3 Education
We must educate our masters.— Robert Lowe, Chancellor of the Exchequer (1868– 73)Education is the route to a career, and that is a major rea-
son for its importance. It benefits society, and society pays
the educated individual for those benefits. In the 1950s
under 10% of Britons went into higher education; now it is
nearly a half. A similar educational explosion has happened
worldwide (see Figure 3.1). So is education mainly a route
to higher productivity and better pay; or is it also a good in
itself?^1
Education certainly raises income, as we saw in the last
chapter. And this effect has been remarkably sustained de-
spite the huge increase in the number of highly educated
people. Clearly the demand for educated workers has in-
creased at least as much as the supply, at least in the United
States and the UK.^2 And it is this wage premium that, in
part at least, draws people into higher education.
But education also provides more than just extra income
to the person who is educated. It provides an interesting
and potentially enjoyable experience for students; it edu-
cates people as citizens and voters; it generates higher tax
payments; it reduces crime (see Chapter 7). And it provides
for the individuals concerned a personal resource, interest-
ing work, and additional capacity for enjoyment through-
out their life.^3 In this chapter we investigate only this last
set of (“direct”) benefits, using our standard framework of