Discussion- Social and Nonmarket Benefits from Education in an Advanced Economy

The extensive literature on individual returns to education has been very influential on the thinking of economists and policymakers alike regarding the optimal amount of education for an individual and also the kinds of intervention that governments can or should undertake in educational markets. Wolfe and Haveman argue that many important social and nonmarket returns from schooling are being ignored. I am quite sympathetic to this view and believe that the investigation of nonmarket returns and externalities from education is a very important area for research. Wolfe and Haveman focus on a number of these social and nonmarket benefits. In particular, they emphasize that greater schooling can lead to greater schooling of offspring, to better health for oneself and one’s family members, to better consumer choices, to better fertility choices, to lower participation in criminal activities—and that greater schooling may have peer group effects related to the above choices. This is a long list, and if only some of these benefits were important, it might be enough to change our views about what the optimal amount of schooling is for an individual from a social point of view. But one could add more standard social effects from schooling. There could be external returns to education. For example, the higher education of one’s colleagues might increase one’s productivity, or more-educated workers could undertake innovations that other workers in the economy might use. In addition, more-educated workers could make better political decisions. Interesting related questions are whether these external and social