The World Bank hasn’t always made loans to education. Post-World War II, the Bank focused mainly on infrastructure. Even when it did start lending to education in the 1960s, it used the idea of manpower planning, the process of estimating the number of people with specific skills required for completing a project. Only in the 1970s did the World Bank begin to think of education in terms of rates of return: the cost-benefit calculation that uses expected future earning from one’s educational attainment.

The introduction of rates of return inside the World Bank was no easy process. The internal fights by larger-than-life personalities were the stuff legends are made from. Yet, these disputes often go unnoticed, hidden behind glossy reports and confidence.

Today Stephen Heyneman takes us back in time when he introduced rates of return to the World Bank. He discusses how he used them to his advantage and how he ultimately lost his job because of them.

Stephen Heyneman is Professor Emeritus of international education policy at Peabody College, Vanderbilt University. He served the World Bank for 22 years between 1976 and 1998.

Citation: Heyneman, Stephen, interview with Will Brehm, FreshEd, 155, podcast audio, May 20, 2019.

Transcript, Translation, and Resources:


Will Brehm  1:49
Steve Heyneman, welcome to FreshEd.

Steve Heyneman  1:51
Thank you. Glad to be here.

Will Brehm  1:54
So, I want to talk to you today about the political project of human capital. Not necessarily the economic side of what it did, and how it changed the conception of labor and capital or anything like that. So, you worked in the World Bank, and maybe that’s where we should start. Or maybe even earlier, because you were talking about Jean Bowman, and you learn two things through her, so maybe we should start there.

Steve Heyneman  2:22
Well, I took three courses in the economics of education with her. I also studied with her husband, C. Arnold Anderson, and with Philip Foster at the University of Chicago. And they had written a paper on manpower planning. And the paper was very controversial, and it was suggesting that manpower planning was inaccurate and sometimes counter-productive to education because it all focused assistance in areas of specific skills.

Will Brehm  3:00
So, what was manpower planning, very briefly?

Steve Heyneman  3:04
Manpower planning is a way of trying to forecast where there would be employment in specific skills. You know, in plumbers, carpenters and engineers, basically. It had nothing to do with general skills. It had nothing to do with basic education, nothing to do with general secondary education, and nothing to do in fact, with humanities or any of the social sciences. It was basically confined to how many engineers are we going to need. And it had several different techniques. And one technique was to look at comparisons of the ratio of engineers to manual laborers in a field of industry -such as coal mining in Poland and UK and then let’s say Russia- and find out that the ratio was different, so that might justify more investment in engineering education to bring their ratio up to some comparable. That was manpower forecasting.

Will Brehm  4:05
So, it would be similar like, if you were building a road and you would say, “We need this amount of concrete or asphalt”?

Steve Heyneman  4:13
It was pretty much like that. And as it got applied in development by the World Bank and others, it was based on the amount of infrastructure investment. So, let’s say you build a road and it’s 25 miles of road. Question is: Well, how many engineers are you going to need to build that 25. And for maintenance, how many tractor drivers, how many steamroll drivers?

Will Brehm  4:40
Yeah, it seems like a legitimate question.

Steve Heyneman  4:41
It is a legitimate question. But it’s a very tiny fraction of what we mean by human capital. Human capital is so much broader and that was the line of argument first brought in by Schultz with his classic study on accounting for growth in the US economy over a long period of time and finding out that a large portion of that growth could be attributed to greater education -general education. And then that was advanced both in London in University of London and at Chicago by Mary Jean Bowman by pioneering the economic rate of return methodologies. And that provided a technique for estimating in quantitative terms, how much one could expect both in private benefit and in public benefit from an investment in education regardless of where that investment was made. Whether it was made in engineers, or whether it was made in primary school graduates. So, it was MUCH more applicable to human capital than manpower planning. And that’s what I learned at Chicago.

Will Brehm  5:57
So, it was Mary Bowman for you that was sort of advocating these ideas and wrote this controversial paper, critiquing manpower planning. Is that what she was doing?

