Published November 5, 2012 | September 2012 issue
The Blake School
In evaluating the beneficial externalities that justify government support for higher education, society must look beyond the economic benefits, such as increased productivity. Individuals who have invested in higher education develop stronger civic and communal values. Education strongly encourages political activity, public awareness, community involvement, personal and familial health, reduction in crime and acceptance of basic democratic values. These behaviors occur because investment in human capital increases the opportunity cost of inefficient time and resource allocation. Government investment in education is not only an investment in the economy; it is also an investment in the strength of the democracy itself.
The economics behind the higher rates of civic activity resulting from education can be explained by examining the costs and benefits of socialization. Glaeser, Ponzetto and Shleifer (2007) state, “A primary aim of education is socialization” (p. 79). Fundamentally, education imparts stronger communication and social interaction skills. An individual capable of effective communication increases his/her potential contributions to a group effort and the group’s potential as a whole. As communication becomes easier, the cost of collaboration decreases. The opportunity cost of rejecting cooperation also increases with communication proficiency. The well educated spur their peers to participate in politics by using their developed persuasion/communication skills. Educated individuals are drawn toward collaboration because a group of efficient communicators is more effective than the sum of the individual parts (due to specialization). These individuals understand the necessity of cooperation to effect political change (see Glaeser, Ponzetto and Shleifer 2007).
The effects of education on democratic activity are clear. Dee (2003) states that college entrance correlates to an increase in voting by almost 30 percent above the average. He finds that education increases the rate of newspaper readership and significantly raises support for free speech. Glaeser, Ponzetto and Shleifer (2007) show that college graduates are overwhelmingly more likely to join groups and organizations. Dee (2003) and Glaeser, Ponzetto and Shleifer (2007) demonstrate that college graduates are more likely to “volunteer” to combat local problems (20 percent and 29 percent, respectively). Wolfe and Zuvekas (1995) state that, after income, education is the “primary determinant of donations” (p. 8) to charitable causes. Their research finds that college graduates dedicated twice as many hours toward volunteering as did high school graduates. Educated individuals pursue these civic behaviors because their stronger social interaction skills increase the benefits and decrease the costs of social interaction.
Beyond direct civic values, education reduces crime and promotes healthy lifestyle choices. A report issued in 2000 by the Joint Economic Committee of the U.S. Congress (Saxton 2000) states that the average crime rate in the top 15 “most educated” states was 20 percent lower than the same rate in the 15 “least educated” states. The report concludes, “Education has a greater effect on crime reduction than the higher income that is associated with superior educational attainment” (pp. 10-11). The high costs, both direct and indirect, accompanying the legal consequences of criminal activity discourage individuals with higher education from participating in illegal behaviors.
Wolfe and Zuvekas (1995) document additional benefits of education. They indicate that education positively affects the individual’s life expectancy and health. They propose that these health improvements arise from better information about nutrition, healthy activities and use of health services, along with a decline in health-harming activities. This claim is supported by their quantitative conclusion that additional years of schooling decrease the amount of cigarettes consumed, reduce the likelihood of heavy drinking and increase the average amount of exercise. Wolfe and Zuvekas (1995) also realize that children of more-educated parents tend to experience lower rates of infant mortality and low-weight births. Education helps individuals recognize the benefits of healthy behavior and the costs of unhealthy habits, positively affecting the health of the individuals and those closely associated with them.
Higher education, by increasing an individual’s marginal productivity, raises the opportunity cost of nonoptimal choices. This higher cost induces individuals to make better choices, which generates beneficial externalities that are highly desirable in a democratic society. Higher education produces individuals who effectively cooperate to accomplish their political aims. These individuals are politically invested, active in their communities, charitably oriented, healthier and law-abiding. Utility-maximizing, educated individuals will avoid costly behavior while realizing the benefits of civic participation.
The presence of these beneficial externalities indicates that the free market alone will fail to produce the optimal supply of individuals with higher education. Government policy should aim to increase the number of educated individuals by reducing the costs of higher education through subsidies. The government currently subsidizes higher education through student loan programs and scholarship opportunities. Such subsidies are currently under attack for their “inefficiency.” Before reducing funding for student loan programs, voters and policy officials must understand that cuts in funding will reduce the presence of the externalities brought about through higher education. Cutting subsidies could weaken the vitality of our democratic society. Before slashing these valuable aids, the “inefficiencies” of education subsidies must be weighed against the political virility, community health and civic values they bring about.
Dee, Thomas S. 2003. “Are There Civic Returns to Education?” National Bureau of Economic Research Working Paper 9588.
Glaeser, Edward L., Giacomo A. M. Ponzetto and Andrei Shleifer. 2007. “Why Does Democracy Need Education?” Journal of Economic Growth 12 (2): 77-99.
Saxton, Jim. 2000. “Investment in Education: Private and Public Returns.” Washington, D.C.: Joint Economic Committee, U.S. Congress.