To Fund or Not to Fund...Is Education "Worth" it?

To Fund or Not to Fund...Is Education "Worth" it?

Strong national economy is a pursuit for all countries around the world. Nations with strong economies can offer greater standards of living to their populations because more money can go towards health, education, and closing the economic gap.

Human capital is recognized as being influential on economic growth. We don’t like to think of humans as capital but the fact is, the quality of human effort is improved by education and this equates to an increase in human capital.

In the wake of Alberta’s approaching provincial election where funding for education is one of the main chips on our table, perhaps some important questions worth answering are: Does government investment in education impact student learning? Is there a relationship between a nation’s achievement scores and the economic growth of that country? Do cognitive skills predict GDP per capita?

As a Doctoral student, one of the things I have to practice is analyzing data. The problem with data is that is takes a lot of time and effort to collect. Thankfully there are ready available databases on-line which can be used for such assignments. Last year I used the overall average scores of 15-year-old students on the PISA mathematics literacy scale in 2015 and the national expenditures per student in USD from 2014 (both taken from the OECD website), and GDP per capita per nation in 2015 (from the World Bank database), to conduct a study which aimed at gaining an understanding of how government investment in education impacts national student achievement and GDP. My purpose was to understand how education enhances national human capital so policy-makers and educators can work together to help develop our younger generations and support our nation’s desire to flourish for the common good. Please consider the findings of this study as our provincial election approaches and important decisions need to be made about future spending on education and healthcare.

First of all, the concept of human capital was originally conceived by Adam Smith, an 18th century economist and philosopher. He asserted that all the acquired and useful abilities of all the inhabitants of a country is considered part of its capital. He also formed the concepts of gross domestic product (GDP) and free trade. Theodore Schultz (1961) is another academic who contributed to the economic ideas and concepts we understand today. Schultz was an economist and Nobel Laureate, who identified national consumption like expenditures on education, health, and internal migration, as necessary investments in human capital. He also acknowledged that improving the quality of human effort through the acquisition of skills and knowledge would enhance overall national productivity.

Analysis on current data for student achievement, GDP, and spending in education, can help us understand if the theories of Adam Smith and Theodore Schultz hold up to our modern day realities. The findings of my analysis indicated a very strong positive relationship between national expenditures per student and GDP per capita (r = 0.92, p < .001). 

National Expenditures per Student in USD related to GDP per Capita

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The country of Luxembourg had the highest GDP, as well as the highest expenditures per student in USD. Luxembourg is the highest dot in the scatterplot. The country of Indonesia had the lowest GDP as well as the lowest expenditures per student in USD. Indonesia is the lowest dot in the scatterplot.

Since GDP per capita and national expenditures per student show such a strong relationship, it is important to understand how all four variables in the analysis relate to each other. The table below displays the correlation coefficients for the different variables in the study. This table shows a strong positive relationship between PISA scores and spending in education. It also indicates a moderate positive relationship between PISA scores and GDP per capita, as well as a moderate positive relationship between PISA scores and national graduation rates. No statistically significant relationship exists between expenditures per student and graduation rate, as well as GDP per capita and graduation rate.

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The analysis of the data highlights an interesting cycle between GDP per capita, expenditures in education, and student achievement. It indicates that expenditures in education do influence achievement and that achievement has a positive moderate impact on GDP.

From these results, educators, policy-makers, and other stakeholders should continue to advocate for funding in the area of education. Research shows that education is a vital component in the improvement of human effort and leads to an increase in the nation’s well-being. Countries with quality education systems will prosper and can provide more services and support for their people.

Every nation has a desire to flourish economically. A stronger economy allows a nation to offer a greater standard of living for their population by providing more support in the areas of education and health, as well as offering opportunities to close the socioeconomic gap. Investment in human capital through education is supported by research and imperative to the well-being of a nation.

I think Bill Gates said it best.

“In the long run, your human capital is your main base of competition. Your leading indicator of where you're going to be 20 years from now is how well you're doing in your education system.”

When you head to the polls in April, you will be deciding to fund or not fund education and healthcare. Choose wisely!

The Happy Child

The Happy Child