essay on education is better than wealth

Money vs Education: Which Is More Important? (Debate)

• Post author: Edeh Samuel Chukwuemeka ACMC
• Post published: June 9, 2024
• Post category: Scholarly Articles

Money or Education, Which is more Important? (Debate): So, which is more valuable: education or money? Which one should we concentrate on? This appears to be a simple question, but when we think about it, the answer is not that straightforward. Money and education are inextricably linked in our daily lives. On the one hand, money is what drives the majority of our lives.

We have to think about money in practically every decision we make. Education, on the other hand, cannot be overlooked since it provides us with the fundamental tools we require to live. Let’s weigh in on their relative importance and see if we can finally settle this age-old argument.

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Table of Contents

Why Money is Important

Money is commonly said to be “ not the most important thing in the world.” However, for many individuals, it is right up there with oxygen in terms of significance. These aren’t necessarily materialistic individuals. They just recognize the genuine worth of money.

Money isn’t exciting on its own. What matters is what money can accomplish for you. You have more flexibility and options when you have money. When you have a strong salary or financial resources, you have the freedom to choose where and how you wish to live. When you don’t have much money, on the other hand, making choices may be something you can’t afford. In actuality, the choices available to you may not be choices at all.

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Undoubtedly, you’ll require money to meet your fundamental needs, which include food, clothes, and shelter. Because of a lack of funds, a poor individual is frequently forced to make compromises even on essential basic requirements. Moreover, medical expenditures nowadays consume a person’s whole life savings. Furthermore, one must have money to obtain an education, as the cost of school is quite expensive these days and is not likely to decrease anytime soon.

While money cannot purchase happiness, it may give you independence, stability, and the ability to follow your aspirations. As a result, money is unquestionably necessary for every excellent thing that provides us financial satisfaction.

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Why Education is Important

Today, education is more vital than ever before, and it has reached new heights as people have a better knowledge of what it comprises. If you ask yourself, “Why is education important?” your response will almost certainly not be the same as everyone else’s. While having a college degree is tremendously important for a successful profession and is socially acceptable in today’s culture, it is not the sole source of education. In everything we do, education is all around us.

Education may help you become the greatest, most complete version of yourself by allowing you to learn about what interests you, what you’re excellent at, and how to become self-aware and aware of the world around you. It can assist you in finding your position in the world and making you feel whole. Basic life skills and street smarts are built on the foundation of education. While education may appear to be a technical phrase, it refers to all we learn in life on how to live our lives to the fullest. When it comes to being creative in any manner, shape, or form, the mind can only achieve its full potential if it’s given the tools to think outside the box.

Education gives you a sense of stability in life, which no one can ever take away. You boost your prospects of greater professional options and create new doors for yourself by being well-educated. Education gives financial security in addition to stability, which is very important in today’s culture. An excellent education is more likely to lead to a higher-paying career and provide you with the necessary skills. It might provide you with the freedom to make your own decisions as well as be financially independent. Education has the potential to be the most liberating and empowering thing in the world.

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Money vs Education, Which is More Important

Money is required for basic expenses, but that is not the only requirement. Money helps us reach our objectives and support the things we care about most, such as family, education, health care, charity, adventure, enjoyment, and so on. It assists us in obtaining some of life’s intangibles, such as freedom or independence, as well as the opportunity to maximize our abilities and talents. It allows us to chart our path in life. It ensures financial safety. Much good may be accomplished with money, and unnecessary suffering can be prevented or eliminated.

Education, on the other hand, is essential for survival. Everyone needs education at some point in their lives to improve their knowledge, manner of life, and social and financial standing. Although it may not provide you with financial standing in society, a literate mind will undoubtedly set you apart. Education is amazing in that it is not restricted by age.

While money gives us the ability to make a difference in our own lives and the lives of others, it is impossible to obtain an education without it. The cost of education is quite expensive these days, and it will continue to rise in the near future. Education may be too expensive, particularly at private institutions and universities. While you don’t have to pay back your student loans until after you graduate, the payment will ultimately come due. Without funding, education would come to a halt.

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In a different light, money may be able to buy what you “ desire ,” but education helps you to realize what you “need” to live a better life. This is demonstrated by the numerous non-monetary advantages that may be obtained via education. Money may allow us to have more control over our lives, but it is education that allows us to contribute to society.  Although money is useful, an educated individual understands how to make money in the first place. Education has the potential to open up job opportunities.

With an education, you have the potential to earn more money than others who do not. Obtaining a degree might expand your options in some professions, allowing you to make more money. Many employers provide educational incentives to their workers. Anyone who stays up with current trends will always be able to make more money. If you are well educated, your chances of living in poverty are lower.

Furthermore, you cannot lose or be stripped of your education. Whatever happens, the lessons you’ve learned will be with you. Even if you lose a wonderful job, your degree and experience will assist you in finding work in the future. When a financial catastrophe strikes, you can’t lose what you’ve learned. Even if you become indebted due to unforeseen circumstances, your education will not be taken away from you.

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Nevertheless, much of the narrative about the benefits of going to college and having a degree is centred around the concept that if you have a degree, you’ll be able to make more money. For many people, education is only a means to an end, which is monetary gain.

Some believe, however, that if generating money is your primary incentive for pursuing a profession, you might explore trade schools and other qualifications that may help you earn a fair living. After all, while many people dismiss trade skills such as plumbing and electrical labour, these individuals may amass money more quickly than their more educated counterparts. We frequently read about people who have amassed enormous wealth while having had very little formal education. In fact, having a degree does not ensure that you will earn more since many people without a degree make more money than graduates.

Regardless, education will assist you in developing a decent character, a noble personality, and, above all, will help you become a better person. You will not only be able to make money with education, but you will also be able to efficiently use the money you have made to benefit yourself and others. Money is a slippery slope, but those who figure out what they genuinely value and match their money with those beliefs have the most financial and personal well-being. Education is necessary to become such a person. Never forget that knowledge is power.

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Money vs Education is a perennial debate. The common view of money and education in our lives has been emphasized in this article. Everyone, after all, has their unique point of view.

Edeh Samuel Chukwuemeka, ACMC, is a lawyer and a certified mediator/conciliator in Nigeria. He is also a developer with knowledge in various programming languages. Samuel is determined to leverage his skills in technology, SEO, and legal practice to revolutionize the legal profession worldwide by creating web and mobile applications that simplify legal research. Sam is also passionate about educating and providing valuable information to people.

