Summary of Findings and Recommendations for Future Research

Abstract

This book opened by questioning whether current methods used to calculate rates of return to investments in schooling were useful for guiding government investments in education. In particular, the argument was made in Chapter 1 that such methods were of little use because they essentially calculated rates of returns to additional years of schooling rather than rates of return to government investments in school quality. Chapter 2 presented a method for calculating rates of return to government investments in school quality, based on combining the impact of such investments on the attainment of cognitive skills by students with the impact of those skills on the incomes of workers. Yet Chapter 2 also pointed out that rates of return to investments in school quality, even when accurate, could well be deficient for purposes of doing cost-benefit analyses of these investments because parents may respond to improvements in school quality by sending their children to school for longer periods of time. Thus, the most useful approach is to calculate the net present discounted value of school improvements and then to choose those investments with the highest value per government dollar spent. The remainder of the book applied this method using data from the 1988–89 Ghana Living Standards Survey.