time of students, parents, and others—and social capital are important aspects of investment in education, and they are missed in the traditional National Income and Product Accounts (NIPAs). Looking at all education inputs, and their related outputs, would form a more complete picture. Second, human capital, particularly that arising from education, is large relative to the nonhuman capital stock measured by the Bureau of Economic Analysis (BEA). By one estimate, more than two-thirds of national income in recent years is a return to past investments in schooling and to work experience (Krueger, 1999). Separate education accounts would contain data essential for improving our understanding of how investment and the capital stock, defined more broadly to include both human and nonhuman capital, affect economic growth. Third, the education sector is large and important in its own right. Understanding trends in output and productivity in the education sector, both public and private, therefore is of interest.

CONCEPTUAL FRAMEWORK

In this chapter we discuss the components of an education satellite account, including inputs and outputs, focusing primarily on formal education and the significant measurement issues it involves. There are difficulties on both the input and the output side: How does one value time that is not transacted in an explicit market? How does one define and value the output of education, given that it is not directly traded and not directly observed? Regardless of the methodology employed, a goal is to have independent estimates of inputs and outputs—both market and nonmarket—in nominal and constant dollars, to allow for the estimation of productivity.

The emphasis of this chapter is on formal education, in part because data on informal education and training are limited.2 This is not to imply that the role of families in preparing young children for school early in life or on-the-job-training and other sources of informal education later in life are unimportant. Rather, we do not discuss these less formal investments only because their magnitude and effects are difficult or impossible to measure at present. The scope of the chapter also excludes other factors, such as health and the role of social capital, that may enhance or impinge on education.3 By looking at formal education, the chapter highlights approaches that could be used to produce more comprehensive education accounts and measurement issues that would arise in the construction of such accounts.

The National Center for Education Statistics, the Bureau of Labor Statistics (BLS), and the Census Bureau, as well as the National Education Association and

2  

Schools and their staffs also provide child care services, which are valued by parents, but these services can be considered a separate joint product of having children attend school, rather than an output of education itself.

3  

Social capital is defined in Chapter 1; see Chapter 6 for a discussion of accounting for health.



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