Steve Heyneman  6:06
Yes. It was published. It’s a very famous paper. It was published in I think ’65 or ’66. And I think it was co-authored with C. Arnold Anderson. That was her husband who was professor of sociology.

Will Brehm  6:22
And big in comparative ed.

Steve Heyneman  6:23
HUGE! But both of them, they were very interesting people. They were married. She had a joint appointment in the Department of Economics, as well as education. He had a joint appointment in the department of sociology, as well as education. So, both held joint appointments. They were a power couple. And they were really, really interesting. So, they wrote this classical kind of analysis of manpower forecasting, which is very critical. But at that time, every single country in the world including all European countries, used manpower forecasting in their economic planning. In the first meeting of OAS (Organization of African States) in 1961 in Addis Ababa, every country that came with a plan for the development of their education system justified on manpower forecasting. So, it was the dominant methodology used in development. And when I joined the World Bank, which was in April of 1976, manpower forecasting had a virtual monopoly on the analytics of human capital. That’s the only methodology that was used. The chief economic advisor in the field of education was Manny Zimmermann, and he was a manpower forecaster. And he had grave doubts about all this, you know, practicality of economic rates of return.

Will Brehm  7:56
So how many years. So, I mean, Mary Bowman, and C Arnold Anderson -they write this major critique of manpower forecasting.

Steve Heyneman  8:02

Will Brehm  8:03
You joined the bank in ’76.

Steve Heyneman  8:06
So, there was a decade between the time that that article was published and the date on which I joined the World Bank. So, at least a decade, maybe more. So, it had become -there had been some experiments. I think Carnoy and -gosh, I wish I could remember his name, but I think he came from Finland- did some work in Kenya on economic rates of return for the Bank and tried it -but the basic argument of the Bank that it was impractical. How could you get all this data? Where did you get it? How did you know it’s valid? And they could do manpower forecasting much easier. So, they would not allow any alternative methodology in the World Bank. But it was very consistent with the way the World Bank got into education -which is in 1962, the first loan to Tunisia. They saw education, they were allowed to justify loaning to developing countries on the grounds of making their infrastructure investments work through engineering education. So, you build a road in Zambia. You’ve got to have engineers to both build it and maintain it. So, if you’ve got x numbers of miles of highway, and this involves 100 million dollars, how many more engineers will you need? That’s how the bank got involved in education. So, manpower forecasting was used as the engine to justify those investments in engineers in Zambia and wherever else.

Will Brehm  9:55
And you investing in things, infrastructure that they’ve done historically?

Steve Heyneman  9:58
Correct. So, every project between 1962 and 1980, the time of the World Bank education policy paper of 1980, the bank was restricted to lending for vocational and technical education. And one little expansion in secondary education in what’s called diversified schools, meaning secondary schools with wood shop, metal shop and domestic science for you know who. So, a country could not borrow money for secondary education unless they built those workshops including -my first experience was as a consultant before I joined the World Bank, they sent me to Somalia and they said well evaluate the effectiveness of these diversified schools and I said they’re crazy! You call them these are quote, “practical workshops”. And Somalia didn’t have any wood. So, they had to import the wood from Italy in order to have something for the kids in secondary school to work on because there wasn’t enough, or the right kind of wood. So, it was two and a half times the unit expenditure of a general secondary education. So, it made no sense. They brought in a new director whose name was Aklilu Habte. The best boss I ever had in my life. And he came from Ethiopia. And he was kind of rescued by Robert McNamara and made the first non-European, the first African director of the World Bank. And I had a private talk with him about it. And I said, “Look, we’ll never be able to loan for primary education”. I was told by the by Ravi Gulhalti, who was the chief economist for the sub-Saharan Africa, he’s from India and he said, “We will never loan for a primary education in sub-Saharan Africa. First of all, it’s all dispersed. You can’t monitor the projects, you don’t know how they’re being implemented. And besides, primary education is a local kind of a recurrent expenditure, and you expect the government to do that. We can’t come in”. So, when I heard that, and I was frozen out of justifying lending of the bank’s role in primary or secondary education, I went to my boss Aklilu. I said, well, we have to do something. What would you recommend? I said, well, there’s a guy in London, who teaches at the London School of Economics, George Psacharopoulos, and he was trained in Chicago, and he worked with Schultz, and he worked with Mary Jean Bowman, and he’s a promoter of economic rates of return. And I think we should consider him as an employee of our department and so Aklilu said to me, would you please go to London and talk to him? So, I did.

