Thursday, October 15, 2009
The value of school
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
Oreopoulos and Salvanes go on to make a back-of-the-envelope calculation of the size of the nonpecuniary effects. They suggest that
about three quarters of the schooling effect on selfreported life satisfaction is due to non‐pecuniary factors. A 12 percent increase in annual earnings would then imply that the total non‐pecuniary gains are equivalently worth another 16 percent increase in earnings (for a total of 28 percent).
Not to mention that College grads are graduating and getting less money because passing the SAT and graduation do not prepare one for real life. The sad fact is majority of young college grads don't really know what they want to be when they grow up.
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