Compass Lexecon conducts education investment report for the Confederation of School Trusts
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Compass Lexecon economists Patricia Lorenzo, Sander Heinsalu and Tania Fernandez Navia provided pro bono assistance to the Confederation of School Trusts evaluating the direct and indirect economic consequences of investing in education. With the aim of assisting policymakers in making evidence-based decisions, Compass Lexecon was commissioned to prepare a study that quantifies the economic returns of investment in education in terms of increased lifetime earnings in the United Kingdom, as well as reviewing the academic literature on the monetary and non-monetary benefits stemming from increased investment in education.
This report was originally published by the Confederation of School Trusts and is available on their website (here). The views expressed are those of the authors only and do not necessarily represent the views of Compass Lexecon, its management, its subsidiaries, its affiliates, its employees, or clients.
Executive Summary
This report evaluates the direct and indirect economic consequences of investing in education. The objective is to offer a well-informed assessment of the significance of such investment for the long-term economic outcomes in the United Kingdom.
Our findings show that:
- A 10% increase in spending on primary and secondary education in the United Kingdom would generate £1,100 billion in net present value over the period 2024-2080. The average yearly benefit is £95 bn and the average yearly cost £17 bn.
- This result is consistent with previous evidence from peer-reviewed academic papers, which shows that investing in education increases lifetime earnings and GDP growth via greater innovation and a more educated workforce.
- Peer-reviewed studies also highlight the non-monetary effects of investing in education, which encompass improved physical and mental health, reduced crime rates, and enhanced civic engagement.
- The returns are highest for programs focussing on (i) early childhood, and (ii) disadvantaged children.
- A decrease in education funding may have detrimental effects for the long-term growth of the United Kingdom. The effect is likely to disproportionally fall on low-income citizens.