Will Brehm  13:02
And so, did you know him from your connection to Chicago?

Steve Heyneman  13:05
I knew of him. I had never met him before. He was my senior. He was older than I and so I had never met him. But I have read things it and I think maybe -anyway, I’d heard quite a lot about him. So, I knew of him quite well, but I had never met him. So, I went to London, and I called him up and I mean, he knew I was coming of course. And I had lunch with him and I met his wife, Elena, who is a medical researcher, I think, a liver researcher at London Hospital. And I explained the political situation and said would you consider working for the World Bank. I’m not offering you the job, I’m speaking on behalf of my director. Would you consider it if we went the next step and he said he would. So, we went the next step and he was hired, he was brought in as the chief of a division for education research at the Bank.

Will Brehm  14:01
What year was this?

Steve Heyneman  14:02
This is probably ’78 or ’79.

Will Brehm  14:05
A few years after you arrived.

Steve Heyneman  14:07
Oh, yeah, this is my first -I skipped one sort of story. I don’t know if I told it in the article, but my first time I ever attended a decision meeting on an education project, when I worked for the World Bank was probably in May or June of 1976. And it was a project in Algeria that was on vocational education. And the division chief, is there a tough guy Jack Stewart really tough -Irish, you know. And they had done a lot of work. And I said, you know, “How do we know that these vocational schools are justified?” And he said, “Well, we have a manpower plan”. And I said, “You know, but manpower plan doesn’t consider costs, okay? They don’t consider benefits. Costs and benefits are not part of their equation, but rate of return is, do we have any economic rate of return?” And he says, “Rate of return evidence doesn’t exist. We don’t need it.” And I just studied it. I just come from Chicago. I’ve been, you know, in the house of the World Bank for a minute and a half. And I’m told that everything I studied in Chicago didn’t exist. That’s when I knew we had a problem.

Will Brehm  15:17
Now, did Mary Jean Bowman, prepare you for this?

Steve Heyneman  15:22
Not at all. I don’t think she knew anything about the World Bank actually. She was above the pay grade in a certain sense. But there is a story as to how she got involved in the Bank, and I’ll explain that in just a second.

Will Brehm  15:37

Steve Heyneman  15:37
So, that’s when I went to Aklilu and I said, we’ve got to do something here. So Aklilu is one of the smartest bosses so he first sent me out to try and feel out George Psacharopoulos. Then he landed George Psacharopoulos, and George Psacharopoulos got into a fight with Manny Zimmerman within 10 minutes of him joining. They were at loggerheads and it was like watching two whales go at it. I mean, it was enormous, very entertaining, but just what we needed. They were, you know, we didn’t bring in George -George is very articulate as you know, and very convinced and often very convincing. So, we had two giants fighting it out over what methodology is best.

Will Brehm  16:20
Like an intellectual debate inside of the institution. I mean, that often gets lost when people talk about the Bank.

Steve Heyneman  16:27
They have no idea. People from outside the Bank really underestimate the amount of intellectual debate that occurs within it. And when you’re involved in it as I was, and privileged to be, it’s exciting as hell, because it helps to determine the rest of the world in certain respects. So, all this is going on. So, Aklilu knew that he not only wanted economic rates of return, but he wanted to justify it with a paper that would be approved by all of the executive directors at the World Bank. But before he asked for money to do this paper, he asked for a study of the World Bank’s analytics. And there he went to his old friends at the Ford Foundation. And they put up some of the money and they had a commission to study how the World Bank does its analytics. And on that commission was Mary Jean Bowman, very prominently. And Champion Ward was the director of that commission, who was a senior member of the Ford Foundation. And it was a setup job and it was a very important report.

Will Brehm  17:33
Who pick the people?

