The cooperative education movement lacks a unified organizational scheme to classify benefits. This deficiency is particularly evident and problematic in the case of student outcomes-student returns being both the inspiration to Schneider's development of cooperative education and the focus of participating groups today. Absence of a common overall categorization format has led to difficulty in such areas as reading the professional literature, sharing promotional materials, writing funding proposals, and comparing program evaluations. This article seeks to resolve the existing predicament by demonstrating that cooperative education is the epitome of human capital investment and, therefore, co-op should adopt the simple, relevant, and well-established classification strategy founded in economics.
Student benefits occupy a prominent place in the cooperative education literature. No consistency has been shown in terms of categorization of these returns. Most works make mention to at least one of the student outcomes, others simply offer an extensive listing, and still others attempt arrangement by the formation of ad hoc groupings. The major reason for this lack of uniformity is that professionals in the co-op field represent numerous and varied sectors of the economy and disciplines ,within academia. Each group appears to bring its own perspective and/or classification format (e.g., educators and learning outcomes, psychologists and adaptability, sociologists and socialization to adult values, etc.). Specific examples are Saline (1972) examining student benefits in terms of four "societal hopes," extending from individual involvement in society through recognizing and coping with change; Richard Wilson ( 1981) using "ability areas" to group identified factors into employee abilities, communication abilities, career decision abilities and personal competence abilities; and Heerman (1974) stressing that defined outcomes take the form of "behavioral or institutional objectives" as usually applied in education.
My purpose is not to deny the validity of previous categorization schemes that have been offered. Rather, it is to demonstrate that the technique developed by human capital theorists can be justified as being preferable to all others. Existing methods could easily fit into the general framework offered by economists. This view derives from the natural linkages that exist between cooperative education and human capital theory, specifically the economics of education, and the dominant position that investment in human beings has played in the growth of cooperative education.
Human capital theory is a branch of economics that analyzes the process of investment in individuals. Enhancement of human resources can occur through investment in formal education, experience, training, health and nutrition, mobility, and job search skills. Cooperative education is a plan of study that integrates career-related work experience into student curricula to better prepare individuals for the world-of-work. Both have as a common denominator an interest in the direct costs (i.e., out-of-pocket expenses) and indirect costs (i.e., opportunity costs or foregone alternatives), as well as the multitude of benefits, that accrue to those making an educational investment. In all cases, investments are embodied in people, augment the quality of their labor and leisure, and ultimately yield private and social progress.
Increasing the resource value of individuals is the historical foundation and present focus of the co-op methodology. Herman Schneider, the "prophet and originator of cooperative education," sought to give engineering students professional experience to facilitate their transition into the post-college world. Quite simply, he sought to fuse two forms of human capital investment-education and experience. The projected outcome was to be greater worker efficiency, which would translate into rising profits and higher earnings for employers and students (future employees) respectively. Benefits would flow to educational institutions sponsoring programs as well. Additions to productive capacity made possible by other forms of human capital investment were natural outgrowths of the co-op relationship. The acquisition of general (transferable) and specific (nontransferable) training during placements enhanced the value of students. The development of better job search skills rendered higher personal and corporate earnings, as periods of unemployment were reduced. A more thorough understanding of the benefits of worker mobility increased societal growth by again reducing two major forms of unemployment-structural and frictional. Clearly, co-op combined several types of skill-enhancing expenditures and was exemplary of the concept of human capital investment.
