Direct and indirect utility of education. Causal effects of education on life satisfaction

48 Pages Posted: 6 Dec 2021

See all articles by Susanne Elsas

Susanne Elsas

State Institute for Family Research

Date Written: December 2, 2021

Abstract

There is growing interest in non-monetary returns to education, including health or aspects
of political participation. I focus on the relation of education and adults’ life satisfaction and
add to the so far limited research that aims at identifying the causal effects of education on life satisfaction. In addition, I examine not only the direct, but also the indirect causal effects of education on life satisfaction. I exploit an exogenous increase in compulsory schooling that was implemented across West German federal states at different times between 1949 and 1969. My empirical analyses are based on data from the National Educational Panel Study (NEPS). Results of 2SLS regressions indicate a negative causal effect of education on life satisfaction. In estimations that condition on other adult outcomes of education, which mediate the effect of education on life satisfaction, the direct effect, since mediation is of minor relevance. Gender-separated estimations reveal that especially men’s life satisfaction was affected by this increase in education. Validity of this estimate is probably restricted to mandatory increases in years of schooling with small immediate returns but sensible opportunity costs.

Suggested Citation

Elsas, Susanne, Direct and indirect utility of education. Causal effects of education on life satisfaction (December 2, 2021). Available at SSRN: https://ssrn.com/abstract=3976204 or http://dx.doi.org/10.2139/ssrn.3976204

Susanne Elsas (Contact Author)

State Institute for Family Research ( email )

Heinrichsdamm 4
Bamberg, DE Bavaria 96045
Germany

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