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[Pages:64]IT'S NOT JUST THE MONEY

The Benefits of College Education to Individuals and to Society

Lumina Issue Papers

Philip Trostel

Professor of Economics & Public Policy University of Maine

You already know...

It is now widely accepted that education creates "human capital", which is generally understood to mean the value of the higher earnings associated with education attainment.

The "college earnings premium" is frequently used to indicate this notion.

$90,000 $80,000

Average Annual Earnings

$82,139

$70,000 $60,000 $50,000

$56,122

$26,016

$40,000 $30,000 $20,000 $10,000

$14,342

$24,010 $9,668

$31,565 $7,555

$36,178 $12,168

$32,112

$0 Less than High School High School Diploma Diploma

Some College

Associate's Degree

Bachelor's Degree

Advanced Degree

$1,800,000 $1,600,000

Present Value of Lifetime Earnings (At Age 19 using a 3% Discount Rate)

$1,593,959

$1,400,000 $1,200,000

$1,174,493

$419,467

$1,000,000 $800,000 $600,000 $400,000 $200,000

$344,001

$549,010 $205,009

$701,936 $152,926

$795,406 $246,396

$625,483

$0 Less than High School High School Diploma Diploma

Some College

Associate's Degree

Bachelor's Degree

Advanced Degree

You probably also know...

There is no sign of a shrinking college earnings premium, despite relatively more college-educated labor.

In fact, the college earnings premium has generally risen over the past several decades.

Trend in Degree Premia in Earnings

120%

100%

80%

60%

40%

20%

0%

High School Diploma

Some College

Associate's Degree

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Bachelor's Degree

Advanced Degree

"If you can't measure it, it

doesn't exist"

The "other" benefits of college are at least as important as the well-known effect on earnings.

Public policy debates about college education often omit more than half of the story.

The college education picture paints less than 500 of its words.

The "curse of the earnings premium":

Why bother showing other benefits? Promotes the perception that college education is primarily a private

good, and hence there is little need for taxpayer support.

This report highlights the frequently unmeasured (ignored) benefits of college attendance.

The purpose is to organize and compile the evidence from several different literatures.

Scope

All data are recent, typically 2012.

All dollars are 2012 values.

This study examines evidence for the United States. Except when otherwise noted, samples are ages 27 through 66. This report summarizes the benefits from attaining college

degrees, but not the benefits from college education generally.

In addition to educating students, colleges create benefits from research and public service activities.

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