Steve Heyneman  17:36
Aklilu on the advice of me and on the advice of George Psacharopoulos, and on the advice of the Ford Foundation.

Will Brehm  17:42
So, you sort of knew what you were doing?

Steve Heyneman  17:44
Oh yeah. I mean, he picked people from around the way. People from Chile, and Brazil, and Thailand and these were all very prominent people, very prominent people. But in terms of the intellectual power about the methodology, Mary Jean Bowman came in with her funny hat

Will Brehm  18:00
Did she wear funny hats?

Steve Heyneman  18:00
All the time! She was a gracious lady! A gracious lady, and she was always a little dizzy. But when she spoke, it was very articulate.

Will Brehm  18:12
I would imagine the World Bank at that time is quite male dominated.

Steve Heyneman  18:15
Very male, all white shirt and tie all the time, but Mary Jean Bowman could take them. She had them in the palm of her hand because she could speak economics like nobody else.

Will Brehm  18:28
So here she is sitting on this panel doing a review of the analytics of the World Bank.

Steve Heyneman  18:32
Yeah, right. And that review came out recommending a diversification of analytics to justify lending in the field of human capital. And then on the basis of that report, then Aklilu financed the generation of the 1980 education policy paper, which argued for the World Bank becoming involved in primary education, secondary education, a general higher education, education research, and a variety of other things that never would have been justified under manpower forecasting. It broke the dam. But that started us on a path that we never would have been able to do without Psacharopoulos in the early days and Mary Jean Bowman and the whole emphasis coming out of Chicago

Will Brehm  19:24
And it seems like that happened -So ’78 Psacharopoulos comes and in ’80 that policy paper gets written, so we’re talking fast.

Steve Heyneman  19:32
This is really fast. And it would never have happened without Aklilu Habte, the first African director of the World Bank from Ethiopia, who was a blue blood himself, could talk to power, was listened to by McNamara, had a direct access to McNamara. How can you argue with an African that we’re not going to get involved in primary and secondary education? Okay, good luck, you’re not gonna fly. Okay, and he speaks with such credibility that he won the day.

Will Brehm  20:06
And then he could build scientific evidence now to sort of support that.

Steve Heyneman  20:09
So, I was able to do -we were financing things called tracer studies, which are studies of graduates of institutions into the labor market. We had several going and I wrote two papers: one on India, and one on Malawi using economic rate of return evidence, and those were highly debated in the Bank, and later published. In fact, when I turned in the paper on India, I turned it over to the chief economist, and even anyway, I will remember his name in a minute. And he said, well, you better let the boss read this, Aklilu. So, Aklilu read it and he said to me, I’m not going to send this to the India country department because they’ll destroy it. I’m going to send it to the Vice President of the South Asia region who will read it and he’ll give us his opinion. And the next day I had on my desk, a piece of paper with a copy of my paper on India, and a handwritten note from the Vice President of South Asia, trumping all the layers saying, damn fine paper, we need to publish it. That’s all he said. And that was using rate of return evidence on India for the first time ever. And we had been frozen out of India because India for a variety of reasons didn’t think that they could learn anything from the World Bank, because they had so many economists of their own, and they’re very proud people and they had other things they wanted. But that got that paper published in the South Asia region, and that broke the dam in terms of analytics. And then I did another one on Malawi, which also used our own evidence. So those two things started that started the economic rate of return.

Will Brehm  22:04
And once that dam broke, did more economists get hired who are using similar?

Steve Heyneman  22:09
Oh, sure. Oh, yeah. Oh, yeah. And George is very busy in his own way of raising this question time and time and time and time again, using available data and then under the Bank’s evaluation components, making sure that economic evidence was collected, so it sort of became relatively common. By the late 1980s, it was relatively common to have economic rate of return evidence which showed as George is very talented at summarizing higher rates of return to primary, higher rates of return to secondary than higher and, and very low rates of return to vocational and that became the kind of mantra of the Bank in the 1980’s.

Will Brehm  22:54
Did it begin to replace manpower planning? It used to be manpower planning was the mantra.

