Priceless: The Nonpecuniary Benefits of Schooling

TLDR

Schooling shapes income, job satisfaction, employment prospects, health, family decisions, patience, risk behavior, trust, and consumption value beyond wealth. The paper argues that schooling generates diverse experiences and skills that influence key life aspects, and presents evidence that nonpecuniary returns are at least as large as pecuniary ones. The authors discuss mechanisms by which schooling affects outcomes independently of wealth, using evidence that nonpecuniary returns match or exceed pecuniary returns. Early school leavers miss high returns because they lack decision‑making skills that additional schooling would develop.

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.