Governments have provided longstanding support for higher education in the United States and elsewhere. The original justification for such support was that higher education, like primary and secondary education, confers critical and sizable benefits on the public. This justification was supported by philosophical reasoning and backed by qualitative and anecdotal evidence.

In the decades after World War II, economists devised a more precise analytical method for assessing whether private and public investments in education are justified. Building on Adam Smith’s original conception of human capital, economists such as Milton Friedman, Gary Becker, and Jacob Mincer developed the “human capital” theory as a way of understanding and estimating the value of education to both individuals and society. This framework, which focuses on comparing the costs of education with the wage gains that accrue to individuals when they acquire more education, lends itself quite naturally to quantitative analysis.

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