Steve Heyneman  22:58
Oh, yes. By 1990 manpower planning probably wasn’t used at all in the World Bank. So, let’s say it fell completely by the wayside.

Will Brehm  23:14
And then it basically got replaced by a whole another idea. Was there big debates on human capital on rates of return?

Steve Heyneman  23:22
Well, the answer is yes. And that’s how I got involved. So, I switched sides.

Will Brehm  23:28
Oh! What side?

Steve Heyneman  23:29
Well, I brought economic rate of return into the Bank because I needed a weapon so that we could diversify ourselves beyond manpower forecasts. So, I used it as a weapon.

Will Brehm  23:40
So, you saw the problems of manpower planning and you said rates of return is a tool to get me to not have to use a methodology you disagree with?

Steve Heyneman  23:48

Will Brehm  23:50

Steve Heyneman  23:51
Then, you know, in the 1980s, a lot of countries were becoming middle income. I mean, there was Thailand, there was Brazil. Big, huge economies. India itself, Indonesia. And then in 1989, when the Berlin Wall came down 26, new countries joined the World Bank when the Soviet Union imploded. And I was put in charge of those countries -all 26. From Hungary, to Tajikistan, and these are all countries that had universal primary education, universal literacy, universal secondary education, and where females made up 50% of all the graduates from secondary school and in some of the professions were even over-represented. So, the problems of Malawi did not apply to Russia. And we were writing a policy paper and the Bank was going -George was by that time had been made the senior advisor to the Senior Vice President.

Will Brehm  24:53
Now, he’s your boss in a way?

Steve Heyneman  24:55
No, no, no, he’s not my boss. I never reported to him. He was in another branch of the World Bank. In the policy-making branch. But he had control over all education policy that would go to the board. And as a reviewer of our education policy paper of whether it is 1990 1991, we were developing in the education department. He insisted on having a monopoly of economic rates of return, and that the results would drive our lending priority so that we would not be loaning for higher education. We would not be loaning for vocational education, we would only be loaning for primary or sometimes secondary.

Will Brehm  25:37
Where there’s a greatest rate of return.

Steve Heyneman  25:38
That’s what he said. And I’m representing Russia and Hungary, and they don’t need that. And I realized that if that policy paper becomes the standard argument of the World Bank, I lose my clients. I lose any interest in the World Bank. And so, for me, it’s a struggle. So, I gather my colleagues together -Ralph Harbison in Eastern Europe, Wadi Haddad in West Africa- and we had a little talk ourselves at a retreat, and we decided to fight the policy paper. And we decided to fight it in such a way that they will never agree to pass it without our permission.

Will Brehm  26:20
How do you do that?

Steve Heyneman  26:21
Well, we wrote a memorandum it’s quoted in that paper. Okay, so you can go to the paper, you can read what we wrote. And we had it secretly signed by the division chiefs in charge of education. And I don’t know how many we had like, by that time, let’s say 18 division chiefs that were in one way. And we had like, 15 of them signed to protest together, and I sent it to every vice president in the Bank including my boss, and the place lit up. I mean, it just -we were at war. And the war was “them or us”. You put that policy paper and you’re going to sacrifice our interests. So, George has never forgiven me, but we were at war. And you’ve read three papers of mine: the first paper was on economics of education. Now that was about economic rates of return. And that was first presented to UNESCO. And they loved the paper, of course, because UNESCO always was hostile to the World Bank interpreting economic rates of return. Always from the beginning.

Will Brehm  27:40
It sort of narrowed the idea of education for the economy.

Steve Heyneman  27:41
Well, right. It became mechanistic. So, when I presented that paper, they asked what I was going to do with it, and I said, well, I think I’d like to publish it and they asked whether they could publish it in Prospects and I said, yes, you can. So actually, what I did is I let me think about it. I went home, I had three children who I was raising at that time and one, my son Peter, who was about 10 years old, and then Alice was eight. And then little Julie was about two or three. And I sat them around the table and I said, if I publish this paper, I’ll be fired. And I wasn’t kidding.

