Higher Learning, Greater Good

A college education has long been acknowledged as essential for both personal success and economic growth. But the measurable value of its nonmonetary benefits have until now been poorly understood. Walter W. McMahon, a leading education economist, suggests that higher education accrues significant social and private benefits. McMahon argues that there is a major skill deficit in the United States and other OECD countries because of technical change and globalisation. Yet with a college degree comes better job opportunities, higher earnings, and even improved health. Higher education also promotes democracy and sustainable growth and contributes to reduced crime and lower state welfare and prison costs. These social benefits are substantial in relation to the costs of a college education. McMahon offers a human capital perspective on this and other higher education policy issues. He suggests that poor information about the value of nonmarket benefits leads to private underinvestment. He offers policy options enabling state and federal governments to increase investment in higher education. Adequately reforming higher education policy, McMahon argues, is also critical for reducing inequality and encouraging growth, both important in the present era of globalisation.