The social rate of return to schooling

Question

Quizplus · Accepted Answer

The social rate of return to schooling includes not only the private benefits to the individual receiving schooling (such as increased earnings potential), but also the societal benefits, such as the increase in national income resulting from a more educated workforce. It does take into account the costs of education, so option D is incorrect. Option A is incorrect because it only includes private benefits, while the social rate of return takes into account both private and societal benefits. Option B is incorrect because signaling benefits are only one component of the private benefit of education, and they do not fully capture the societal benefits. Option E is incorrect because while there can be some measurement issues with calculating the social rate of return to education, it is generally a well-defined concept in economics.

The Social Rate of Return to Schooling