The Costs and Benefits of an Excellent Education for All of America’s Children

Levin, Henry M.; Belfield, Clive; Muennig, Peter A.; Rouse, Cecilia

Broad policy decisions in education can be framed around a simple question: Do the benefits to society of investing in an educational strategy outweigh the costs?
We provide an answer for those individuals who currently fail to graduate from high school. The present cohort of 20-year olds in the US today includes over 700,000 high school dropouts, many from disadvantaged backgrounds. We investigate the economic consequences of improving their education.
First, we identify five leading interventions that have been shown to raise high school graduation rates; and we calculate their costs and their effectiveness. Second, we add up the lifetime public benefits of high school graduation. These include higher tax revenues as well as lower government spending on health, crime, and welfare. (We do not include private benefits such as higher earnings). Next, we compare the costs of the interventions to the public benefits.
We find that each new high school graduate would yield a public benefit of $209,000 in higher government revenues and lower government spending for an overall investment of $82,000, divided between the costs of powerful educational interventions and additional years of school attendance leading to graduation. The net economic benefit to the public purse is therefore $127,000 per student and the benefits are 2.5 times greater than the costs.
If the number of high school dropouts in this age cohort was cut in half, the government would reap $45 billion via extra tax revenues and reduced costs of public health, of crime and justice, and in welfare payments. This lifetime saving of $45 billion for the current cohort would also accrue for subsequent cohorts of 20-year olds.
If there is any bias to our calculations, it has been to keep estimates of the benefits conservative. Sensitivity tests indicate that our main conclusions are robust: the costs to the nation of failing to ensure high school graduation for all America’s children are substantial.
Educational investments to raise the high school graduation rate appear to be doubly beneficial: the quest for greater equity for all young adults would also produce greater efficiency in the use of public resources.


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More About This Work

Academic Units
Education Policy and Social Analysis
Teachers College, Columbia University
Published Here
November 10, 2016