When we think about smart investments, we usually think about the stock market, real estate or retirement accounts. But there's another investment that delivers consistent, lifelong returns for individuals and society alike: education.

That's according to a new working paper by the U of A Department of Education Reform and Angelica Rivera-Olvera, a consultant in economics at the World Bank. The two examined the relationship between education and earnings in Arkansas, using the latest data from the U.S. Census Bureau's 2024 Current Population Survey.

"Our goal was to answer a simple but important question: How much does an extra year of school pay off in the Arkansas job market?" said Harry Patrinos, head of the education reform department and Twenty-first Century Endowed Chair in Education Policy in the College of Education and Health Professions. "The answer is clear — education pays."

The study indicates that each additional year of schooling increases earnings by 7.7 percent on average in Arkansas. The most striking finding was that women in Arkansas see even greater benefits. For women, each extra year of education boosts earnings by 8.9 percent, well above the state average.

That return rises further with a university degree, Patrinos said. Across the state, a college graduate earns 8.8 percent more than someone without a degree. For women, that figure jumps to 10.8 percent.

"This means that women who complete university not only close the gender earnings gap but often surpass their male counterparts in educational return on investment," he said. "These gains help explain why more Arkansas women are pursuing higher education. The economic incentives are strong, and the rewards are tangible. Education leads to higher earnings, greater financial stability and expanded professional opportunities. It's not just about better jobs — it's about building better lives."

Of course, going to college involves costs like tuition, time out of the workforce, and other expenses. But the research shows that the average long-term payoff is well worth it, Patrinos noted. "The private rate of return — what individuals and their families receive — to university education in Arkansas, after accounting for all costs, is an impressive 11.5 percent," he said. "That's higher than many traditional investments and comes with personal and societal benefits. For example, an investment in a college education beats the stock market."

In dollar terms, the study found that the average college degree in Arkansas adds about $1.1 million in lifetime earnings. That's not just a win for individuals — it's a boost to the state's economy, Patrinos said. "A well-educated workforce drives innovation, attracts new businesses, and raises productivity across the board," he added.

The study also found that in nearly every comparison, women experience equal or greater returns than men for the same levels of education. "This finding reflects national and global trends and confirms the powerful role education plays in advancing gender equity," Patrinos said. "It also signals a tremendous opportunity for Arkansas. By investing in women's education, we invest in the state's economic future."

The study also looked at changes in returns over time. Like much of the country, Arkansas saw a jump in returns to education during the pandemic. But unlike the national trend, which has stayed high, Arkansas has seen a slight dip in recent years. Still, the long-term benefits remain strong, especially for women, researchers argue.

Patrinos posed the question: What can we do to keep those returns high — and make sure more people benefit?

First, he said, Arkansas can continue to expand access to education, especially for women and underserved communities. Scholarships, career pathways and flexible learning options help make higher education more accessible and attainable.

Second, education policy should be guided by labor market analysis to ensure students acquire the skills most in demand. "When programs are informed by real-time data on employer needs, the connection between schooling and employment outcomes is strengthened — raising the return on education for individuals and improving the efficiency of public investment," Patrinos said.

Finally, Arkansas should continue investing in its schools and universities. "The state's funding formula is well-structured, and sustained support will ensure that public education remains a smart and rewarding investment for generations to come," he said. "In the end, education is about opportunity, growth and mobility. And in Arkansas, especially for women, it's a path to prosperity."