From Schneider's inception of the program to its current position, as an established educational philosophy, co-op has continually justified its worth by providing a more productive and enlightened labor pool via these human capital investments. Cooperative education, unlike other types of education, involves students who are almost entirely interested in gaining monetary rewards. Nonmonetary returns are simply a significant byproduct of the investment. For example, people may deliberately make an investment into traditional education with no hopes of achieving returns in the marketplace. Retirees may seek the psychic rewards of finishing college, and homemakers may seek skills in becoming more enlightened parents. In these cases, there are substantial and obvious benefits, but no direct financial returns. We almost never see investment in cooperative education solely for such nonmonetary purposes. Co-op is "marketed" to students, and chosen by them, primarily on the basis of remuneration today and added income tomorrow. Individuals planning to be outside the labor market do not opt for the co-op plan. Co-op attracts the young, the inexperienced, those from the bottom of the socioeconomic spectrum, and so forth. A study of alumni of Lehman College of the City University of New York revealed statistically significant background differences between those who had participated in cooperative education versus those who had opted for the regular program of study. As an undergraduate, the average co-op student was approximately four years younger than the non co-op counterpart. In addition, the co-op student was more likely to be residing with parents, receiving financial aid, and living in a household of lower family income than a member of the non co-op group. Observable and important differences were also found on variables representing measures of human capital stock. Although most students had pre-baccalaureate work experience, the co-op student had almost two less years of full-time work experience, possessed less career-related work experience, and received lower wages while working during the collegiate years (Siedenberg, 1987). Cooperative education appeals to those interested in raising their current and potential value in the labor market. Therefore, cooperative education should logically adopt the classification scheme employed for skill-enhancing and income-producing investments. The human capital's benefit format should be given priority.
This simple economic scheme divides benefits into two major classifications:
(1) private, those accruing to the individual; and (2) social, those received by society as a whole. The private benefits of human capital investment are ultimately subdivided into the investment or monetary returns ( e.g. additional lifetime earnings) and the consumption or nonmonetary returns (e.g., prestige). Consumption returns may actually be work-related (e.g., a more stimulating and responsible job), leisure-related (e.g., added self-confidence which increases one's desire to explore and enjoy varied activities), or cut across both (e.g., increased communication skills and maturation).
A broad view of social returns aggregates the private returns and adds a category known as externalities, external benefits, or spillover effects. These outcomes are not captured by the individual, but benefit the total society. Thus, at the macro-level, there are the investment or monetary returns (e.g., additions to national output attributable to increased worker productivity), the consumption or nonmonetary returns (e.g., large numbers of workers selecting lower-paying jobs because of their prestige, independence, or absence of stress or strain), and the externalities or spillover effects (e.g., increased productivity of fellow employees caused by training of a single worker, or greater societal enjoyment resulting from an invention made possible by education) (Perlman, 1973).
Private benefits are of importance to individuals making investment decisions, whereas social benefits are taken into account by governments in their funding judgments. Determinations regarding educational spending provide an illustration. The student considering further schooling is concerned with such individual returns as higher wages or status. Public authorities must weigh such general benefits as the effects of increased education on participation in public affairs, intergenerational transmission of preschool learning, propensity to partake in crime, and maintenance of the economic, political, and social order. In either case, benefits must ultimately be examined in relation to direct and indirect costs. Although many of the costs and benefits are difficult to measure and/ or quantify, they are used as guides in decision-making. The individual may use these costs and benefits to decide on what type of higher educational degree to pursue. Governments may use_ them to answer questions concerning resource allocation or public vs. private funding of education.
Classical economists, such as Adam Smith, made mention of the importance of human capital investments (Reynolds, Masters, and Moser, 1986). However, the classical position that investment in individuals was both investment (i.e., using current output to generate higher levels of output and satisfaction in the future; investment goods are used to produce future goods) and consumption (i.e., using current output for immediate satisfaction; consumer goods are used in the present year), and could contribute to economic growth, was hampered by the development of both the Keynesian theory of income determination and national income accounting (Blaug, 1970). The latter viewed consumption and investment as mutually exclusive categories; they were expenditures by two different sectors of the economy, households and firms. For example, since education was purchased by households, or by governments acting as representatives of households and using taxes collected from households, formal education was clearly labeled consumption. This notion inhibited consideration of education as a contributor to future growth (Blaug, 1970). There was an overemphasis on associating progress with increased spending on physical capital (e.g., machines, tools, and factories) at the expense of human capital.
Recently, many economists have found that expenditures measured as consumption by national income accountants influence growth in the same way as others labeled investment. This has led them to abandon the Keynesian classifications, and return to the classical definitions of investment and consumption goods stated above. In employing these meanings, human capital investments share both consumption and investment aspects (Blaug, 1970). Education may provide satisfaction in the present (e.g., it may be inherently pleasant) and/ or over time (e.g., it may generate higher future earnings and consumption).