This Post Has 4 Comments

Money is important but education is far more important cuz money is the root to all evil while education is power

Money or education which is more important?

Education is the best, only to those who value it and know how to make use of it Education can bring money, but money at the other side can never bring education Even, a renown people in this world are educated.

Comments are closed.

It’s not nothing: The role of money in improving education

Subscribe to the center for economic security and opportunity newsletter, mark dynarski mark dynarski owner - pemberton research, former brookings expert.

March 2, 2017

• 14 min read

The roots of the long and contentious debate about whether we should spend more for K-12 education can be found in two sentences from the famous 1966 report led by James Coleman:

It is known that socioeconomic factors bear a strong relation to academic achievement. When these factors are statistically controlled, however, it appears that differences between schools account for only a small fraction of differences in pupil achievement (pp. 21-22). 1

The conclusion is sometimes stated as “money doesn’t matter,” a paraphrase that also suggests there is no basis for equalizing spending in schools, which, because they often are funded by local property taxes, end up spending lower amounts in lower-income communities. And federal education spending focuses directly on giving states and districts money to close achievement gaps, which assumes money matters.

The spending question is still active. Decades after famous cases like the 1971 Serrano v. Priest case in California, equalization cases are currently working their way through courts in Connecticut, California, Texas, and elsewhere. And the nearly-authorized Every Student Succeeds Act continues to provide billions under its Title I program to close gaps.

How might we gather evidence of the effects of money on education achievement? We now recognize that the approach used by Coleman 50 years ago does not yield ‘causal’ estimates, i.e., it does not measure the degree to which spending more money causes outcomes to improve (or not). The Coleman analysis looked at a cross-section of districts and schools at a point in time and found little relationship between spending and outcomes. But suppose two neighboring school districts differ in their average income levels. The more affluent one does not spend much on its schools but posts high test scores on the state assessment. The less affluent one spends more on its schools but posts low test scores on the state assessment. In this example, more spending has a negative correlation with better outcomes but we can see how erroneous it would be to conclude based on such findings that spending more on schools harms learning.

A ‘causal’ estimate of the effect of spending would be an experiment, maybe structured like this: a state identifies, say, 50 school districts and divides them randomly into two groups of 25. It gives one of those two groups more funding and does not change any other aspect of funding. If money ‘causes’ education outcomes to improve, test scores of students in the two groups will diverge over time. The difference in scores is what we want to know, the causal effect of added funding.

This kind of experiment is unlikely to be done, for various legal and political reasons. But some research methods can measure causal effects without a group experiment. Two recent studies that use these methods provide evidence that money matters. But they also provide evidence that it will take massive amounts to close gaps.

Short term money does not matter

The first study examined outcomes of School Improvement Grants (SIG), which were funded for $7 billion as part of the American Recovery and Reinvestment Act of 2009. The study was done by Mathematica Policy Research for the U.S. Department of Education’s Institute for Education Sciences. It compared schools that fell just short of receiving a SIG grant based on their test scores with schools that received SIG grants.

This approach—known by the mouthful name of a ‘regression discontinuity design’—relies on the logic that when there are cutoff points, created perhaps by rules or regulations or arbitrary procedures, those just below the cutoff and just above it tend to be similar. For example, imagine an intervention program for students struggling to learn to read. The program uses a cutoff of the 20 th percentile on a test of reading skills. Students reading at the 19 th percentile participate in the program. Students reading at the 21 st percentile do not participate in the program. These students are likely to be similar in terms of family background, previous educational experiences, and personal characteristics such as motivation and the like. It’s not guaranteed, but likely. Now imagine schools rather than students are on each side of the cutoff. Comparing school outcomes is how the SIG study estimated effects of SIG money.

SIG grants were substantial, about $2 million a school for three years, which amounted to about $900 per student each year. With that additional money in hand, it seems obvious that schools below the cutoff would be doing more improvements than schools above the cutoff, such as using different instructional approaches, different hiring practices, developing teachers and principals and so on. And for the study to be testing something, schools on each side of the cutoff need to be doing different things. Otherwise, the study would be comparing schools making the same improvements.

But the study reported that schools just above the cutoff were undertaking improvement efforts without SIG funding. In fact, it reported that improvements under way on both sides of the cutoff were nearly equivalent (and, in the statistical analysis, the study could not conclude that improvements around the cutoff differed). What schools were doing to improve was not altered by SIG funding. It’s as if the hypothetical reading program I described above was delivered to students on both sides of the cutoff. This crucial aspect of the study’s results was mentioned in some media reports, but others overlooked it and focused on the lack of improvements in scores. 2  When improvements don’t differ, we should not expect outcomes to differ, and they did not.

Some commenters suggested that turnaround models being tested were just not developed to the point where they were scientifically sound.

Another explanation is that districts were taking steps to reform all low-performing schools, ones above and below the SIG cutoffs, and simply used SIG funding to underwrite some of the costs of those steps. Replacing a school’s principal, which is one of the required elements of using SIG funding, might seem like a radical step. But schools that just miss the cutoff for SIG funding are also struggling, and replacing their principals would be a reasonable decision for district administrators trying to improve those schools. ‘Comprehensive instructional reform’ also is part of the SIG model, but also is likely to be done in schools above the cutoff.

The underlying logic of SIG grants also could be an issue. Simply pushing money to schools for brief periods makes sense if one believes the money can fix whatever shortcomings the schools had, and quickly. School physical structures meet these criteria better than school operations. Structures can be repaired and refurbished within three years. But district administrators might rationally conclude that whatever instructional reform activities a school undertakes with the money should be ones that do not continue to incur costs after the three-year grant ended. So they invest in curricula (textbooks, technology), professional development for teachers and principals, using a teacher evaluation system that incorporates student test scores, and so on. Textbooks last a long time, professional development workshops don’t have to be done in the future, and evaluation systems can be rolled back. If the reform activities lead to score improvements, even better. As the Coleman report warned, schools have a limited role in education achievement. That role is even more limited in a short time span.

But long term money can matter

Two recent studies concluded that changes in spending induced by state education finance reforms improved outcomes such as test scores, high school graduation, and earnings. On the surface, reforming a state’s education finance system sends more money to low-income schools, which is what SIG did without success. But finance reforms are long-lasting, and low-income districts and schools can invest in improvements knowing that their funding is higher for the foreseeable future.

