Haveman, Robert H., and Barbara L. Wolfe. 1984. “Schooling and Economic Well-Being: The Role of Nonmarket Effects.” Journal of Human Resources 19(3):377-407.

Standard estimates of the economic value of additional schooling, based on earnings differences associated with differences in the level of schooling attained, cover only a portion of the total effects of education that are valued by citizens. We first identify a catalog of nonmarketed effects, many of which have been recently studied by economists, and then propose a procedure for estimating a willingness-to-pay value for these effects. Using empirical estimates of the magnitude of a selection of these effects found in the literature, we calculate willingness-to-pay values using our proposed procedure. These illustrative calculations suggest that standard estimates of the benefit of incremental schooling substantially understate the full value of such investments.

Haveman is on the faculty of the Department of Economics and the Institute for Research on Poverty, University of Wisconsin-Madison. Wolfe is on the faculty of the Departments of Preventive Medicine and Economics and the Institute for Research on Poverty, University of Wisconsin-Madison. The research assistance of Stephen Oliner and the helpful comments of Ed Dean, John Goddeeris, Robert Lampman, Robert Michael, Jacob Mincer, Edgar Olsen, Theodore Schultz, Timothy Smeeding, Eugene Smolensky, Burton Weisbrod, and the members of the Public Economics Workshop at the University of Wisconsin-Madison are gratefully acknowledged. Initial support for this research was provided by the National Institute of Education.

© 2003 by the Board of Regents of the University of Wisconsin System

US ISSN 0022-166X

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