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International Study Shows Clear Evidence of Economic Benefits of Educational Improvement

Press Release:

International Study Shows Clear Evidence of Economic Benefits of Educational Improvement

Washington, DC – Relatively small improvements in students’ educational performance can have large impacts on a nation’s future economic well-being, according to a new international study released today from the Paris-based Organisation for Economic Co-Operation and Development (OECD). The study uses economic modeling to show that even modest and achievable gains in student learning yield large increases in Gross Domestic Product (GDP) over the long run.

“This report provides powerful evidence that educational improvements make an important and lasting impact not only in the lives of students, but in the livelihood of nations,” said Bob Wise, president of the Alliance for Excellent Education and a former governor of West Virginia.

Making the connection between economic growth and educational attainment has long been a focus of the Alliance. Last week, through the generous support of State Farm®, the Alliance demonstrated how cutting the dropout rate in half would boost home ownership, car sales, and the economies of the nation’s fifty largest cities.

“Both the Alliance’s past work and the OECD study point to the indisputable fact that higher student achievement, whether in the form of international assessments or lower dropout rates, can have a significant and lasting impact on a community’s or nation’s economy,” said Wise. “Whether you’re talking at the city, state, national, or even international level, education and the economy are inexorably linked—better educational outcomes mean better economic outcomes.”

The OECD study, The High Cost of Low Educational Performance: The Long-Run Economic Impact of Improving PISA Outcomes, was presented at an exclusive preview event sponsored by the Alliance in Washington, DC on January 19. Eric Hanushek, a coauthor of the report and the Paul and Jean Hanna senior fellow in education at the Hoover Institution at Stanford University, and Andreas Schleicher, head of the Indicators and Analysis Division of OECD’s Education Directorate, presented the findings.

Summary of Key Findings

This report examines three scenarios to estimate what the long-term effects of educational improvement, as measured by scores on the highly regarded Programme for International Student Assessment (PISA), would be on the nation’s GDP.

  • Scenario 1: Increase average scores on PISA by 25 points over twenty years.

This relatively modest goal—less than Poland achieved in just six years, from 2000 to 2006—would result in an increase in the U.S. GDP of $40 trillion over the lifetime of the generation born in 2010. Even this minor performance improvement represents a significant increase (25 percent) over what might be expected without raising the current level of student performance.

  • Scenario 2: Bring each country to the average level of Finland.

Finland is the highest-performing country on PISA, scoring about 50 points higher than the United States in mathematics and science. Raising U.S. scores to that level would increase GDP by $100 trillion over the lifetime of a child born in 2010.

  • Scenario 3: Bring all students up to a minimum skill level.

Although the U.S. average score exceeds the PISA minimum level (400 on a 0-to-1,000 scale), about 19 percent of U.S. students perform below those levels. Simply raising the cognitive skills of those students would add $72 trillion to GDP over the lifetime of a child born in 2010.

“Think about a child born this year,” said Wise. “If we act now to improve that child’s education, the nation will reap enormous benefits over the lifetime of that child. For that child’s sake, and for the nation, we cannot delay.”

The report notes that there is uncertainty in these projections, as in any projections. But even reducing the projections to allow for plausibly minimal estimates suggests very large implications of improved cognitive skills and human capital. Even achieving just one-half the projected impact remains a remarkably important potential change in the economic growth of the United States, the report concludes.

The complete report is available at https://all4ed.org.

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The Alliance for Excellent Education is a Washington, DC-based policy, research, and advocacy organization that works to make every child a graduate, prepared for postsecondary education and success in life.

Categories: International Comparisons

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