Using this twofold system, based on time, places long-run nonmonetary benefits into the investment category (Cohn, 1972). This consumption is utility derived in the future; a greater capacity to enjoy things. Potential confusion arises, however, since future consumption is now an investment return rather than a consumption return. This difficulty can be overcome by adopting the more specific classification scheme employed by such, theorists as Blaug (1970), Rogers and Ruchlin (1971), and Perlman (1973). Investment goods retain their definition, but now consumer goods are divided into durable and nondurable classes. Nondurable consumer goods only yield immediate satisfaction, whereas durable consumer goods generate satisfaction in the present and in the future. The consumption category now adds a forward looking aspect of consumption the durable consumer good viewpoint. This leaves investment returns as the market, monetary, or quantifiable outcomes, and consumption returns as the nonmarket, nonmonetary, or non-quantifiable outcomes.
Human capital theorists generally concentrate on estimating investment returns, although human capital expenditures are acknowledged to yield nonmarket as well as market benefits. Research most often emphasizes using cost-benefit analysis, or internal rates of return, to evaluate monetary outcomes of human capital investment. This approach has often been criticized. The attacks usually center around the "coldness" of placing a dollar (economic) value on people, the fact that there are inherent differences between human capital and physical capital, and the idea that investments may have, as a goal, something other than maximization of economic efficiency (Perlman, 1973).
Theorists answer the first criticism by noting that economic value does not constitute a person's worth as an individual. Insurance companies in setting premiums, courts in settling injury cases, and even employers in paying salaries, are all making judgments on an individual's current or future economic value. These are common practices and they do not imply the total contribution of an individual as a member of society. In addition, the economist recognizes the differences between human and physical capital and has, therefore, adopted the consumption returns classification. This indicates that individuals have many needs and feelings, and do make investments in hopes of acquiring nonmonetary returns. Lastly, in judging alternative investments, economists do not always recommend those with the highest rates of return. Positive economics only describes the facts and makes generalizations concerning economic behavior. Decision-making is left to individuals who will rationally weigh alternatives in light of values and desired policy goals. Objectives may or may not stress economic efficiency. For example, equity may be the goal, rather than the achievement of the highest rate of return on investment (Perlman, 1973).
Fields such as education, health, and training have successfully def ended the use of the investment-consumption framework, and the parallels drawn between human capital and physical capital. For example, an investment in a doctor visit and a prescribed antibiotic may yield investment benefits (e.g., more income by loss of fewer days on the job due to the illness) and consumption benefits (e.g., less days of discomfort). It appears that a more powerful argument can be made for employing these ideas in the field of cooperative education, which as stated earlier, combines investments in several forms of human capital.
If human capital concepts were applied to cooperative education, the calculation of rates-of-return to co-op investment would be improved. The internal rate of return method, which equates the present discounted value of the stream of costs with the present discounted value of the stream of investment benefits could be used to yield rates-of-return for different types of students. Although rough estimates, due to measurement problems, these rates could be used to compare the economic benefits of co-op investment with alternative investment opportunities. Individuals could also be informed that computed rates represent underestimates of the true total rates of return, assuming that psychological, sociological, and other noneconomic factors comprising the nonmonetary consumption benefits and externalities are positive. Quantitative findings could also aid employers, colleges, and government in their decision-making and evaluations.
The human capital literature contains a great deal of theoretical and empirical investigation into the relationship between education and such outcomes as achievement, earnings, unemployment, job search, and job satisfaction. Co-op educators could benefit from this work. Such questions as, Is cooperative education participation a significant predictor of achievement? Are co-op graduates more efficient in seeking employment? and What influence does co-op participation have on lifetime earnings? could better be answered if cooperative education researchers made use of human capital theory. Moreover, standardization in categorizing benefits, and costs, would be useful in sharing information, writing grant proposals, and reading the professional literature.
A strong case can be made for using the economic (i.e., human capital) strategy to categorize returns from cooperative education participation. First, co-op combines several forms of human capital expenditure. Second, the specific fields that study each of these respective types of investment have already adopted the consumption-investment scheme for classifying benefits. Moreover, the importance of acquiring monetary returns, as a decision criterion for co-op investment, also makes the economic format very useful.
Alternative plans can be defended on the basis of realized outcomes. However, these systems could easily be incorporated into the investment and consumption return context. Adopting the simple and relevant economic classification format would certainly add consistency to the literature, formulate natural linkages to economics, and facilitate the dissemination of information.