The two studies, one by Jackson et al. (2016) and one by LaFortune et al. (2016) use techniques designed to estimate causal effects of spending more money. 3  Essentially, they treat court-ordered finance reforms as if the reforms were ‘exogenous,’ equivalent to unanticipated surprises. Reforms aren’t surprises, of course—it’s hard for a state government not to know a court case is under way. But what a court will decide and what it will instruct a state to do is not known in advance. Both studies use ‘event history analysis’ to compare time trends for test scores and other outcomes for states in which finance reforms are enacted relative to that state’s trends up to that point and to trends in other states not enacting reforms. The idea is that if the reform improves outcomes, the improvement should be visible as a break in the trend for that state relative to other states. If Kansas enacts a finance reform and Nebraska does not, and Kansas then experiences an improvement larger than its trend to that point, and Nebraska does not, the similarities in the two states lends credibility to the argument that the reform caused the improvement. 4

Jackson et al. match state finance reforms to a nationally representative sample of students that is tracked over time. They show that these students had more years of completed schooling and higher earnings as adults. 5  Their data do not enable them to study education outcomes while students are in school, but the findings hint at positive ones.

LaFortune et al. take a closer look at outcomes while students are in school. Before getting to those, however, they point out that finance reforms increased overall spending, and increased spending more in low-income districts relative to high-income districts, which means at least some ‘equalization’ happened. 6  Based on their evidence, it is clear that finance reforms re-allocate significant amounts of money—on average, reforms increased spending by $1,225 per student a year in the lowest 20 percent of districts ranked by income, while increasing spending by $527 in the highest 20 percent of districts ranked by income. In a state like Ohio, with 1.8 million students, these amounts imply spending increases on the order of $1.8 billion each year. The SIG program may seem large because it spent $7 billion, but that amount is modest compared to school finance reforms in even one large state.

LaFortune et al. match state finance reforms to representative samples in each state of student test scores from the National Assessment of Education Progress (NAEP), which enables them to measure the effects of money on test scores. Crucially, they find that NAEP test scores increase after spending increases. Increases are not large for any one year, but they note that effects will cumulate for students who attend K-12 after a reform is enacted, a 13-year span. After ten years, they estimate that a student in a lower-income district closed the score gap with students in the median-income district by 3.5 NAEP points. 7  For comparison, in 2015, the gap between math scores for white and black eight-graders was 32 points (and this gap is after decades of state reforms). Finance reforms can cut into the gap, but it remains a challenge.

LaFortune et al. report another finding that underscores the challenge in closing gaps. Finance reforms reduced achievement gaps between high- and low-income school districts but did not have detectable effects on resource or achievement gaps between high- and low-income students. The authors point out that many low-income students live in high-income districts and vice versa. Equalizing resources among districts is a poorly targeted approach for mitigating achievement gaps arising from differences in household incomes that exist within districts. Using state resources to offset disparities in property tax bases may meet a legal definition of equal access under state constitutions, but the LaFortune et al. findings raise questions about this strategy for promoting more equal outcomes.

We are back to the Coleman report, but updated this way—money can matter, but spending more on schools does not yield big improvements. The update is not nothing, but it’s short of a big something.

Programs and objectives should match

The SIG study’s result that test scores did not improve is logically consistent with SIG not generating differences in what low-performing schools did to improve. And perhaps expecting short-term money to transform schools is a kind of magical thinking that the issues that plague these schools can be ‘fixed’ by temporary funds.

The LaFortune et al. study shows that durable increases in money spent in schools improved achievement. The increases help states meet their legal obligations to public education under their constitutions, and the achievement gains show that the money did matter. But the study also found that targeting the money through school districts failed to close gaps between high and low income students. If the objective is to close gaps, state equalization might not be the right tool.

Incorporating those lessons into federal policy argues for making Title I portable, which Nora Gordon wrote about in this series—the money will follow the student for a long time (for as long as the student is eligible) and it is precisely targeted to students who need it. It does not sidestep issues first raised in the Coleman report about the limited role of schools in determining achievement, but it starts at a sensible point.

ESSA requires states to develop plans and intervene in their lowest-performing 5 percent of schools. The national SIG study offers some lessons about what not to do but is unclear about what to do. Susannah Loeb’s recent piece here offers suggestions based on findings from turnarounds in California that appear more successful than what the national study found. Improving teaching is at the top of the list. Schools might play a minor role in achievement overall, but, within schools, teachers play a major role. Focusing on teaching within low-performing schools is where the evidence points.

The author did not receive financial support from any firm or person with a financial or political interest in this article. He is currently not an officer, director, or board member of any organization with an interest in this article.

• The full Coleman report can be found at http://files.eric.ed.gov/fulltext/ED012275.pdf .
• Sparks mentions the lack of differences between school practices: http://blogs.edweek.org/edweek/inside-school-research/2017/01/school_improvement_fund_final_report.html . Brown does not: https://www.washingtonpost.com/local/education/obama-administration-spent-billions-to-fix-failing-schools-and-it-didnt-work/2017/01/19/6d24ac1a-de6d-11e6-ad42-f3375f271c9c_story.html?utm_term=.a059805f8a53 .
• Kirabo Jackson, Rucker Johnson, and Claudia Persico. “The Effects of School Spending on Education and Economic Outcomes: Evidence from School Finance Reforms.” The Quarterly Journal of Economics (2016), pp. 157-218; Julien LaFortune, Jesse Rothstein, and Diane Whitmore Schanzenbach, “School Finance Reform and the Distribution of Student Achievement,” National Bureau of Economic Research, Working Paper 22011, February 2016. Kevin Carey and Elizabeth Harris provide an overview of both studies at https://www.nytimes.com/2016/12/12/nyregion/it-turns-out-spending-more-probably-does-improve-education.html?_r=0 .
• The LaFortune study goes further by contrasting high and low income districts within a state, essentially estimating differences-of-differences-of-differences.
• Eric Hanushek noted that the Jackson et al. estimates seem too large. They report that the gap between low and high income students would be closed if spending increased by 23 percent more a year. Hanushek points out that actual spending increases during the time period they studied was more like 100 percent, gaps have not closed, and other explanations for low performance such as increases in the numbers of students in poverty don’t explain the difference. See http://educationnext.org/boosting-education-attainment-adult-earnings-school-spending , http://educationnext.org/money-matters-after-all, http://educationnext.org/money-matter , and http://educationnext.org/not-right-ballpark .
• They also find that spending increases after reforms are enacted continue into the future, which suggests that reforms create more or less permanently higher levels of spending.
• I am using their effect size estimate of .10 (page 32) and the NAEP reported standard deviation of 36 for fourth graders and 34 for eighth graders, https://nces.ed.gov/programs/digest/d11/tables/dt11_126.asp .

