IDEAS home Printed from https://ideas.repec.org/a/aea/jecper/v25y2011i1p159-84.html
   My bibliography  Save this article

Priceless: The Nonpecuniary Benefits of Schooling

Author

Listed:
  • Philip Oreopoulos
  • Kjell G. Salvanes

Abstract

Increasing wealth provides key motivation for students to forgo earnings and struggle through exams. But, as we argue in this paper, schooling generates many experiences and affects many dimensions of skill that, in turn, affect central aspects of individuals' lives. Schooling not only affects income, but also the degree to which one enjoys work, as well as one's 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 nonpecuniary 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.

Suggested Citation

  • Philip Oreopoulos & Kjell G. Salvanes, 2011. "Priceless: The Nonpecuniary Benefits of Schooling," Journal of Economic Perspectives, American Economic Association, vol. 25(1), pages 159-184, Winter.
  • Handle: RePEc:aea:jecper:v:25:y:2011:i:1:p:159-84
    Note: DOI: 10.1257/jep.25.1.159
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.25.1.159
    Download Restriction: no

    File URL: http://www.aeaweb.org/jep/app/2501_oreopoulos_app.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ernst Fehr & Simon Gächter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 159-181, Summer.
    2. Ofer Malamud, 2011. "Discovering One's Talent: Learning from Academic Specialization," ILR Review, Cornell University, ILR School, vol. 64(2), pages 375-405, January.
    3. Dee, Thomas S., 2004. "Are there civic returns to education?," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1697-1720, August.
    4. Sandra E. Black & Paul J. Devereux & Kjell G. Salvanes, 2005. "Why the Apple Doesn't Fall Far: Understanding Intergenerational Transmission of Human Capital," American Economic Review, American Economic Association, vol. 95(1), pages 437-449, March.
    5. Stephen Machin & Kjell G. Salvanes & Panu Pelkonen, 2012. "Education And Mobility," Journal of the European Economic Association, European Economic Association, vol. 10(2), pages 417-450, April.
    6. Philip Oreopoulos, 2006. "The compelling effects of compulsory schooling: evidence from Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 39(1), pages 22-52, February.
    7. Lange, Fabian & Topel, Robert, 2006. "The Social Value of Education and Human Capital," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 1, chapter 8, pages 459-509, Elsevier.
    8. Pedro Carneiro & Costas Meghir & Matthias Parey, 2013. "Maternal Education, Home Environments, And The Development Of Children And Adolescents," Journal of the European Economic Association, European Economic Association, vol. 11, pages 123-160, January.
    9. Costas Meghir & Mårten Palme, 2005. "Educational Reform, Ability, and Family Background," American Economic Review, American Economic Association, vol. 95(1), pages 414-424, March.
    10. Nancy Qian, 2009. "Quantity-Quality and the One Child Policy:The Only-Child Disadvantage in School Enrollment in Rural China," NBER Working Papers 14973, National Bureau of Economic Research, Inc.
    11. Lazear, Edward P, 1977. "Education: Consumption or Production?," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 569-597, June.
    12. Becker, Gary S & Tomes, Nigel, 1976. "Child Endowments and the Quantity and Quality of Children," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 143-162, August.
    13. Devin G. Pope & Jaren C. Pope, 2009. "The Impact of College Sports Success on the Quantity and Quality of Student Applications," Southern Economic Journal, Southern Economic Association, vol. 75(3), pages 750-780, January.
    14. Mingliang Li, 2006. "High school completion and future youth unemployment: new evidence from High School and Beyond," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(1), pages 23-53.
    15. Michael, Robert T, 1973. "Education in Nonmarket Production," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 306-327, Part I, M.
