A largely unquestioned consensus proclaims that educational policy is an effective tool for delivering prosperity and increasing rates of economic growth. This consensus rests on far less secure foundations than is commonly supposed. International comparisons confirm that, as they become richer, people seek ever more education for their children; but provide no clear-cut evidence of economic benefits accruing to countries which are high-spending in education terms. Analyses which extrapolate from the incomes of educated individuals rest on assumptions about how wages are determined, and the extent to which rewards are for skills acquired in schooling, which are highly questionable. Moreover, an uncritical belief in educational expansion leads to target-driven policies with serious negative effects on educational quality. A more realistic view of education's economic impact, and a move away from centralized planning for economic ends, would actually improve the quality of education. © Oxford University Press and the Oxford Review of Economic Policy Limited 2004; all rights reserved.
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