How large are returns to schooling? Hint: Money isn't everything

Philip Oreopoulos and Kjell G Salvanes

No 15339, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper explores the many avenues by which schooling affects lifetime well-being. Experiences and skills acquired in school reverberate throughout life, not just through higher earnings. Schooling also affects the degree one enjoys work and the likelihood of being unemployed. It leads individuals to make better decisions about health, marriage, and parenting. It also improves patience, making individuals more goal-oriented and less likely to engage in risky behavior. Schooling improves trust and social interaction, and may offer substantial consumption value to some students. We discuss various mechanisms to explain how these relationships may occur independent of wealth effects, and present evidence that non-pecuniary returns to schooling are at least as large as pecuniary ones. Ironically, one explanation why some early school leavers miss out on these high returns is that they lack the very same decision making skills that more schooling would help improve.

JEL-codes: I20 J24 (search for similar items in EconPapers)
Date: 2009-09
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Published as Philip Oreopoulos and Kjell Salvanes, "Priceless: The Nonpecuniary Benefits of Schooling", Journal of Economic Perspectives 25 (1) (2011), 159–184.

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