K-12 Education

Economic Studies

Center for Economic Security and Opportunity

Katharine Meyer

October 28, 2024

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October 21, 2024

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October 17, 2024

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Education is better than wealth Argumentative Essay

This article discusses the importance of education over money. While having money is necessary, it is crucial to have knowledge to save and invest it wisely. Education provides a sense of security and a regular earning mechanism, protecting individuals from any unexpected financial shocks. The article explains that education is a form of learning that is transferred from one generation to the next through teaching, training, or research. Although education is compulsory in most places, attendance at school often isn’t, and some parents choose home-schooling or e-learning. The history of education began in prehistory, as adults trained the young of their society in the knowledge and skills they would need to master and eventually pass on. Education is more valuable than money, as it provides individuals with a skillset that they can use throughout their lives.

When considering money as an asset, it is not inherently advantageous. It necessitates expertise to effectively save and even more knowledge to make prudent investments in ventures or businesses. To attain genuine tranquility, it is essential to establish a dependable means of earning income that can protect you from potential setbacks like a failed business or economic downturn.

Education holds greater significance than money as it opens up diverse avenues for earning. Nevertheless, individuals lacking education who amass wealth through entrepreneurship or other means may encounter challenges when their business fails or unforeseen circumstances arise. Without an education, they are left with limited options and the arduous task of persevering with their business. Conversely, education grants the opportunity to seek employment and generate income.

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Moreover, education and learning in any form are advantageous and provide diverse benefits in various aspects of life. Education, broadly speaking, encompasses the acquisition of knowledge, skills, and behaviors from one generation to another through teaching, training, or research. Although education typically entails guidance from others, it is also feasible to acquire knowledge independently.

Education includes any experience that affects a person’s thoughts, emotions, or actions. It is commonly divided into different stages like preschool, primary school, secondary school, and higher education which encompasses college, university, or apprenticeship. Some governments recognize the right to education. Moreover, globally, Article 13 of the United Nations’ 1966 International Covenant on Economic, Social and Cultural Rights guarantees everyone’s right to obtain an education.

Despite the requirement for education in many regions until a certain age, some parents opt for alternatives like home-schooling or e-learning for their children. The term “education” is derived from the Latin word educatio, which comes from educo and is associated with the word educo originating from e- and “duco.” Education can take place in formal or informal settings. Since ancient prehistoric times, adults have been passing on crucial knowledge and skills to younger members of society.

In pre-literate societies, the passage of knowledge occurred orally and through imitation. This tradition of story-telling continued from one generation to another. However, as cultures advanced and sought to expand their knowledge beyond skills that could be easily acquired through imitation, formal education came into existence. During the time of the Middle Kingdom, schools were present in Egypt. Education not only offers the opportunity to earn a good income but also brings immense value that cannot be purchased with money. As mentioned by Napoleon Hill in “Think and Grow Rich,” inherited wealth can sometimes have negative consequences.

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‘Better to Be Born Rich Than Smart': Education Must Answer for Systemic Inequality

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In a fair society, people’s successes should reflect their talent and hard work. But that’s not the case in the United States today. Instead, a child’s likelihood of becoming a college graduate and achieving early career success depends more on his or her family’s bank account and social status than on talent. In short, in America, it is better to be born rich than smart.

Our research team at the Georgetown University Center on Education and the Workforce demonstrated just how dire the prospects are for disadvantaged youths in our report, “Born to Win, Schooled to Lose.” What is most striking is that the most talented young people from the least affluent families don’t do as well in college and careers as the least talented young people from the most affluent families. We found that a child from an affluent family with low math test scores in kindergarten has a 71 percent chance of working in a good entry-level job by age 25. Meanwhile, a child from an economically disadvantaged background with high math test scores in kindergarten has only a 31 percent chance of working in a good entry-level job by age 25.

Systemic inequality affecting Black and Latino youths adds another dimension to economic class disparities. Black and Latino youths who have high math test scores as teenagers are less likely to earn a college degree than White and Asian students with the same high scores.

The great sorting of the most talented young people into haves and have-nots starts early and continues into young adulthood.

The great sorting of the most talented young people into haves and have-nots starts early and continues into young adulthood, but fluctuation does occur along the way. Throughout elementary, middle, and high school, students’ math test scores rise and fall.

Whether affluent or poor, regardless of race or ethnicity, any student can stumble along the academic pathway. That said, affluent students have the best odds of never falling behind: 74 percent never see their math test scores fall to the bottom half, compared with 30 percent of economically disadvantaged students. And if affluent students do fall, they are more likely to recover. More than half of the most affluent students whose high initial math test scores drop during primary school have high test scores again by 8th grade, compared with less than one-third of the least affluent.

These contrasts are stark—but the fact that advantaged students regularly fall and recover and that some disadvantaged students do make it despite the odds gives us reason for optimism. Education quality does make a difference.

There is also good news in the fact that students who still have good scores by the 10th grade have good chances thereafter. Most individual movement in math test scores occurs before the 10th grade, and a 10th grader who has high math test scores has a much better chance of being a relatively affluent adult than one with low test scores. Among students from economically disadvantaged families, Black and Latino students who still have high math test scores in 10th grade are almost as likely as similarly scoring White students to be in the top half of education, income, and occupational prestige at age 25.

Our data suggest several calls to action along the education pipeline. By the end of preschool, too many students are already behind: Only 26 percent of economically disadvantaged students start out in the upper half of the math score distribution in kindergarten. The K-12 pipeline is no better. Even after decades of standards-based education reform, we still aren’t very good at helping talented students, especially disadvantaged students, keep up or catch up when they fall behind.

National problems require national solutions. And that means direct federal mandates in state and local education policy. President George W. Bush and former U.S. Secretary of Education Margaret Spellings’ big push for No Child Left Behind asserted an historical escalation of the federal presence in K-12 education. Whatever their intentions, the Obama administration signaled a classic case of federal retreat with Race to the Top, basically violating the responsibilities of the federal government to less advantaged students by pushing education reform back to the states.

