Value of educational time lost

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.

Value of a school year

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 $V$).

$$\text{VSY}_c = \text{GNI}_c \times V \times R$$

Valuation constants

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

Country GNI values are for the most recent year available, and are taken from the World Bank’s World Development Indicators.

Present value of future earnings

A constant scaling factor for the present value of future (lost) earnings ($V$) is calculated using the valuation constants defined above.

$$\frac{1 - (1 + r)^{-(m_Y + 20 - a)}}{r} - \frac{1 - (1 + r)^{-(20 - a)}}{r}$$

Value of education lost

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 developments

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.