Will Brehm  28:20
And could they comprehend that?

Steve Heyneman  28:22
Peter, I said, here’s what it would mean for you. It would mean that I’d have to find a new job. You’d probably have to change schools. We probably have to sell our house, we might have to leave the Washington area and go someplace else. What should I do? Peter says, “Get him dad!” And Allison, “I don’t know”, and Julie. But it was serious. I knew I would be fired. I knew I’d be fired. Because George had a monopoly on the interpretation of economic evidence, and I was at war with him. So, when that paper was published then the memo objecting to the education policy paper, I was essentially removed from my job.

Will Brehm  29:10
So how did that happen? Who removed you?

Steve Heyneman  29:12
Her name was Maris O’Rourke, they had hired Maris O’Rourke from -she was a kind of right-wing darling from New Zealand never having worked on development before. And she pushed the fact that I would be pushed out. So, I was taken from my position as division chief in charge of a region and made an advisor. Which they paid me, but I had no power. So, I spent another year in the Bank and then retired.

Will Brehm  29:40
And then you left on your own?

Steve Heyneman  29:42
I left on my own in 1998. So, and essentially, I was fired without being fired. The way they do it, it wasn’t very nice because I didn’t do anything wrong. I didn’t publish anything that was confidential. I simply went to war within the Bank, and they can’t fire you for that -for speaking up and speaking the truth. So, they looked at how long I’d work there, which is 22 years and they said, well, he’s getting out of date, he’s not up to date,  let’s clean house. So, they gave me an enormous amount of money. And the moment I left the Bank, I joined a consultant firm earning the same salary I earned in the Bank and did very well for two years. And then I was invited by Vanderbilt to be a professor. But the lesson for me the lesson is rather personal. All of us at one stage or another, many of us perhaps, are faced with the possibility that the institution that we work for -that we love and are loyal to- may be antithetical to our profession, may be doing harm. And I’m an educator, and I’ve been an educator since I was in the Peace Corps in Malawi in 1967. And I believe in schools and I believe in primary schools, but I also believe in higher education and I believe in vocational education, I believe in many forms of education. And I don’t believe in ideology. And what we had become is it was a method that we needed, but it became a monopoly. And whenever you have a method becoming a monopoly, you have distortions. And the distortions were going to ruin our relationship with Russia and all these other very important borrowers.

Will Brehm  31:29
So, did the relationships with the Bank and those new countries that just became members of the World Bank -were relationships ruined?

Steve Heyneman  31:38
They would have been if we were limited. If we couldn’t loan to China for engineering education, we would not have had a relationship with China in education. If we couldn’t help Russia and other parts of Eastern Europe with higher education reform, we would not have had a role at all. So, you know, my job was to make it possible for us to be flexible and to interpret economic rates of return in their legitimate way. Which is to say it’s a guide but there are many other factors and others: efficiency factors, there’s public interest factors, there’s demand factors, all kinds of factors that you can use. All good economics, by the way, that aren’t necessarily part of the equations of the economic rate of return.

Will Brehm  32:31
So, are you saying all those other factors basically, when Psacharopoulos won this war was pushed out?

Steve Heyneman  32:35
He had no interest in anything other than -he was an ideologue. He had no interest in anything other than economic rates of return based on monetary estimates and anything non-monetary, which Bowman used to pioneer by the way -Bowman always pioneered both monetary and non-monetary benefits and she was adamant about the importance of non-monetary benefits.

Will Brehm  33:02
Whereas Psacharopoulos was not.

Steve Heyneman  33:04
He said we can’t measure it. So how do you know? I mean, how can you compare? You know, how can you pair good feeling and good citizenship, with salaries? And the virtue of an economic rate of return to education is that you can talk somewhat in parallel terms with an investment in highways reports or agriculture industry. And that’s very important. I mean, that’s really helpful to education. And I don’t regret bringing that style into the Bank at all, or into general economic development dialogue at all. But you have to be careful how you interpret that.

Will Brehm  33:42
Was Psacharopoulos an ideologue while at the London School of Economics?

