Economics

Educating the Consumers

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Science  02 Jul 2010:
Vol. 329, Issue 5987, pp. 14
DOI: 10.1126/science.329.5987.14-a
CREDIT: MICHAEL DWYER/ALABY

Many efforts to improve education aim to increase the supplies of teachers and schools; in some cases, supply may outstrip demand, which is thought to be driven in part by long-term earnings that accrue with increasing education. However, many families, especially those in developing countries, may lack complete information about long-term returns, and misperception of the economic benefits could influence demand. In the Dominican Republic, for example, large declines in enrollment are seen after the eighth grade, which marks the final year of compulsory education. Jensen asked 2250 of those eighth-grade boys to estimate the earnings of adult men who had completed primary school only, and also of men who had spent 4 more years to complete secondary school. The estimated benefit for completing secondary school was only one-fourth as large as the actual benefit. A randomly chosen subset of boys was then given accurate information about the enhanced earnings. Four years after the initial survey, those boys had completed roughly 0.2 more years of schooling as compared to boys who were not given earnings information. Although some educational interventions offer near-term financial rewards directly to students, for example in return for high test scores or reading lots of books, a supply of earnings information may be an inexpensive way to promote more years of schooling.

Quart. J. Econ. 125, 515 (2010).

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