The Obama administration triggered the multi-step dance that constitutes the classic political strategy for taking the federal government out of a policy domain: First, offer money and loose guidance to shift action back to the state and local governments. Then, after some time has passed and people have stopped listening, quietly let the money go away.

The Trump administration has taken this retreat a step further by working to put the money in the hands of local parents and charter schools, completely abdicating the federal responsibility.

K-12 education has effectively been out of sight and out of mind in the national dialogue in recent years. It’s time to put the continuing failures identified in our research back at the forefront of the national education policy dialogue. Instead, most national politicians are focused on higher education. Providing money for higher education moves middle-class votes, but it also creates a direct economic transfer from the disadvantaged who don’t complete college to advantaged students who graduate college and thrive in the labor market. Unless there’s more progress in K-12 education first, any attempts at free college will just end up funding postsecondary dropout factories.

Our report shows that the class and racial imbalances that existed when NCLB began have not gone away and still require strong federal intervention. By extending from early education to early careers, our data illuminate an additional systemic failure to connect the dots between high school, college, and career. There already are some promising reforms designed to break down the institutional silos between K-12 education, higher education, and labor markets—including AP and IB programs, dual enrollment, linked learning, early college, and apprenticeships. But more needs to be done, including offering better career counseling and exposure earlier in the pipeline.

Too many talented students from disadvantaged families are facing an uphill battle. By providing the right supports—and holding the whole system accountable—we can give more talented students much better chances of success.

A version of this article appeared in the June 12, 2019 edition of Education Week as It’s Better to Be Born Rich Than Smart

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Why education is essential for growth

.chakra .wef-spn4bz{transition-property:var(--chakra-transition-property-common);transition-duration:var(--chakra-transition-duration-fast);transition-timing-function:var(--chakra-transition-easing-ease-out);cursor:pointer;text-decoration:none;outline:2px solid transparent;outline-offset:2px;color:inherit;}.chakra .wef-spn4bz:hover,.chakra .wef-spn4bz[data-hover]{text-decoration:underline;}.chakra .wef-spn4bz:focus-visible,.chakra .wef-spn4bz[data-focus-visible]{box-shadow:var(--chakra-shadows-outline);} Kevin Watkins

Some 236 years ago, a young governor from the American state of Virginia broke the mold on education reform. In his  Bill for the More General Diffusion of Knowledge ,  Thomas Jefferson called for “a system of general instruction” that would reach all citizens, “from the richest to poorest.” It was the first step in the creation of the American system of public education – an institution that helped to propel the country’s rise to global prominence.

By the early twentieth century, the United States was a global leader in public schooling. Investments in education provided a catalyst for economic growth, job creation, and increased social mobility. As Claudia Goldin and Lawrence Katz  have shown , it was American “exceptionalism” in education that enabled the country to steal a march on European countries that were under-investing in human capital.

As world leaders gather this week for the  Oslo Summit on Education for Development , the lessons from this experience could not be more relevant. In fact, with the global economy becoming increasingly knowledge-based, the education and skills of a country’s people are more important than ever in securing its future. Countries that fail to build inclusive education systems face the prospect of sluggish growth, rising inequality, and lost opportunities in world trade.

In this context, some of today’s discussions on education sound curiously anachronistic. Harvard economist  Ricardo Hausmann   recently berated  what he describes as the “education, education, education crowd” for advocating an “education-only” strategy for growth. It was an impressive attack on a view that, to the best of my knowledge, nobody holds.

Of course education is not an automatic route to growth. Expanding education in countries where institutional failure, poor governance, and macro-economic mismanagement stymie investment is a prescription for low productivity and high unemployment. In North Africa, the disharmony between the education system and the job market left young, educated people without decent opportunities – a situation that contributed to the revolutions of the Arab Spring.

None of this detracts from the vital role of education – not just years of schooling, but genuine learning – as an essential component of growth. Extensive research – from the work of Adam Smith to Robert Solow and Gary Becker and, most recently, Eric Hanushek – confirms the importance of learning in building productive human capital. One step up the standard deviation score on the OECD’s  Program for International Student Assessment  is associated with a 2% increase in a country’s long-run  per capita  growth rate.

Education may not be a quick fix for slow growth. But try naming a country that has sustained an economic transformation without advances in education.

Economists at the World Bank have contributed a few straw men of their own to the education debate. In one  contribution , Shanta Devarajan criticizes the view that education is an essential public good that governments should finance and deliver, arguing that it should instead be considered a private good, delivered through markets to customers – that is, parents and children – seeking private returns.

The problem is that education is self-evidently not a public good – in the real world, few things are. It is, however, a “merit” good, something that governments should offer for free, because of the wide-ranging private and social returns that might be lost if parents underinvest, or if the poor are excluded. For example, progress in education – especially girls’ education – is closely associated with improvements in child survival and nutrition, and maternal health, as well as higher wages.

It is time to move beyond futile discussions based on flawed logic to focus on the real challenges in education – challenges that must be addressed, if we are to meet the  Sustainable Development Goal  of delivering high-quality primary and secondary education to all by 2030. The Oslo summit presents an important opportunity to lay the groundwork for success. With 59 million primary school-age children and 65 million adolescents out of school, that opportunity should be seized with both hands.

A successful summit would advance four key imperatives. First, governments must commit more domestic funds to education. One  background paper  for the summit highlights the failure of successive governments in Pakistan, which now has the world’s second-largest out-of-school population, to invest in education. At the heart of the problem are politicians who are more interested in facilitating tax evasion by the wealthy than improving learning opportunities for the poor.

Second, international donors must reverse the downward trend in aid for education. Even with an enhanced resource-mobilization effort, roughly $22 billion annually in aid will be needed to achieve universal lower-secondary education. That is around five times current levels. Beyond closing the aid gap, United Nations Special Envoy on Education  Gordon Brown  has rightly  called for  financing mechanisms to deliver education to children affected by conflict and humanitarian emergencies.

Third, world leaders must get serious about inequality. Every government should be setting targets aimed explicitly at narrowing education disparities – linked to gender, wealth, and the rural-urban divide – and aligning their budgets with those targets. As it stands, the disparities are huge. In Nigeria, for example, urban boys from the wealthiest 20% of households average ten years of schooling, while poor rural girls in northern areas can expect less than two years. Yet, as another Oslo summit  background paper  shows, education finance is skewed toward the wealthy in most countries.

