Monday, July 08, 2013

OECD study: investment in tertiary education pays for individuals and the public

The Organisation for Economic Cooperation and Development (OECD) has published Education at a Glance, 2013, which provides data on the structure, finances, and performance of education systems in more than 40 countries, including OECD members and G20 partners.  The title says "at a glance," but the report contains many education-related indicators along with analysis.  The OECD has also prepared detailed country profiles, and video, slide and Prezi presentations.

There is way too much to summarize here, so let me show you just one example -- the private and public returns on tertiary education for men.  (They also report on women).

The private returns on investment in tertiary education are substantial.  Not only does education pay off for individuals, but the public also benefits in the form of greater tax revenues and social contributions.  The following table shows the public and private gains associated with a man attaining tertiary education (2009) as compared with upper secondary or post-secondary non-tertiary education.

The net public return on investment for a man with tertiary education is over US$100,000 across OECD countries – almost three times the amount of public investment (direct cost plus foregone tax on earnings). For a woman, the public return is around US$60,000, almost twice the public investment.  Note that the public return for the United States is second only to that of Hungary.

The report includes the data in tables and downloadable spreadsheets and spells out the methodology and definition of indicators in detail.  Here, for example, are the indicators leading to the table shown above:

Most of this data is from 2009, so critics might counter that the cost of education has risen substantially since that time and the payoffs have dropped, and they would be correct.  On the other hand, we are experiencing a spurt of innovation in online education.
In the nations surveyed, education paid off handsomely for individuals and the public.  My guess is that, as we improve online education and begin to define its role in certification and employment, the payoff from education will grow.
If this report sounds interesting, you can download a copy  here.  Note that it includes links to Excel spreadsheets with all of the raw data, so you can draw your own conclusions. 

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