Myth that education brings economic prosperity

Alison Wolf, Project Syndicate

We all know that more education is a Good Thing, especially for our economic futures. This is why many countries, particularly in Europe, have numerical targets driving their education policies: 50 percent participation in post-secondary education in the UK or Sweden, for example, or 80 percent to baccalaureate level in France. Chancellor Schroeder's big idea for solving Germany's economic problems is, of course, education: Including yet more undergraduates in a system struggling to cope with those it has.

Governments see their main job as delivering economic prosperity, and they view education as a necessary and reliable tool for achieving that end. But is it?

We are told that in a "knowledge economy," a country needs ever more graduates and formal qualifications to stay competitive. But education simply does not deliver economic growth the way our politicians -- and businessmen -- believe: More education in does not mean more growth out. Worse, the education policies that follow from current beliefs have serious negative consequences for opportunities for young people and the quality of education itself.

The argument that education matters for the economy is plausible because, at one level, it is obviously right. A modern society does need educated people: Not just engineers, chemists, and doctors, but millions of people who can write coherent letters, fill in complicated forms, explain insurance policies, and interpret statistical data from machines on factory floors. Some of these skills can be learned only in universities; others can (and should) be mastered in primary and secondary schools.

Employers naturally tend to hire the most educated workers on offer, and so as the number of graduates increase, so does the number of "graduate" jobs. However, every study I know of -- whether British, Scandinavian, or American -- agrees that large numbers of these "graduate" jobs require no more than they did when non-graduates performed them perfectly well. In this sense, many societies are already "over-educated."

But perhaps this is irrelevant. Maybe better-educated workers do their jobs more efficiently, in which case we will surely find a clear relationship between educational attainment and economic growth.

Alas, no. A few recently industrialized countries have pursued successful government-driven education strategies that seem to boost economic development. But for every such case -- South Korea is the favorite example -- there is another, like Hong Kong, where meteoric economic growth had nothing to do with centrally planned education policy. Instead, parents pushed their children towards the best schools to give them an individual head start -- something parents do the world over -- only after they got richer.

Moreover, for every South Korea, and every Hong Kong, we can also find developing countries where expanding education merely fueled competition for white-collar jobs in a bloated, deadweight state bureaucracy. Countries like this explain why large international studies often find a negative relationship between education and growth rates.

Egypt is a classic example of this. Between 1970 and 1998, its primary school enrollment rates grew to over 90 percent, secondary schooling soared from 32 percent to 75 percent, and university education doubled. Egypt started the period as the world's 47th poorest country; it ended the period as the 48th poorest.

But it is not only among developing countries that links between education and growth prove elusive. Switzerland has been one of the richest countries in the world for a century -- and not because of its natural resources. Yet it has the lowest rate of university attendance in Western Europe.

If you look for a relationship between children's performance on international surveys of achievement, and their countries' growth rates twenty years on, you will look in vain. No such relationship exists. So, while any developed country obviously needs an educated population, the idea that having the most education will get you the most prosperity is a chimera.

Does this matter, though? Surely, education has other virtues, over and above its economic role. So maybe we should stop criticizing and start celebrating governments' enthusiasm for spending on education.

But this would ignore the dark underside of our educational spiral. The creation of more "graduate" jobs only proves that as credentials become more common, they become more important. Moreover, in the past, someone who left school without the "right" qualifications could still succeed, through an apprenticeship or by working his way up from the shop floor. Today, that is becoming impossible: we are creating societies in which the sheep and the goats are marked for life in their teens.

As university attendance becomes more common, fewer capable young people enter vocational training. Yet our economies still need highly trained craftspeople far more than another batch of arts graduates.

Moreover, rapid expansion of university education all too often comes at the expense of quality. Education is expensive because it uses people: There are no vast economies of scale or leaps in productivity. Relative pay for teachers has been dropping as their total numbers increase, which affects teacher quality. University classes become larger, which means that students are taught less effectively. It becomes harder to maintain good university-based research because of the demands of other parts of the education budget.

Is this really the best route to a vibrant economy and a civilized, cultured, and open society?

The writer is Professor of Management and Professional Development, King's College London, and author of Does Education Matter? Myths about education and economic growth.