Finally, governments and aid agencies must abandon market-based experiments, and commit to genuine system-wide reform. One key priority area is teachers, who need strong incentives, effective training, and dependable support systems to deliver real learning. After all, an education system is only as good as its educators.

As world leaders gather in Oslo, millions of parents will be struggling to ensure that their children receive the education they deserve – one that will enable them to build better lives for themselves and their families. For these parents, schooling is a source of hope. We owe them and their children our best efforts.

This article is published in collaboration with Project Syndicate. Publication does not imply endorsement of views by the World Economic Forum.

To keep up with the Agenda  subscribe to our weekly newsletter .

Author: Kevin Watkins is Director of the Overseas Development Institute (ODI), a leading UK think tank on international development and humanitarian issues.

Image: Coloured pencils are pictured in a wooden box at a nursery school. REUTERS/Michaela Rehle.

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Is Education Better than Money, and Why?

There are a lot of successful people in this world. Some came up with great ideas and were born geniuses. Others needed the education to get them to where they are today. Lastly, some are thousands of dollars into student loan debt while others are born into a life of wealth and luxury. All of these scenarios beg the question, is education better than money?

Yes, education is better than money. Education brings opportunities, fosters new ideas, and develops problem-solving skills. Education gives us a fully stocked toolbox to a successful life. At the end of the day, education is essential to success.

Why Is Education Important?

With an education in your chosen field, the sky is truly the limit. You can become part of any company, or even become a business owner with confidence in your understanding. Education brings the career needed to lay the foundation for self-dependency and financial stability .

Without an education options become limited. Experience alone may get you by in some fields but oftentimes, working off of experience alone does not get people to the level of success they wish to achieve. Experience can also be seen as an education. Thus experience alone does not mean someone does not have an education. With experience, someone learns the aspects of their specific role, and they even learn some behind-the-scenes aspects of the industry where their experience comes from.

At the same time in many fields, you cannot gain experience without some sort of education. A lot of fields nowadays require at least a trade school or undergraduate degree just to begin.

Education gives you more than just success. It comes with a certain freedom that is not acquired without it; doors to opportunities are opened for the success you want in your life when you have some sort of education.

Do You Need Money to Get Your Education?

Having some money can be helpful when getting your education; however, it is not required. There are hundreds of ways to get an education when you do not have money. Sure you can go with student loans and sometimes that is the best choice; but, there are so many more ways to gain funding for your education.

Aid is available in a multitude of forms. You can apply for government aid through your FAFSA. The sooner you send in your FAFSA the higher chance you have of getting a good chunk of aid. Colleges, universities and even some trade schools offer in house scholarships.

Having extracurricular activities on your resume or transcript can help with these a lot. If you were a great player for four years in high school on a sports team you may qualify for an athletic scholarship. If you often volunteered and kept good grades an academic scholarship could be in your future as well.

Essay scholarships are a great resource when trying to get money for school. Write about your biggest struggle, or a letter to your younger self. Anything you write about, there is bound to be an essay scholarship prompt that fits.

Start early when trying to get scholarships and grants. If you have four years stacked full with extracurricular activities and good grades a scholarship is definitely in your future.

Can Education Bring More Money or Success?

Jobs requiring some sort of education do tend to pay more. This is because these jobs typically have more responsibility and a bigger workload. These jobs also tend to pay more simply because the more knowledge you have the more they are willing to pay you. Not only that but many fields need some sort of education or training, so finding a well-paying stable job with no education or training can be next to impossible.

There are obviously some exceptions to this. Big media companies like Facebook and YouTube are starting to drop college requirements. This is great for those who choose to not go to college. But, these jobs require experience or knowledge of certain software, some of which you have probably never heard of.

The upside to this is, with the internet being as expansive as it is, you are able to find crash courses on certain software for low prices and possibly even free. Microsoft has certification classes where you only pay for the exam and Google does something similar. Even if you have never heard of the software for these jobs, there are ways to learn about them and so much more.

Success is subjective. Some people believe having wealth is a success. Others believe having children means they have been successful in life. Money does not apply to all definitions of success. However, Education does.

In every definition of success, education can help you get to where you want to be. Having knowledge of the field or lifestyle you desire in order to feel successful gets you to where you want to be in life efficiently.

Why Do Some People Believe Money Is Better Than Education?

The main argument is that money is needed for survival. Without money, you have no food, stability, or housing. The counter to this is, do you want to just survive? Or do you want to build a successful life and live feeling fulfilled? If you choose the second option, education is better than money.

If you just want to pay your bills and make a few big purchases here and there you can definitely do that without an education. Many young people still trying to get their education are able to make big purchases from time to time and pay their bills, so obviously it can be done.

On the other hand, if you want freedom, peace of mind, and stability; education will get you that and so much more. Money cannot give you some freedoms an education can. An education gives intellectual freedom; freedom money can never buy.

Education gives the ability to create new ideas, have a well-rounded understanding and think for yourself to form your own opinions. With education someone can learn what they need to live a successful life; however, money does not teach you what you need in life. Education also teaches you how to contribute to society.

If you have money that is great! If you have no idea how to contribute to society or even be a part of society at all, money cannot get you very far.

What Can Happen to Someone Without an Education?

Not having an education comes with consequences, just like anything in life. Some of these consequences are more severe than others. The least severe being that, a person ends up working in a low paying job and lives their life paycheck to paycheck, hoping one day to have more responsibility and a higher pay as their experience grows. This person is not able to save up for the unexpected circumstances life can throw, like a trip to the hospital.

However, more severe consequences can happen and even become dangerous. An individual can become unemployed and, as a result, end up homeless. Some of these individuals end up resorting to crime in order to make the money they need to survive. They feel they have no other option since they are uneducated.

Uneducated individuals are also at risk of being a victim to a “poverty trap”. A poverty trap is when someone lacks an education and has a lack of resources. These people are not able to get out of poverty simply because they do not know how to.

The most severe form of a consequence to lacking an education is exploitation . Individuals who live in countries that are less developed tend to fall victim to exploitation. Examples of exploitation are slavery and human trafficking. In some countries women are not given an education or resources; these women do not understand that they should be treated differently and with human decency.

Education does not have to mean four years of undergraduate school and four years of graduate school. Education can be a two-year degree, or a trade school or a vocational program. All of these options give you access to jobs and fields looking for people with the exact education you acquired.

