Does education matter? Why governments have overestimated the economic returns of higher education

Education -> Wealth & Economic Growth

Or

Wealth & Economic Growth -> Education

The evidence can be obtained by looking at countries that are both wealthy and have some level of education and then considering which condition preceded the other. In 1960, Taiwan had a much lower literacy rate than the Philippines and half the income per person; today Taiwan has ten times the income. At the same time, Korea had a much lower literacy rate than Argentina (which had one of the highest in the world) and about one-fifth the income per person; today it has three times as much. Furthermore, over the same period, sub-Saharan Africa saw markedly increasing literacy rates, accompanied with a decrease in their standard of living. There are myriad examples which we could cite over and over. This can be explained by what risk analyst and top-selling author Nassim Taleb has termed “the fooled by randomness effect” — mistaking the merely associative for the causal. That is, since rich countries are educated, immediately inferring that education makes a country rich, without really checking.

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