The High Cost of Low Educational Performance: The Long-Run Impact of Improving PISA Outcomes

Eric A. Hanushek
Ludger Woessmann
Published Date
Paris: Organization for Economic Cooperation and Development
pp. 1-55
While many nations express a commitment to improved educational quality, education often slips down on the policy agenda when pressures on budgets or other issues arise. Because the benefits of educational investments are seen only in the future, it is possible to underestimate the value and the importance of improvements. This paper uses recent economic modeling to relate cognitive skills – as measured by PISA and other international instruments – to economic growth. This relationship, which is important and highly precise, indicates that relatively small improvements in the skills of a nation’s labor force can have very large impacts on future well-being. The estimated growth relationships are used to simulate the impact of schooling improvement for individual OECD countries. Three specific scenarios are considered: an average increase of 25 PISA points; bringing each nation up to the level of the top-performing country (Finland); and bringing all students to minimum competency (400 on the PISA scale). The present values of such reform efforts vary by country, depending on current economic performance and current educational performance. Under plausible assumptions, the aggregate gains calculated across all OECD countries would amount to $100-200 trillion. These gains, for example, far exceed the level of stimulus funds in the current global recession.