“An investment in education pays the highest return,” Benjamin Franklin aptly said. The economic benefits of education for individuals and nations are well known: enhanced economic opportunities, greater employability, and higher income.

While these advantages are undeniably important, they do not fully capture education’s transformative power. When policy makers and researchers focus solely on financial returns, they risk undervaluing education’s profound influence on personal empowerment, social equity, and collective well-being, particularly for those who operate outside formal labor markets.

Consider a housewife whose contributions to her family and community have no monetary value. Does education hold value for her? The answer is unequivocally yes. Research demonstrates that education empowers individuals by fostering critical thinking, enhancing decision-making, and building confidence. Education’s role in shaping health behavior is particularly significant for women. For a housewife, these attributes translate into better management of family health and nutrition. In addition, overwhelming empirical evidence shows that women with more schooling have fewer children.

Studies demonstrate that higher levels of education are linked to greater civic participation. Educated people are more likely to vote, volunteer, and support democratic values. No fixed global benchmark for education spending exists—it varies by country. UNESCO recommends allocating 4-6 percent of GDP, but the global average is slightly below 4.5 percent, reflecting differences in economic development, population needs, and national budget priorities.

Yet the traditional framework for evaluating educational returns, focused primarily on economic metrics, fails to capture education’s full societal impact. While the worldwide average education expenditure of almost 4.5 percent of GDP represents significant investment, our understanding of returns must evolve beyond conventional economic measures. The evidence overwhelmingly suggests that education’s dividend extends far beyond labor market outcomes, serving as a fundamental catalyst for social transformation and democratic vitality.

From our viewpoint, policy makers and researchers must adopt a more comprehensive framework that recognizes education as a public good with far-reaching societal benefits. This requires moving beyond simplistic return-on-investment calculations to embrace methodologies that capture education’s role in fostering critical thinking, civic engagement, and social cohesion.

Read the full article about social returns on investments in education by Rahul Pachori and Neha Dhaka at Stanford Social Innovation Review.