Steve Heyneman  33:50
He’s a very smart guy, but he became a one pony show.

Will Brehm  33:56
But because of the World Bank, like because of the position he was in that sort of became a way to gain power?

Steve Heyneman  34:01
The big argument about bringing Psacharopoulos into the Bank. It was Jean Peirre Jalladewho made this argument that was the name I had forgotten- he said, “He’s too narrow. All he cares about is economic rates of return”. And I went to bat for him, “Oh, no, no. He’s written this on equity”.

Will Brehm  34:22
But in fact, he was.

Steve Heyneman  34:24
In fact, he was, or he became. I mean, but it was his claim to fame. And as an editor of the International Journal of Education, I use him all the time as a reviewer. And he’s very flippant, and he makes a decision within two tenths of a nanosecond but he’s often right. You know, he’ll look in the methodology and say this guy doesn’t know what he’s talking about, because he forgot a and b, and c. So, I use him for that. I don’t use him to make judgments on what kind of policies, what directions you should go, but on technical terms, he’s very good.

Will Brehm  35:00
So, you leave the World Bank. Psacharopoulos is now sort of quote unquote a king to return, dominate conversation here, does it continue this way?

Steve Heyneman  35:09
It continued for a very short time. Maris O’Rourke was fired within a year after I left. Since I left, the Bank has now published three, or even four policy papers justifying their interest in higher education. And so those papers have become kind of the mechanism by which the Bank gets around Psacharopoulos’ argument. And then George was forced into retirement and he left the Bank. So, the Bank today, they went through a decade of trying to repair the damage, but they have. And they are as adamant today about investing in higher education as any institution.

Will Brehm  35:53
But they still use rate of returns to justify.

Steve Heyneman  35:56
Occasionally. Occasionally. And certainly, they use all kinds of new evidence, a lot of randomized trials, a lot of cost-benefit analysis, a lot of argument on the basis of skills that are developed by human capital that are non-monetary. So, I won the war!

Will Brehm  36:17
Right? You lost the job, but you won the war. And so, what do you make of this human capital project, which is relatively new? Have you looked at it and analyzed it in anyway?

Steve Heyneman  36:28
I think it’s kind of a soft weapon. It’s not a rate of return weapon. And I buy it. I have my own dimensions to it. These days I talk a lot about the corruption of educational institutions, I talk about the cost of that. I’ve developed an interest in faith and faith-based education other than state education, and low-cost private schools, and the importance of listening to people’s demand for what kind of schools they want. I’m paying a lot of attention now to the content of education, what kids learn, the attitudes they pick up. So human capital is interpreted as monetary returns, I think has run its gamut. And there’s a lot of things that contribute to economic growth, a lot of ripple effects of human capital investments that we don’t yet understand about how jobs are found, how networks work, how people become more adaptable, how they find jobs in an environment in which people will not have lifetime careers and in which they’ll have jobs where every one of us will be, you know, private kind of contractors and move from job to job. All those benefits of going to school and going to school with intelligent, fast, interesting colleagues we have yet to fully explore.

Will Brehm  38:10
But yet when I talk to students and parents, it’s always: “I want my child to go to school, to go to the best university because he or she will get a better job”, and it’s still putting those monetary terms.

Steve Heyneman  38:21
Well, I think that’s the most popular way of putting it. And that certainly is understood but I’m on the board of the Putney School in Putney, Vermont, it’s a progressive school, and that school trains people to be adaptable and to have a wide variety of skills, some of which are monetary, and many of which are not, but which will make them adaptable and happier in their lives. And that kind of education is now becoming very interesting. In China and a lot of people in Japan are worried about the kinds of -let’s call it a paradigm of reasoning for education. And they think it’s not enough. So, the shoe has not yet dropped on why you invest in schools and I think you’ll find when it does drop, there’ll be a lot of reasons and not just the kind of typical one that you just recited.

Will Brehm  39:19
Well, Steve Heyneman, thank you as always for chatting today. Really a pleasure. I learned a lot and thank you so much for joining FreshEd.

Steve Heyneman  39:27
My pleasure too.

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