Standard estimates of the economic value of additional schooling, based on earnings differences associated with differences in the level of schooling attained, cover only a portion of the total effects of education that are valued by citizens. We first identify a catalog of nonmarketed effects, many of which have been recently studied by economists, and then propose a procedure for estimating a willingness-to-pay value for these effects. Using empirical estimates of the magnitude of a selection of these effects found in the literature, we calculate willingness-to-pay values using our proposed procedure. These illustrative calculations suggest that standard estimates of the benefit of incremental schooling substantially understate the full value of such investments.
A growing body of work suggests that education offers a wide range of benefits that extend beyond increases in labor market productivity. Improvements in education can lower crime, improve health, and increase voting and democratic participation. This chapter reviews recent developments on these "nonproduction" benefits of education.
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