    16. Eric P. Bettinger & Bridget Terry Long & Philip Oreopoulos & Lisa Sanbonmatsu, 2009. "The Role of Simplification and Information in College Decisions: Results from the H&R Block FAFSA Experiment," NBER Working Papers 15361, National Bureau of Economic Research, Inc.
    17. Adriana Lleras-Muney, 2005. "The Relationship Between Education and Adult Mortality in the United States," Review of Economic Studies, Oxford University Press, vol. 72(1), pages 189-221.
    18. repec:fth:prinin:311 is not listed on IDEAS
    19. Claudia Goldin, 1992. "The Meaning of College in the Lives of American Women: The Past One-Hundred Years," NBER Working Papers 4099, National Bureau of Economic Research, Inc.
    20. Nattavudh Powdthavee, "undated". "Does Education Reduce Blood Pressure? Estimating the Biomarker Effect of Compulsory Schooling in England," Discussion Papers 09/14, Department of Economics, University of York.
    21. Daniel S. Hamermesh, 1999. "Changing Inequality in Markets for Workplace Amenities," The Quarterly Journal of Economics, Oxford University Press, vol. 114(4), pages 1085-1123.
    22. Gary S. Becker & Casey B. Mulligan, 1997. "The Endogenous Determination of Time Preference," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 729-758.
    23. Elizabeth U. Cascio & Ethan G. Lewis, 2006. "Schooling and the Armed Forces Qualifying Test: Evidence from School-Entry Laws," Journal of Human Resources, University of Wisconsin Press, vol. 41(2).
    24. Larry E. Jones & Alice Schoonbroodt & Michèle Tertilt, 2010. "Fertility Theories: Can They Explain the Negative Fertility-Income Relationship?," NBER Chapters, in: Demography and the Economy, pages 43-100, National Bureau of Economic Research, Inc.
    25. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 443-478.
    26. Jeanne Lafortune, 2013. "Making Yourself Attractive: Pre-marital Investments and the Returns to Education in the Marriage Market," American Economic Journal: Applied Economics, American Economic Association, vol. 5(2), pages 151-178, April.
    27. Riddell, W. Craig & Song, Xueda, 2009. "The Causal Effects of Education on Adaptability," CLSSRN working papers clsrn_admin-2009-15, Vancouver School of Economics, revised 16 Feb 2009.
    28. Erica Field, 2009. "Educational Debt Burden and Career Choice: Evidence from a Financial Aid Experiment at NYU Law School," American Economic Journal: Applied Economics, American Economic Association, vol. 1(1), pages 1-21, January.
    29. Ernst Fehr & Simon Gächter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 159-181, Summer.
    30. Robert H. Haveman & Barbara L. Wolfe, 1984. "Schooling and Economic Well-Being: The Role of Nonmarket Effects," Journal of Human Resources, University of Wisconsin Press, vol. 19(3), pages 377-407.
    31. Becker, Gary S, 1973. "A Theory of Marriage: Part I," Journal of Political Economy, University of Chicago Press, vol. 81(4), pages 813-846, July-Aug..
    32. Chen, Keith & Lange, Fabian, 2008. "Education, Information, and Improved Health: Evidence from Breast Cancer Screening," IZA Discussion Papers 3548, Institute of Labor Economics (IZA).
    33. Green, David A. & Craig Riddell, W., 2003. "Literacy and earnings: an investigation of the interaction of cognitive and unobserved skills in earnings generation," Labour Economics, Elsevier, vol. 10(2), pages 165-184, April.
    34. Fletcher, Jason M. & Lehrer, Steven F., 2011. "Genetic lotteries within families," Journal of Health Economics, Elsevier, vol. 30(4), pages 647-659, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Philip Oreopoulos & Kjell G. Salvanes, 2009. "How large are returns to schooling? Hint: Money isn't everything," NBER Working Papers 15339, National Bureau of Economic Research, Inc.
    2. Marc Piopiunik, 2011. "Microeconometric Analyses of Education Production in Germany," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 40, November.
