their own paths with as much access to information on a range of best-practices and input from local persons as possible, in order to tailor both means and ends to suit the needs and abilities of any given locality. Without meshing education into the cultural and economic realities of families and villages, practical benefit from school-based learning will continue to take a backseat to hands-on experience, which while obviously valuable in the immediate term, is resistant to innovation.


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