Making the Economic Case for Education is Important, but It Needs to be Done the Right Way
The economic case for education is crucial for securing funding, especially as international budgets tighten and national resource competition increases. In this blogpost, Natalia Kucirkova argues that current measures for making this case are imperfect and need refining to fairly reflect all educational contexts. Using diverse methods and a multidimensional perspective that captures the full complexity of educational progress will safeguard education’s deeper value and prevent it from being reduced to a simple budget line.
When investment decisions are based on projected dollar returns, they carry hidden assumptions about which outcomes matter and which research methods are considered valid evidence. The current approach to justifying investment in education tends to favour outcomes that can be reliably measured through standardized tests and efficacy trials. These methods are important, but they are insufficient to fully capture the success of well-functioning education systems. The more openly we discuss cost-effectiveness methods, the more the entire education community can take ownership of the economic case—and that is what is needed for it to be sustained.
Why we need an economic case for education
Investing in education should be an obvious priority for any government, but in the current volatile global politics, moral arguments no longer sway government funding decisions. With U.S. cuts to education programs, European governments shifting funds toward defence, and the mounting costs of climate action worldwide, the strategic need to frame education in economic terms is imperative. To justify the spending, funders demand spreadsheets comparing the return on investment of early literacy programs to vaccines or military spending.
The economic case for education implies that foundational skills like literacy, numeracy, and socio-emotional learning are not just moral obligations: they are key drivers of national prosperity. When governments invest in these skills, they lay the groundwork for stronger economies, healthier populations, and more resilient societies.
Benjamin Piper, Director of Global Education at the Gates Foundation, clearly outlined how foundational learning can drive higher earnings, job creation, and stronger economies: if every child gained basic literacy, global GDP could rise by $6.5 trillion annually. Conversely, inaction could result in $21 trillion in lost lifetime earnings, particularly in low- and middle-income countries where millions of children remain in school without learning.
Rachel Bonnifield, Director of the Global Health Policy Program and a Senior Fellow at the Centre for Global Development, found that a 0.3 standard deviation improvement in a child’s learning corresponds to a 3–4% increase in their annual earnings as a young adult. Based on this, USAID’s average investment of $34 per child implies an impressive return on investment: a benefit-cost ratio of about 30:1.
These powerful cost-benefit analyses and strong voices behind them are exactly what donors and governments must hear to invest in education. Because without emphasising the practical economic necessity of education, even the most noble moral educational goals remain out of reach.
How do we measure educational success?
Economic arguments for education typically lean on standardized metrics and experimental, quantitative methods borrowed from medical research. Most research measures education by years of schooling, assuming more school means more learning. But in several countries, especially low- and middle-income ones, many students finish school without basic skills, so using schooling years alone underestimates the true impact of actual learning.
In terms of design, these interventions typically rely on the power of randomization to establish causal relationships. To create an effective randomized controlled trial (RCT), it is essential to define a concrete problem, develop a straightforward study design, and maintain strict control over the “noise” that is typical of any everyday context. To generate meaningful and robust information, RCTs must be carefully implemented and be measured with a few selected outcome parameters. These measures are the measures of learning used to substantiate investment in education, and they include tests of children’s performance on literacy, numeracy, cognitive skills, reasoning ability, or vocabulary tests.
Such tests are seen as standardized, objective and reliable. But the tests assume a meritocratic model of education, and the conclusion from the ISSEA consortium of researchers is that such a model deepens, rather than closes, education gaps. Students from low-income or minority communities enter school at a disadvantage, and the supposedly neutral tests often disadvantage marginalized cultural or socioeconomic groups. In other words, merit-based allocation models fail to account for systemic barriers that shape educational outcomes long before a student ever sits for a test. As a result, by treating underachievement as an individual deficit rather than a product of structural inequality, the economic model may inadvertently entrench the very inequities it claims to remedy.
Or take another example: a recent synthesis of seven international evaluation studies on media literacy and digital skills interventions found that, overall, the interventions were moderately effective. However, their impact was notably less significant for groups starting from more disadvantaged positions. The comparisons—both within and between interventions—highlight a critical insight: to achieve equitable outcomes, the design and delivery of such programs must be better aligned with the needs, contexts, and lived experiences of these underserved groups.
Tackling these challenges requires shifting from a meritocracy framework to a systems-level perspective that confronts and corrects the structural obstacles learners face. This implies reframing the definition of educational success that lies behind current cost-effectiveness calculations.
Expanding the definition of educational success
Solving the persistent problems in today’s education, such as the global learning crisis, requires several interconnected efforts, including coordinated improvements in school infrastructure, teacher retention, remuneration, and professional development; higher quality of instructional resources so that they are grounded in the science of learning; the implementation of effective pedagogical strategies like Teaching at the Right Level and many more. None of these improvements is possible if we cling to narrow definitions of educational success.
Standardized tests are part of efficacy evaluations that exclude context-rich and practice-informed insights. Research by two leading economists underscores this point: on average, data collected in a school’s actual context, even if less tightly controlled, gave more useful, accurate guidance than “clean” experimental results imported from another context. In other words, locally grounded evidence can be more valuable for systems reform than methodologically impeccable studies. To drive genuine improvement, education systems must therefore embrace a broader, context-sensitive definition of educational progress, which provides insights into the interconnected factors that together influence a child’s educational achievement.
This perspective has two implications: that we need rigorous methods, which do not rely on standardized tests alone and which can be linked to cost-effectiveness assessments. And that we need to define educational success in a broader sense than just the measurable learning that took place over a given time period. Here, learner variability and measuring the potentiality of each child are emerging as powerful new methodological approaches. Such new methods are coupled with new thinking around a multidimensional view on educational impact.
Educational impact and holistic approaches to education
The rate of return on educational policy interventions depends on multiple factors: timing, targeting, context, intensity and frequency of the intervention, and many more. At the very least, it is a combination of efficacy trials with the effectiveness of implementation and teachers’ take-up of an intervention, with respect for the ethics of the approach and marginalized groups. The 5Es framework that consists of five dimensions: Efficacy, Effectiveness, Ethics, Equity and Environment, strikes a critical balance between the rigor of experimental trials with contextually produced evidence (such as insights from teachers and participatory effectiveness ratings). It combines them with the results of equity and ethics evaluations, recognizing all as important sources of evidence of impact that require methodological rigor.
The approach allows for the possibility that well-timed “cures” can be just as cost-effective as broad early prevention, especially when prevention means investing in people who may never need the tested intervention. Connecting such a multidimensional perspective on impact to the economic case for education is a way to argue for education with equity at its core.
In sum, while simplifying the focus on investment returns helps policymakers prioritize it, oversimplification can become its Trojan horse. The education community needs to address the methodological issues and the definition of educational success to reinforce the economic case’s capacity to effectively represent and advocate for the entire education community. Holistic approaches show that education is complex, and this complexity is necessary.
Author
Natalia Kucirkova, PhD, University of Stavanger and International Centre for EdTech Impact