Education Is A Good Investment Essay

Length: 4 pages Sources: 6 Subject: Economics Type: Essay Paper: #35651395 Related Topics: Investment Banking, Art Education, Liberal Arts, Education
Excerpt from Essay :

¶ … Invest More in Education

Higher spending on education is an investment in our collective future. It is an investment in our children. It is an investment in our community. It is an investment in the future world in which we want to live. A more educated community has better economic outcomes. A more educated community has hope. A more educated community is empowered to create their own pathways to their dreams. A more educated community has the ability to understand what really matters, rather than getting bogged down in inane minutiae. This paper will argue that greater investment in education pays dividends for our world down the road. We have a lot of challenges to solve, and they will not be solved any other way. Investment in education will benefit our community.

The Value of Education

What anybody with half a brain already knows intuitively, that education is a worthwhile investment for the community and for our children, has been demonstrated in a number of different studies. One need not rely on logic alone to reach the determination that investment in education is beneficial. In a study for the World Bank, education investment has been shown to improve both individual and community outcomes. The issue has been studied since the early 1970s, and the evidence is always that education is an investment that pays a positive return. Psacharapoulos (1994, p.1325) notes that investment in education yields positive results in terms of increasing a country's per capita income, and that education investment has positive returns in the private competitive sector as well.

Studies have showed that investment in


The reason for this is that there are diminishing returns to education investment. In many parts of the world, investment in female education has lagged that of male education, and as a result, there are greater incremental gains in investing in girls, because they have further to gain. Thus, investing in educating females yields greater returns than investing in men, who usually have already received significantly more investment (Psacharapoulos, 1994, p.1327). Likewise, education in rural areas tends to yield better returns -- the value of investment where there has been little before is greater than the value of education investment in areas where there already was some (p.1328). The rate of return on investment money in sub-Saharan Africa was found to be over 13%, versus less than 7% in OECD nations (p.1331).


If Psacharapoulos' work focused on the broad-based economic benefits of education, that is not the only perspective under which the call for greater investment in education is supported by the literature. Villa (2005) uses the perspective of people's well-being. It is reasonable to assume at least some correlation between wealth and happiness -- at least to the extent that one is wealthy enough not to worry about food and shelter. But Villa goes further, and determines that social outcomes are also superior -- people who are better educated are happier, and more satisfied with their lives, than people who are not. Education provides greater security, but it also provides more opportunity, in particular to pursue dreams and achieve a level of actualization.

Methods of Investment

It is an interesting question, if one accepts the proposition that increased education investment is valuable, to examine if the type of investment in education matters. Schmit, Monteiro and Omar (2014) investigated a…

Sources Used in Documents:


London Economics (2012). Assessing the deadweight loss associated with public investment in further education and skills. BIS Research Paper Number 71. Retrieved May 18, 2015 from

Psacharapoulos, G. (1994). Return on investment in education: A global update. World Development. Vol. 22 (9) 1325-1343.

Schimit, P., Monteiro, L. & Omar, N. (2014). Cash transfer program and education investment: A model for social evolution. Communications in nonlinear science and numerical simulation. Vol. 19 (3) 570-577.

Solesvik, M., Westhead, P., Matlay, H. & Parsyak, V. (2013). Entrepreneurial assets and mindsets. Education + Training. Vol. 55 (8/9) 748-762.

Cite this Document:

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