What exactly are
the benefits of education?
This might seem like an obvious
question or a trivial topic,
but, in fact, it involves some very deep 
economic and even philosophical issues.
First of all, education increases 
human capital in the labor force
and that raises wages.
Workers who can read and write 
very well are more productive
than workers who cannot.
Workers who have a master's degree or 
PhD degree in electrical engineering
are also more productive.
Furthermore, these workers 
may be more innovative
and innovation is one of the major
drivers of economic growth.
An educated workforce is also 
more able to accept and use
the innovations generated by others.
Imagine, for instance, education helping 
a worker work with computers.
Many of the most important benefits of 
education are often quite intangible.
For instance, education seems to develop 
a greater sense of conscientiousness
both in the school, but also 
ultimately, later, in the workplace
and also in individuals'
roles as citizens.
If you look at our video 
units on corruption,
there it was found that societies 
which have greater degrees of trust
and greater degrees of cooperativeness
can also be less corrupt.
So, through these indirect channels,
a well-educated society may become
a less corrupt society
and thus a society better able 
to enjoy the fruits of economic growth.
Education may also make for
better voters, better informed voters,
and a more involved citizenry.
Work by economist Bryan Kaplan has shown
that if individuals are educated,
they are more likely to understand 
the perspectives of economists
on economic growth and act accordingly 
when they get involved in politics.
That may sound pretty obvious,
but part of the puzzle is that 
when we look at the numbers,
it's surprisingly difficult to discover 
what exactly is the causal connection
between education and economic growth.
There are at least two major problems.
The first is trying to figure out 
cause and effect.
It's obvious that wealthier nations 
have more education.
But did they become wealthier nations 
because they're more educated
or are people simply more educated 
because they live in a wealthier nation?
The second problem arises 
once we consider that
it's the quality of education
which matters
and not just the number of years 
that a person has gone to school for.
So, if it's quality of 
education that matters,
the problem, then, is the quality of
educational institutions tends
to be correlated with the quality of
a lot of other institutions
in a given country.
So, it's difficult to figure out whether 
it's the quality of education
that's contributing to economic growth
or the quality of institutions 
in the country more generally.
Pretty much everyone agrees
that education yields
substantial private returns for 
people who undergo the education.
That is, if you graduate from a good
degree from a good university or college,
you will earn considerably more money.
But that's quite different from thinking
that getting more educated for yourself
is going to benefit a lot 
of other people in society,
and when it comes to estimating
that social return from education,
we are still somewhat in the dark.
Sometimes, I think about
the social returns to education
in Michael Kremer's O-ring model.
And, by the way, see Alex's video unit
on the O-ring model of economic growth.
Here's a way to think about how this works.
That education matters,
but for education to really push 
a developing economy into take off,
that economy has to get 
a lot of other things right also.
So, if that economy has improved
its system of education
and done everything else wrong,
well, that additional quality
education doesn't really matter much.
Think of take-off economic growth 
as a process requiring a developing nation
to get 10, 20, or 30 different things
right including education.
So, education does really matter, it's one
of the things you have to get right.
But, getting education right alone might
in fact yield quite small social returns.
There are many different sources
you can read on this topic,
stretching all the way back to 
the classic writings on education,
from the Ancient Greeks.
But, nonetheless, for a start 
on some contemporary sources
using economic reasoning, 
I would point you to these articles.