Money gives us the power to have financial stability in our lives. If someone with money has no education they have no idea how to save that money and spend it wisely. However, education gives someone the power to earn that money and the intellectual maturity to keep themselves stable for their entire lives.

At the end of the day, without an education you do not have the opportunities to make the money you want to make; and you lack the ability to form your own identity. So, even though money is incredibly important, you cannot make the kind of money the average person desires without some sort of education; you also become someone who is incredibly susceptible to suggestion because you do not know any better than the information the person in front of you is providing.

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Education, Income, and Wealth

Americans have among the highest living standards in the world and have enjoyed rising living standards for decades. Median household income in the United States in 2015 was $56,516, up from $49,276 in 2010. 2 However, gains in household income have not been evenly distributed across all income groups. Income inequality has been increasing in the United States since the 1970s, peaking in 2013 3 (Figure 1). A 2015 Gallup poll found that 63 percent of Americans feel that the distribution of U.S. money and wealth is unfair. 4 While many factors contribute to income and wealth inequality, the role of education is a key piece of the puzzle.

Figure 1: U.S. Income Inequality a Rising Trend

NOTE: The Gini coefficient (also known as the Gini ratio or index) is a common measure of income inequality within a nation. It gauges income inequality on a scale from 0 to 1: the higher the number, the higher the level of inequality. The lowest U.S. value was 0.386 in 1968, and the highest value was 0.482 in 2013. In 2015 the, Gini coefficient was 0.479.

SOURCE: FRED®, Federal Reserve Bank of St. Louis. Income Gini Ratio for Households by Race of Householder, All Races: 1967-2022. Accessed November 22, 2016.

When people earn income, they use that income to do three things: pay taxes, buy goods and services (consume), and save. Saving is not spending on current consumption or taxes and involves giving up some current consumption for future consumption. The accumulation of money set aside for future spending and consumption is known as savings. Americans don't save as much as those in other industrialized nations. The U.S. personal saving rate has dropped substantially over the past 50 years (Figure 2). As of September 2016, the U.S. personal saving rate was 5.7 percent, whereas it has historically averaged 8.4 percent (since 1959). 5 By comparison, German households saved 16.7 percent, on average, in 2015. 6

Figure 2: U.S. Personal Saving Rate Over 50 Years

NOTE: The horizontal line indicates the average saving rate over the period.

SOURCE: FRED,  Personal Saving Rate: 1959-2016. Accessed November 22, 2016.

Saving is an essential component of building wealth. Wealth, also called net worth, is the total value of a person’s assets , such as liquid assets (cash or something you can easily turn into cash), real estate, businesses, and cars, minus any liabilities (money owed; debt). Saving to build wealth is an important part of financial planning. And debt is not necessarily a bad thing. Because income tends to start low at younger ages, borrowing (taking on debt) allows people to have things now and pay for them over time. In economic terms, this is called smoothing consumption. Income then tends to increase in middle age and decrease when people retire. Economists often use the life cycle theory of consumption and saving to explain this phenomenon.

As shown in the model (Figure 3 below), people tend to borrow to purchase homes, cars, or an education when they are young, pay down debt and save a portion of their income during their peak working and earning years, and finally spend their saved money during retirement. Within this pattern of planned borrowing and saving, the hump-shaped pattern of income (the curved line) allows for smooth consumption (the horizontal line) across the lifecycle. Thus, saving—to build wealth—is essential for a higher quality of life during retirement.

Figure 3: A Model of Saving & Spending: Life Cycle Theory of Consumption and Saving

Two similar terms must be differentiated here: income is the payment people receive for providing resources in the marketplace. For example, people often receive paychecks twice a month. You may have heard people discuss the flow of income. Saving involves setting some of the flow of income aside to increase wealth . Wealth is the accumulation—or stock—of saved money. Notice that turning the flow of income into a stock of wealth requires saving money. There are several options for saving, including saving in a savings accounts or saving through the purchase of financial assets , which is called financial investment . People invest in financial assets with the aim of “making money”—they hope to earn interest, dividends, profits, and/or capital gains in the future.

Education and Income

The relationship between education and income is strong. Education is often referred to as an investment in human capital . People invest in human capital for similar reasons people invest in financial assets, including to make money. In general, those with more education earn higher incomes (see the table). The higher income that results from a college degree is sometimes referred to as the “college wage premium.” Research shows that this premium has grown over time. 7

In addition, in general, the more skills people have, the more employable they are. As a result, workers with more education have a lower average unemployment rate than those with less education (Figure 4 below).

Figure 4: Unemployment Declines as Education Increases

NOTE: In November 2016, the overall U.S. unemployment rate was 4.6 percent, but level of education matters. The unemployment rate for college graduates was 2.3 percent, while that for those with less than a high school diploma was 7.9 percent.

SOURCE: FRED, Unemployment Rate by Education Levels: 1999-2024. Accessed December 21, 2016.

Education and Wealth

The relationship between education and wealth is also strong. Of course, earning a higher income makes saving easier, and saving is necessary to build wealth. Those with lower incomes have a flatter (non-humped) income pattern, which makes saving and paying down debt more difficult. But those with more education also tend to make financial decisions that contribute to building wealth. 8 It is important to realize, however, that anyone can follow the financial behaviors that well-educated families tend to practice, such as these:

• Have some liquid assets. Liquid assets can help relieve financial distress during a difficult time without having to sell assets or accumulate debt. Liquid assets include savings accounts, stocks, and bonds.
• Diversify. To diversify means to invest in various financial instruments to reduce risk. In addition to tangible assets such as houses and cars, those with higher levels of education also tend to hold a greater share of their savings in stocks, bonds, and businesses, which tend to provide higher returns (but also more risk of loss).
• Keep debt low relative to assets. Those with low debt relative to assets pay lower interest rates. Those with high debt relative to assets pay higher interest rates, which can make it difficult to save. And, over longer periods, both savings and debt are susceptible to the effects of compound interest —which means that savings (or debt) can grow at exponential rates over time. 9

It is important to realize, however, that the relationship among education, income, and wealth is more complicated than simply more education yielding a higher income and more wealth. Factors such as natural ability and family background also impact both income and wealth and are not caused by having more education (see the boxed insert).

Correlation is Not Causation

The relationship among education, income, and wealth seems to be fairly strong. Economists, however, are not ready to say that education alone is the cause of higher income (and wealth). In fact, you might have heard the phrase, “correlation does not imply causation.” What does this mean?

