This vignette explains how the value of lost educational time is calculated in daedalus.
In daedalus, educational time is assumed to be lost due to pandemic-mitigation restrictions on education, such as school closures.
We also assume that education shifts to a remote format that has a reduced efficacy compared to in-person schooling.
The value of a school year in a country (\(\text{VSY}_c\)) is the product of the country-specific gross national income (\(\text{GNI}_c\)) per capita, the rate of return on education (\(R\)), and the present value of expected future earnings (which we denote as \(V\)).
\[\text{VSY}_c = \text{GNI}_c \times V \times R\]
The following constants are assumed when calculating the value of a school year:
\(r = 0.03\): the discount rate for future earnings;
\(m_Y = 45\): the expected future years of work;
\(a = 12.5\): the mean age of
school-going individuals. Note that the mean age of
school-goers is a simple mean of the age-bin
[5, 20).
\(R = 0.08\): the rate of return on one year of education.
Country GNI values are for the most recent year available, and are taken from the World Bank’s World Development Indicators.
A constant scaling factor for the present value of future (lost) earnings (\(V\)) is calculated using the valuation constants defined above.
\[\frac{1 - (1 + r)^{-(m_Y + 20 - a)}}{r} - \frac{1 - (1 + r)^{-(20 - a)}}{r}\]
The value of lost education is the product of:
The number of school days lost due to pandemic-mitigation measures (in DAEDALUS, these are school closures); this is explained more below;
\(1 - E_{\text{remote}}\): the loss in educational efficacy due to remote education during closures;
\(\text{VSD}_c\): the value of a school day, which is the value of a school year divided by 365 (\(\text{VSY}_c / 365\)); and
\(N\): the number of school age children.
\[\text{VSD}_c \times N \times (1 - O_{\text{edu}}) \times T \times (1 - E_{\text{remote}})\]
The number of school days lost is calculated as the product of the closure coefficient for the educational sector (\(1 - O_{\text{edu}}\)) and the number of days a pandemic-mitigation measure is active \(T\). The closure coefficient indicates the stringency of measures applied to schooling, and can take a value in the range \([0, 1]\).
Future development on the valuation of education lost is planned, and includes:
Accounting for the numbers of children in each age-bin in demographic data and correctly calculating the present value of future earnings (\(V\)) by accounting for differences in expected remaining years of work;
Including the effect of education missed due to student absences caused by illness or isolation.