Economic Returns to Education Education helps individuals fulfill and apply their abilities and talents. It increases productivity, improves health and nutrition, and reduces family size. schooling pres- ents specific knowledge, develops general reasoning skills. eauses values to change, s receptivity to new ideas, and changes attitudes toward work and society. But our major interest is its effect in red poverty and increasing income The World Bank economists George Psacharopoulos i19851 325-1343: 1325-1343) and Maureen Wood (Psacharopoulos and Woodhall 1985:21-22. 1%-197) indicate that the average return to education is higher than that to physical capital in LDCs but lower in DCs. Among human investments. they argue that primary education is the most effective for overcoming a poverty and reducing income inequality. This is especially true in sub-Saharan Africa. where less than three-fourths of the children of primary school age afe etrolled in school Yet, in the 1960s. planners in developing countries favored secondary and higher education that met the high-level labor requirements of the modem sector rather than establishing literacy and general education as goals for the labor force as a whole. George Psacharopoulos in a study in 1994 on the social rares of return to educational investment, indicates that the highest average returns are from primary education. A bsequent study (Psacharopoulos and Patrinos 2002) shows Kimilar patterns, with returns to primary education 19 percent per year, secondary education 13 percent, and higher education 11 percent Table 10-1). The higher ratesofretums to primary education are consistent with diminishing returns to increased dollars per pupil. Public e Tenditure education-Sub-Saharan student is more for higher and secondary education than for Africa spends 100 times as much per pupil for higher primary education as for primary education isee Table 10.2.) Africas higher education result partly from an inability to achieve economies of scale. Thus, in the 1970n in Ghana educating 20.000 students costs $3,500 per student, whereas in India. Private and mi s Patrinos 2002