    3. Strauss, Jack, 2013. "The Economic Gains to Colorado of Amendment 66," MPRA Paper 49928, University Library of Munich, Germany.
    4. Amin, Vikesh & Lundborg, Petter & Rooth, Dan-Olof, 2015. "The intergenerational transmission of schooling: Are mothers really less important than fathers?," Economics of Education Review, Elsevier, vol. 47(C), pages 100-117.
    5. Sergi Jiménez-Martín & Judit Vall & Elena del Rey, 2015. "The effect of changes in the statutory minimum working age on educational, labor and health outcomes," Working Papers 2015-07, FEDEA.
    6. Blomquist, Glenn C. & Coomes, Paul A. & Jepsen, Christopher & Koford, Brandon C. & Troske, Kenneth R., 2014. "Estimating the social value of higher education: willingness to pay for community and technical colleges," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 5(1), pages 3-41, January.
    7. Panu Pelkonen, 2012. "Length of compulsory education and voter turnout—evidence from a staged reform," Public Choice, Springer, vol. 150(1), pages 51-75, January.
    8. Lundborg, Petter & Majlesi, Kaveh, 2018. "Intergenerational transmission of human capital: Is it a one-way street?," Journal of Health Economics, Elsevier, vol. 57(C), pages 206-220.
    9. Meyer, Andrew G., 2017. "The impact of education on political ideology: Evidence from European compulsory education reforms," Economics of Education Review, Elsevier, vol. 56(C), pages 9-23.
    10. G. Brunello & M. Fort & G. Weber & C. T. Weiss, 2013. "Testing the Internal Validity of Compulsory School Reforms as Instrument for Years of Schooling," Working Papers wp911, Dipartimento Scienze Economiche, Universita' di Bologna.
    11. Meyer, Andrew, 2015. "Does education increase pro-environmental behavior? Evidence from Europe," Ecological Economics, Elsevier, vol. 116(C), pages 108-121.
    12. Del Rey, Elena & Jimenez-Martin, Sergi & Vall Castello, Judit, 2018. "Improving educational and labor outcomes through child labor regulation," Economics of Education Review, Elsevier, vol. 66(C), pages 51-66.
    13. Adam M. Lavecchia & Heidi Liu & Philip Oreopoulos, 2014. "Behavioral Economics of Education: Progress and Possibilities," NBER Working Papers 20609, National Bureau of Economic Research, Inc.
    14. Weiss, Christoph T., 2015. "Education and regional mobility in Europe," Economics of Education Review, Elsevier, vol. 49(C), pages 129-141.
    15. Amin, Vikesh & Behrman, Jere R. & Spector, Tim D., 2013. "Does more schooling improve health outcomes and health related behaviors? Evidence from U.K. twins," Economics of Education Review, Elsevier, vol. 35(C), pages 134-148.
    16. Peter H. Lindert, 2009. "Revealing Failures in the History of School Finance," NBER Working Papers 15491, National Bureau of Economic Research, Inc.
    17. Grytten, Jostein & Skau, Irene, 2017. "The impact of education on the probability of receiving periodontal treatment. Causal effects measured by using the introduction of a school reform in Norway," Social Science & Medicine, Elsevier, vol. 188(C), pages 128-136.
    18. Luc Arrondel & Nicolas Frémeaux, 2016. "‘For Richer, For Poorer’: Assortative Mating and Savings Preferences," Economica, London School of Economics and Political Science, vol. 83(331), pages 518-543, July.
    19. repec:ehl:lserod:33114 is not listed on IDEAS
    20. Committee, Nobel Prize, 2017. "Richard H. Thaler: Integrating Economics with Psychology," Nobel Prize in Economics documents 2017-1, Nobel Prize Committee.
    21. Frank van Erp & Niels Vermeer & Daniel van Vuuren, 2013. "Non-financial determinants of retirement," CPB Discussion Paper 243.rdf, CPB Netherlands Bureau for Economic Policy Analysis.

    More about this item

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:jecper:v:25:y:2011:i:1:p:159-84. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael P. Albert). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.