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Forbes: Education Investments with $225 Trillion Return

— December 3, 2014

Forbes - Education InvestmentInvestment in education is often touted by politicians on both sides of the aisle as a sound investment – and it is, but many such claims lack empirical support.  One Forbes article I found recently set out to provide just that empirical support, aiming to “determine the costs and benefits of taking U.S. schoolkids from their middling global rankings to top five in the world, as measured by math scores and rates for high school graduation, college entry and four-year college completion.”

This research was conducted by a team of education experts, “who identified five policies that, if fully implemented, could each vault results into the top five (and if undertaken together, would surely take us to number one): [1] teacher efficacy, [2] universal pre-K, [3] Common Core standards, [4] blended learning (incorporating technology into how students are taught) and [5] school leadership (training and empowering principals).” (Forbes)

In total, implementing these five plans would cost just north of $6 trillion (over 20 years), and when factoring in earnings of all these better educated pupils, the return on that investment would be nearly “$225 trillion, spread over an 80-year time horizon”.

Though the technical return on investment (ROI) was calculated with statistics, not hard data, both the cumulative return and the ROI “both produce striking forecasts. If you were a for-profit investor, you could discount these findings as much as you want, and you’d still be falling over yourself to invest.” (Ibid.)

Here’s a breakdown of how that team of researchers arrived at the results it did, found in that Forbes article (hyperlink above):


What This Is: Attract top college graduates to the profession, measure their effectiveness and retain the good ones.

How We Achieve This: Salaries. Specifically, make teaching a highly compensated profession that mirrors its role in society and attracts top college graduates. A major McKinsey study estimates that raising teacher salaries by 50% would mean that a majority of teachers would come from the top third of college graduates. Right now it’s a paltry 23%. Efficacy would solely be derived from student outcome data.

Investment: $4.8 trillion

Return: $64.5 trillion

Adjusted ROI: 12x

Researcher: Eric Hanushek, Senior Fellow, Hoover Institution, Stanford University


What This Is: Guaranteed pre-kindergarten for every American. (Right now only 52% of pre-K-age kids attend.)

How We Achieve This: More than just building pre-K into every elementary school, our assumptions include teacher observation, coaching, curricular integration with the requirements of kindergarten and extensive professional development.

Investment: $1.1 trillion

Return: $38.4 trillion

Adjusted ROI: 34x

Researcher: Robert Pianta, Dean, Curry School of Education, University of Virginia


What This Is: Improve outcomes by empowering–and holding accountable–school principals to deliver educational results.

How We Achieve This: Reform state laws to allow principals to act like any other division head, including hiring and firing and managing budgets. Raise principal salaries by 26% to attract higher-level talent. Create principal training academies–a de facto executive M.B.A. for school administrators.

Investment: $11 billion

Return: $61 trillion

Adjusted ROI: 5,551x

Researcher: Paul Hill, Founder, Center on Reinventing Education, University of Washington Bothell


What This Is: Arming students with computers and delivering rote lessons in part through digital media, personalized and optimized to individual needs and pace, allowing teachers more value-added.

How We Achieve This: National broadband coverage, computers for every student and training and coaching teachers and schools on how to integrate online learning within a brick-and-mortar school.

Investment: $44.3 billion

Return: $33.1 trillion

Adjusted ROI: 746x

Researcher: Michael Horn, Executive Director for Education, Clayton Christensen Institute


WHAT THIS IS: Creating high national standards to ensure college-ready, globally competitive graduates.

HOW WE ACHIEVE THIS: Recent steps are preliminary. New instructional materials, assessments and professional development help ensure success. While Common Core has critics on both extremes of the political spectrum, those in the sensible center rightly view high national standards, coupled with tools to achieve success, as a no-brainer.

INVESTMENT: $185.4 billion

RETURN: $27.9 trillion


RESEARCHER: Patrick J. Murphy, Professor, University of San Francisco; Senior Fellow, Public Policy Institute of California”

[For More Information on Education from Forbes, Click Here]

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