Well, just because two things seem related does not mean that one causes the other. For example, consider ice cream sales. They tend to increase when the rate of sunburn also increases. Does increased ice cream consumption, then, cause an increase in the sunburn rate? Not likely. In fact, a third factor strongly influences both—the weather. Demand for ice cream increases during the hot summer months, when more people tend to be outdoors and thus more likely to get a sunburn.

Likewise, while at least some of the college wage premium is due to the knowledge and skills acquired through education, other factors, such as the following, are surely at play:

• Natural ability: Those with high intellectual ability are more likely to complete college, and that ability contributes to success in the job market as well.
• Assortive mating (“like marries like”): Highly educated people tend to marry other highly educated people—which can double the wage premium and increase household income.
• Inheritance: Poeple with more education are more likely to have parents with accumulated wealth and, thus, are more likely to receive an inheritance.
• Better health and longer lifespans: People with more education tend to be healthier, which enables them to work longer (increasing lifetime earnings) and live longer (collecting more lifetime benefits from Social Security and pensions).

Boshara, Ray; Emmons, William R. and Noeth, Bryan. The Demographics of Wealth: How Age, Education and Race Separate Thrivers from Strugglers in Today's Economy. (PDF) . Essay No. 2: Education and Wealth, May 2015, p. 7.

The Role of Financial Literacy

Research shows that up to half of wealth inequality may be caused by differences in financial literacy. 10 That is, many people do not have the skills or ability to manage their money effectively. As a result, they are more likely to use costly home loan (mortgage) products, 11 pay higher transaction costs and fees, and use high-cost borrowing options. 12 High-cost borrowing includes the use of payday loans and businesses such as pawn shops and rent-to-own stores. 13 Currently only 20 states require high school students to take a course in economics and only 17 states require a course in personal finance. 14 Research has shown, however, that such education makes a difference: students in states with financial education requirements have lower loan delinquency rates and higher credit scores relative to students in states without financial education requirements. 15

Income and wealth inequality have been on the rise in the United States for decades. Research indicates that the level of education is strongly related to both income and wealth. Households with higher levels of education tend to have more liquid assets to withstand financial storms, diversify their savings (investments), and maintain low levels of debt relative to assets. These financial behaviors are effective strategies for building income into wealth. Because much of wealth building can be tied to financial decisionmaking, it is likely that financial literacy can play a key role in reducing wealth inequality over time.

Asset: A resource with economic value that an individual, corporation, or country owns with the expectation that it will provide future benefits.

Capital gains: A profit from the sale of financial investments.

Compound interest: Interest computed on the sum of the original principal and accrued interest.

Credit score: A number based on information in a credit report used to indicate a person's credit risk.

Delinquency rate: The number of loans that have delinquent payments relative to the total number of loans.

Financial asset: A contract that states the conditions under which one party (a person or institution) promises to pay another party cash at some point in the future.

Financial investment: Placing money in a savings account or in any number of financial assets, such as stocks, bonds, or mutual funds, with the intention of making a financial gain.

Financial literacy: Having knowledge of financial matters and applying that knowledge to one's life.

Human capital: The knowledge and skills that people obtain through education, experience, and training.

Income: The payment people receive for providing resources in the marketplace. 

Payday loan: A small, short-term loan that is intended to cover a borrower's expenses until his or her next payday. May also be called a paycheck advance or a payday advance.

Transaction costs: The costs associated with buying or selling a good, service, or financial asset.

• Yellen, Janet L. Perspectives on Inequality and Opportunity from the Survey of Consumer Finances . Board of Governors of the Federal Reserve System, 2014.
• U.S. Bureau of the Census. Median Household Income in the United States [MEHOINUSA646N] , retrieved from FRED, Federal Reserve Bank of St. Louis, November 22, 2016.
• Federal Reserve Bank of St. Louis. “ How Has Income Changed over the Years? ” On The Economy Blog , June 2016.
• Newport, Frank. “Americans Continue to Say U.S. Wealth Distribution Is Unfair.” May 4, 2015; Gallup.
• U.S. Bureau of Economic Analysis. Personal Saving Rate [PSAVERT] , retrieved from FRED, Federal Reserve Bank of St. Louis, November 22, 2016.
• Beisemann, Leonie. “ A Dash of Data: Spotlight on German Households .” OECD Insights , February 11, 2016.
• Valletta, Rob. “ Higher Education, Wages, and Polarization .” Federal Reserve Bank of San Francisco Economic Letter . January 12, 2015.
• Boshara, Ray; Emmons, William R. and Noeth, Bryan. “ The Demographics of Wealth: How Age, Education and Race Separate Thrivers from Strugglers in Today's Economy (PDF). ” Essay No. 2: Education and Wealth, May 2015.
• Boshara, Emmons, and Noeth, 2015.
• Lusardi, Annamaria; Michaud, Pierre-Carl and Mitchell, Olivia S. “ Optimal Financial Knowledge and Wealth Inequality (PDF) .” NBER Working Paper 18669, January 2013.
• Moore, Danna. “Survey of Financial Literacy in Washington State: Knowledge, Behavior, Attitudes, and Experiences.” Technical Report 03-39, Washington State University Social and Economic Sciences Research Center, December 2003.
• Lusardi, Annamaria and Tufano, Peter. “Debt Literacy, Financial Experiences, and Overindebtedness.” NBER Working Paper 14808, March 2009.
• Lusardi, Annamaria and de Bassa Scheresberg, Carlo. “Financial Literacy and High-Cost Borrowing in the United States.” NBER Working Paper 18969, April 2013.
• Council for Economic Education. Survey of the United States: Economic and Personal Finance Education in Our Nation's Schools, 2016.
• Brown, Alexandra; Collins, J. Michael; Schmeiser, Maximilian and Urban, Carly. “ State Mandates Financial Education and the Credit Behavior of Young Adults (PDF) .” Finance and Economic Discussion Series 2014-68, Federal Reserve Board, 2014.

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Scott A. Wolla is an economic education officer at the St. Louis Fed.

Jessica Sullivan was an economic education intern at the St. Louis Fed.

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Scott A. Wolla and Jessica Sullivan, " Education, Income, and Wealth ," Federal Reserve Bank of St. Louis Page One Economics , Jan. 3, 2017.

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