Is there an economist in the audience?

by Sasha Alyson

To promote an “education” goal, U.N. agencies and global charities push the global South to get all children into school, on the grounds that this will produce handsome payoffs in increased productivity and wages. For example:

• “One additional school year can increase a woman’s earnings by 10% to 20%.” —Global Partnership for Education

• “Every additional year of primary school boosts girls’ eventual wages by 10-20 per cent, and an extra year of secondary school by 15-25 per cent.” –UNICEF

• Shoes “are often required for school attendance in many countries. And every year of school can increase a child’s future earnings by 10%.” — Toms Shoes (which will give a free pair to a child in need, if you buy a pair)

• “[F]or girls in particular, every of year of schooling beyond the fourth grade increases individual wages by as much as 20%.” –“Equitable Learning for All in the Post-2015 Development Agenda,” which “was coordinated by the Center for Universal Education at Brookings, Save the Children and Women Thrive Worldwide.”

• “25% increase in wages later in life resulting from a single year of secondary education” –Save the Children, New Zealand.

• “According to UNESCO, a single year of primary education can increase a girl’s wages later in life by up to 20%. An extra year of secondary school can increase their wages by up to 25%.” – Concern USA

• “…each year of secondary school can add between 15 and 25 per cent to [an educated girl’s] salary.” –New Stateman

A quick internet search will turn up many other examples, usually as part of a fund-raising appeal. Often no source is given, I suspect they frequently just copy one another. And embellish: Save the Children changed “15-25% increase” into “25% increase.” When a source is given, nearly always it is (or traces back to) a certain 2002 World Bank report: Returns to Investment in Education: A Further Update, by George Psacharopoulos and Harry Anthony Patrinos. World Bank Policy Research Working Paper 2881, 2002. (Clicking this link will download the PDF.)

As I read the actual paper, I found many gaping holes between what it says, and the policies that it’s being used to promote. Here are some highlights.

The paper is titled “Returns to Investment in Education.” From what I can figure out, it attempts to measure just that – not how much an extra year of schooling will increase wages. However, it uses something called Mincerian analysis, which I do not pretend to understand, but perhaps that in some way changes the picture. Is there anyone who understands this and would like to help me out?

The 2002 study is explicit that it looks at benefits to the individual who gets more schooling, not to society: “Whereas at the micro case, as amply demonstrated above, it is established beyond any reasonable doubt that there are tangible and measurable returns to investment in education, such evidence is not as consistent and forthcoming in the macro literature.” (Likewise, one might say: If you stand up at the ball game, yes, you’ll see better. We’re not sure yet about the people behind you.) A paper in the European Economic Review, Private versus social returns to human capital, suggests that in developing countries, people with more schooling often get jobs in a bloated government bureaucracy. They individually get a high return on their investment, as reported by these studies; but the social benefits of another bribe-seeking functionary are small or negative.

This report provides an overview of earlier studies, of which the median year was 1986. Since these studies looked at adult wages, they were assessing schooling that took place in the 1950s to the 1980s…. in countries ranging from Germany to Ghana. Even in the best of circumstances, it would be irresponsible to use this data to tell developing countries what’s best for them today.

And the current circumstances aren’t that good: All the evidence I can find suggests that school quality in most developing regions has declined dramatically, as attention has shifted from education quality, to a focus on raising enrollment numbers.

Furthermore, some of the value of that diploma, 30 years ago, came from its relative scarcity. As more people finish school, that value drops. (The World Bank paper does mention diminishing returns, the aid agencies never do.)

One co-author of the 2002 paper still works at the World Bank. I wrote to ask if he thought these claims were a reasonable interpretation of his findings. He didn’t answer the question; he merely suggested that “[t]here could have been a regrouping of the data to make a claim. I don’t know. Or a subset of countries?” (No, sir, I doubt they even read the report, they certainly didn’t regroup the 30-year-old data.) It sounds to me like he didn’t think these claims were supported by his paper, but neither did he wish to offend anybody.

I believe that by pushing enrollment as if it were education, and as the key to development, these agencies do great harm. They’ve been doing it for thirty years, and can see it’s not working – UNESCO has even stated that “More than one-half of children and adolescents are not learning worldwide,” and “In every region, most children not learning are in school.” But they continue trying to fill these failing schools.

Why? You’re an economist (right?) — follow the money. “Help us improve education for the world’s poorest children” has strong fund-raising appeal — even more so if its girls’ education. Improving the quality of education is hard, and arguably impossible for a foreign agency with top-down plans, trying to spend its way to success. Building schools and increasing enrollment is easy. As long as you can convince everyone that this is the answer, you can continue forever.

This is no small issue. More than half the children on the globe are sitting in schools that are badly failing them. Yet this gets very little attention.

I’d like to hear from a few others who have the background to help me look at this, to tell me if any of my conclusions seem wrong. I’ve already written about this some, and expect to do so again. If you’re in a position to also call attention to the issue, please do so.

You can email me at: – just fix the mis-spelling, and add the necessary symbol.

Related stories

Leave a Reply