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Journal of Economic Perspectives: Vol. 25 No. 1 (Winter 2011)

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Priceless: The Nonpecuniary Benefits of Schooling

Article Citation

Oreopoulos, Philip, and Kjell G. Salvanes. 2011. "Priceless: The Nonpecuniary Benefits of Schooling." Journal of Economic Perspectives, 25(1): 159-84.

DOI: 10.1257/jep.25.1.159

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.

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Authors

Oreopoulos, Philip (U Toronto and Canadian Institute for Advanced Research, Toronto)
Salvanes, Kjell G. (Norwegian School of Economics and Business Administration and Center for the Economics of Education, London School of Economics)

JEL Classifications

I21: Analysis of Education
I28: Education: Government Policy
J24: Human Capital; Skills; Occupational Choice; Labor Productivity
Z13: Economic Sociology; Economic Anthropology; Social and Economic Stratification

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