The Benefits to Taxpayers from Increases in Students - RAND ...

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80 The Benefits to Taxpayers from Increases in Students’ Educational Attainment Table 7.5 Benefits to Taxpayers from Increasing Educational Attainment from High School Dropout to College Graduate, U.S.-Born Men and Women (2002 $, thousands) Increased Tax Payments Reduced Social Program Spending Reduced Incarceration Spending Total Benefit Estimated Net Benefit 25 Percent Reduction Whites Men 192 38 23 254 206 138 Women 167 64 3 234 187 123 Asians Men 181 63 21 266 219 147 Women 171 82 1 254 207 139 Blacks Men 144 64 179 388 341 240 Women 128 114 14 256 209 143 Hispanics Men 165 45 64 274 228 154 Women 148 83 6 237 190 127 SOURCE: Appendixes B, C, and D. begins to yield benefits six years after the additional schooling begins. Because the future benefits to additional schooling are discounted to age 18 in 2002 dollars, the estimates reflect differences in the times when benefits begin. Table 7.5 also shows that, if the effect of the increase in education on public revenues and costs were 25 percent less that our estimates, the net benefit to increasing a U.S.-born person’s education from high school dropout to college graduate would be 19 to 36 percent smaller. Even if our estimates of the effects of the increase in education level on public revenues and costs were 25 percent too high, taxpayers would realize net benefits to an increase in education from high school dropout to college graduate of at least $123,000 (white women) and as much as $240,000 (black man). The Effects of Increased Educational Attainment: An Example We use the results for a U.S.-born Hispanic woman to illustrate the results of our analysis. Recall that we examine the benefits to taxpayers from increased educational attainment and the costs that taxpayers would incur to provide increased education. We do not consider the costs of any policies or programs undertaken to induce individuals to increase their education. Also, recall that the computations are mortality-
Educational Attainment and Public Revenues and Costs 81 adjusted. In other words, the figures include the schedule of expected age at death, as of 2002, for each population subgroup in the United States. Assuming that life expectancy will continue to increase, our calculations constitute a conservative estimate for expected future benefits. Figure 7.1 compares the discounted present values (2002 dollars) of the costs and benefits that taxpayers would receive if a U.S.-born Hispanic women were to complete college rather than drop out of high school. The public savings from social support programs alone more than compensate for the cost of providing the additional education. While the criminal justice system benefit is minor for this specific population group, substantial benefits from increased tax payments help the educational investment to generate a net benefit to taxpayers in excess of about $190,000. The results presented in Figure 7.1 reflect one scenario: that of raising a Hispanic woman’s education level from less than high school graduate to college graduate. We now turn to some alternative scenarios, raising a man or woman’s education level from • high school dropout to high school graduate • high school graduate to some college • some college to college graduate. Figure 7.1 Benefits and Costs of Raising the Education of a U.S.-Born Hispanic Woman from Less Than High School Graduate to College Graduate 250,000 200,000 150,000 2002 $ 100,000 50,000 0 –50,000 –100,000 Cost of education Taxation benefit Social program benefit Criminal justice benefit Net public benefit SOURCE: Appendixes B, C, and D. RAND MG686-7.1
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THE ARTS CHILD POLICY CIVIL JUSTICE
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The Benefits to Taxpayers from Incr
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Preface Meeting the educational dem
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Figures 3.1. Present Value of Lifet
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Abbreviations ADA CPS EITC FTE GED
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Chapter Two Analytic Approach There
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Analytic Approach 15 effects of edu
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Analytic Approach 17 women employed
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Analytic Approach 19 State and Loca
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Analytic Approach 21 tion of educat
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Analytic Approach 23 The difference
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Analytic Approach 25 but a very sma
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Analytic Approach 27 1997 changes g
Page 55 and 56: Chapter Three Payments for Taxes an
Page 57 and 58: Payments for Taxes and Social Progr
Page 67 and 68: Chapter Four Spending on Social Sup
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Page 115 and 116: Data and Sources 89 Program Benefit
Page 117 and 118: Appendix B Estimating Tax Payments
Page 119 and 120: Estimating Tax Payments 93 Federal
Page 121 and 122: Appendix C Social Program Participa
Page 123 and 124: Social Program Participation and Co
Page 137 and 138: Appendix D Incarceration Cost Estim
Page 139 and 140: References Aos, Steve, Roxanne Lieb
Page 141 and 142: References 115 Krop, Richard, Steph
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