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 (VSYc) is the product of the country-specific gross national income (GNIc) per capita, the rate of return on education (R), and the present value of expected future earnings (which we denote as V).
VSYc = GNIc × V × R
The following constants are assumed when calculating the value of a school year:
r = 0.03: the discount rate for future earnings;
mY = 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 − Eremote: the loss in educational efficacy due to remote education during closures;
VSDc: the value of a school day, which is the value of a school year divided by 365 (VSYc/365); and
N: the number of school age children.
VSDc × N × (1 − Oedu) × T × (1 − Eremote)
The number of school days lost is calculated as the product of the closure coefficient for the educational sector (1 − Oedu) 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.