A Conceptual Framework: Public and Private Benefits of Higher Education

1. A Conceptual Framework:Public and Private Benefits of Higher Education Jamie P. Merisotis, President The Institute for Higher Education Policy www.ihep.com

2. Common Benefits and Common Responsibilities • Financing of higher education is a topic that transcends national boundaries • Role of higher education in economic and social development is growing THE INSTITUTE for Higher Education Policy

3. Concerns about financing are related to a variety of goals • Massification of higher education • Improved educational equity for historically disadvantaged populations • Enhanced educational quality THE INSTITUTE for Higher Education Policy

4. Investment in higher education • Investment in higher education has tangible benefits that are both public and private • Public policy dialogue of investment must continue to reinforce these dual benefits THE INSTITUTE for Higher Education Policy

5. Why should an articulation of public and private benefits matter? • In the absence of understanding benefits selective investment becomes possible • When policymakers and the public do not realize the benefits, other public policy priorities may gain more support for funding THE INSTITUTE for Higher Education Policy

6. Other important reasons • Scrutiny of higher education is increasing • Calls for accountability combined with concern about tuition and payment mechanisms have realigned the public dialogue • These concerns necessitate the need to catalog the benefits of higher education THE INSTITUTE for Higher Education Policy

7. Characterizing higher education’s benefits • Attempts to characterize benefits are likely to be imperfect and incomplete • Imperfect because methods of classifying benefits as public or private are inexact • Incomplete because efforts to measure or describe them are sometimes difficult THE INSTITUTE for Higher Education Policy

8. Four categories of benefits • Public economic benefits • Private economic benefits • Public social benefits • Private social benefits THE INSTITUTE for Higher Education Policy

9. Specific private economic benefits • The following chart compares the ratio of average annual earnings of tertiary graduates with those with less than a tertiary degree • The resulting analysis shows that the earnings premium of university-level graduates is particularly high THE INSTITUTE for Higher Education Policy

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11. For example... • In Canada the earnings of those with an educational level below upper secondary are 87% of those with a university-level education • The earnings of those with a university-level education are 156% of those with an upper secondary education • In Germany the percentages are 78% and 163% respectively THE INSTITUTE for Higher Education Policy

12. Private economic benefits • The next chart examines the employment and unemployment rates of those with varying levels of education • The employment rates of those with a university-level education are higher than for other groups, while their unemployment rates are lower THE INSTITUTE for Higher Education Policy

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14. For example... • Data from Poland shows that the unemployment rate for those with a university-level education is 1.9% • For those with only an upper secondary education the rate is 9.6% • For those in Australia the rates are 2.9% and 5.9% respectively THE INSTITUTE for Higher Education Policy

15. Private social benefits • We next examine the variations in health behaviors and experiences of the U.S. population according to educational attainment • As the level of education increases so does the likelihood of behaviors and experiences considered healthy THE INSTITUTE for Higher Education Policy

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17. For example... • The research shows that as the level of education increases so does the proportion of those who exercise or play sports regularly • Additionally, the proportion of smokers declines as educational attainment increases THE INSTITUTE for Higher Education Policy

18. Public social benefits • The next chart addresses participation in civic activities in the U.S. according to level of education • Those with higher levels of education exhibit higher participation rates THE INSTITUTE for Higher Education Policy

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20. For example... • While the national average for ongoing participation in a community service activity is 39%, it is 51% for those with a bachelor’s degree • 91% of bachelor’s degree recipients voted in a national or state election within the past five years, compared to 74% of the total population THE INSTITUTE for Higher Education Policy

21. Public economic benefits • The final chart shows the rates of participation in the main U.S. welfare program by level of education over a 25 year period • Higher levels of education are equated with lower welfare participation rates THE INSTITUTE for Higher Education Policy

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23. For example... • Over the entire period the participation rate for those with 16 or more years of schooling was less than 1% • An unexplained rise in participation occurred in the 13-15 years of schooling category beginning in 1991, but has since started to decline THE INSTITUTE for Higher Education Policy

24. Impact • This brief tour of public and private benefits reminds us that • a broad range of benefits are derived from investment in higher education • despite the evidence, there is limited capacity to define the consequences of not investing in higher education THE INSTITUTE for Higher Education Policy

25. Consequences of diminishing public support • Growing social and economic disparities • Increasing public expenditures on social welfare programs • Inability to compete in a technological society • Stagnant or declining quality of living • Decreasing health and life expectancy • Diminishing civic engagement THE INSTITUTE for Higher Education Policy

26. In summary • This discussion has shown that the public, private, social, and economic benefits of higher education are vast and important • These benefits should be borne in mind by policymakers and the public as they struggle with the complexities of financing higher education THE INSTITUTE for Higher Education Policy