INTERNATIONAL HIGHER EDUCATION
NUMBER 40, SUMMER 2005
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INTERNATIONAL HIGHER EDUCATION |
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NUMBER 40, SUMMER 2005 |
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The Benefits of Higher Education: A 50-State Analysis Sarah Krichels
It is widely held that investing in higher education can bring significant benefits to both individuals and society as a whole. In terms of the global economy, the importance of higher education becomes paramount as knowledge plays an increasingly key role in economic development. Both in the United States and abroad, many studies have articulated the benefits of higher education, showing that an educated workforce increases productivity along with individuals' ability to sustain employment and earn higher income. Subsequently, the nation sees a return in the form of a higher tax base and a rise in demand for goods and services. In addition, so the argument goes, an educated workforce with a lower unemployment rate diminishes the demand for government-provided social services. In the report Financing Education-Investments and Returns, published by UNESCO in 2002, researchers found that in 16 middle-income countries, human capital investments may have accounted for roughly half a percentage point in the annual growth rates of those countries. Likewise, a number of papers published by the Organization for Economic Cooperation and Development have consistently shown that increased educational attainment leads to expansion of human capital, which plays a key role in economic development and per capita output growth. These factors lead to a rise in posttax earnings and in employment prospects for individuals. As illustrated above, discussions about the value of higher education highlight the economic gains of the students and, to a lesser degree, society—often to the exclusion of the other public and private benefits. However, many benefits that accrue to individuals or groups are not directly related to economic, fiscal, or labor market effects. In the United States, several organizations have chosen the public good of higher education as a key theme of their ongoing work, ranging from the National Forum on Higher Education and the Public Good to the American Association of Colleges and Universities, among many others. Recently some efforts have been made to articulate all the benefits that result from the investment in higher education, both to individual students and society (see the Institute for Higher Education Policy's Investment Payoff and the College Board's Education Pays). Some of the main areas of measurable benefits include enhancement of personal health, community involvement, political participation among the people, and concern for the quality of life for both society and the individual.
Localized Benefits: The U.S. Example
In each of the six indicators, not only did benefits accrue nationally, but the assumptation held true at the more localized state levels as well. For example, in March 2004, the national average personal total income of U.S. workers age 25 and older with a bachelor's degree was $48,417, roughly $23,000 higher than for those with a high school diploma. Similarly, 6 percent of the U.S. population age 25 and older with a high school diploma were unemployed, and 1 percent reported receiving some form of public assistance in the previous year. In comparison, those with a bachelor's degree reported income that was roughly $23,000 higher, and only 3 percent for were unemployed; less than one-half percent of those with a bachelor's degree reportedly received some form of public assistance in 2003. At the state level, the financial and economic benefits of holding a bachelor's degree was clearly evident across all the states. Individuals with a bachelor's degree reported higher earnings (an additional $12,000 to $32,000 per year) and lower levels of unemployment (a 10 percent to 100 percent decline in unemployment) than individuals with a high school diploma. Overall, in almost every state a greater proportion of those with a high school diploma reported receiving public assistance in the prior year, with the difference ranging from 3.5 percent more to 0.4 percent less (two states showed that a higher proportion of those with a bachelor's degree reported receiving public assistance, while two states showed no difference between the populations). In addition, in 28 states no one with a bachelor's degree reported receiving any public assistance. Despite differences among the states, therefore, a consistent pattern emerges: higher salaries, lower unemployment, and a reduced demand for public assistance programs were found among those with a bachelor's degree. A similar trend emerges when examining the noneconomic benefits of higher education. Across the United States, 82 percent of individuals with a high school diploma reported being in "excellent, very good, or good" health, compared to 93 percent of those with a bachelor's degree. At the state level, respondents with bachelor's degrees still reported higher rates of good health than those who hold a high school diploma, with increases ranging from 5 to 23 percent. Similarly, 21 percent of the U.S. population age 25 and older who had a high school diploma reported ever volunteering, compared to 36 percent of those with a bachelor's degree or higher. In all states, higher levels of education were correlated to the likelihood that an individual would volunteer and the difference ranged from 5 to 34 percent. Lastly, 56 percent of U.S. citizens age 25 and older and had a high school diploma responded that they had voted in the 2000 presidential election, compared to 76 percent of bachelor's degree recipients. All of the states exhibited voting rates that were substantially lower for residents with a high school diploma as opposed to a bachelor's degree, with the difference ranging from 8 to 28 percent; nationally, the difference was 20 percentage points.
Next Steps
The most striking lessons are therefore threefold: first, the quantifiable benefits of higher education extend beyond labor market and economic impacts and warrant more scrutiny. Second, the benefits of higher education accrue at multiple levels, not just the aggregate national level. Third, and perhaps most important, the benefits of higher education vary at the local level and ought to be included in policy-related discussions. In any country, an expanded understanding of the localized payoffs that result from the public and private expenditures in higher education could go a long way toward improving the prospects for local and sustainable economic development, social stability, and individual prosperity. [Online] Available: http://www.bc.edu/bc_org/avp/soe/cihe/newsletter/Number40/p14_Krichels.htm
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