Return on education

The Return on Education ( ROE ), also Returns on Schooling , is a measure that describes the relationship between profit and investment in training or further education. A similar size can be found in the economic sector, the return on investment (ROI). The abbreviation ROE must not be confused with the term return on equity used in economics . A related concept is the return on education , the percentage gain in earned income that a person achieves through additional education.

In a simple formula for calculating the return on education as a percentage, the benefits are compared with the costs.

{\ displaystyle {\ text {ROE}} = {\ frac {{\ text {Benefits}} - {\ text {Costs}}} {\ text {Costs}}} \ cdot 100 \, \%}

But unlike the return on investment, in the education sector the factors that contribute to a certain performance or effects can often not be clearly determined. Factors such as motivation, willingness to perform or an improved learning culture are difficult to quantify or to convert into monetary values, although they can play an important role for an institution or company in the long term.

The ROE can be differentiated by gender. The question arises in developing countries as to why, despite the high ROE for women, there is so little public or private investment. Such an investment would be particularly worthwhile in countries where women receive less education than men. In a study by Card (1999), the ROE was estimated to be around 5% for men (who are not the head of the household; 10–12% for male heads of household), while it was around 15% for women.

According to Gröhbiel, three levels of benefit and cost can be distinguished:

Monetary level
Quantifiable level
Non-quantifiable level

	costs	Use
Monetary	Infrastructure costs Development costs Support costs Telecommunication costs	Income from postgraduate courses Lower opportunity costs
Quantitatively	Student learning time Workload of lecturers in the context of existing teaching assignments	Better performance evaluation in exams Increase in individual communication
not quantifiable	Fear of isolation Fear of losing control	Quality of student contributions Better access to courses

Table 1 (according to Urs Gröhbiel): Examples of monetary, quantitative and non-quantifiable costs and benefits

Social inclusion and participation are researched as non-monetary benefits. Against this background, a distinction is made between the ROE for migrants and non-migrants.

Individual evidence

^ King, EM, & Hill, MA (1993). Women's education in developing countries: Barriers, benefits, and policies. The World Bank. P. 51.
^ Measuring the burden of disease and returns to education in rural West Africa. P. 141.
↑ Non-monetary returns to education in the form of social inclusion: Estimation and interdependence of private and social Returns to Education of Migrants and non-migrants (REdMig)
↑ https://www.redmig.uni-hamburg.de/de.html Project page at the University of Hamburg

literature

Patrinos, HA, Ridao-Cano, C., & Sakellariou, C. (2006). Estimating the returns to education: accounting for heterogeneity in ability. The World Bank.
Kilian Wimmer: The evaluation of e-learning. Determining the Return on Education . VDM Verlag 2007, ISBN 3-8364-0433-8

[1] King, EM, & Hill, MA (1993). Women's education in developing countries: Barriers, benefits, and policies. The World Bank. P. 51.

[2] Measuring the burden of disease and returns to education in rural West Africa. P. 141.

[3] Non-monetary returns to education in the form of social inclusion: Estimation and interdependence of private and social Returns to Education of Migrants and non-migrants (REdMig)

[4] ttps://www.redmig.uni-hamburg.de/de.html Project page at the University of Hamburg