Education conveys a civic externality, a benefit to society over and a
bove the benefit to the student in enhancing his future earning power.
Students are taught not only to be productive, but to be law abiding
and loyal to their country. The civic externality is incorporated into
an 'anarchy' model where people choose to be farmers or bandits, and
schooling inculcates a distaste for a life of crime. Estimates of the
return to education are biased down when the civic externality is over
looked. Public schooling can sometimes convey public benefits that pri
vate schooling, even with a voucher scheme, cannot.