Germany wastes an enormous growth potential due to its inadequate education system and every fifth 15-year-old does not get beyond the elementary school level today.

The costs of inadequate education in terms of unachieved economic growth summed up over the coming eighty years - - the lifespan of children born today -  - is about €2.8 trillion. The long time span and total cost estimate brings to mind the famous remark of renowned British economist, John Maynard Keynes, who said the long-run is when we are all dead.

The Ifo Institute for Economic Research, at the University of Munich was asked to study the impact of the education system by the Bertelsmann Foundation - - the majority shareholder of Bertelsmann AG, a global media corporation with more than 106,000 employees in more than 50 countries. Founder Reinhard Mohn commented on his motivation for establishing the organisation in 1977: "I knew the frustration that every citizen of a democracy must feel when society does not function as it should -- and I wanted to do my part to improve the situation...."

In the current study, educational economist Ludger Woessmann calculates the discounted yields of an education reform that clearly reduces the number of "risk pupils." In this way, the long-term economic effects of education can be calculated for the first time.

Approximately 20 percent of all 15-year-olds in Germany are poorly educated "risk pupils." According to the OECD Programme for International Student Assessment (PISA) studies, they are at best only able to read and do maths at an elementary school level and have therefore considerable problems in entering the labour market. In his study Woessmann posits an education reform that clearly lowers the share of risk pupils within the coming ten years. He then calculates the additional growth effects achieved by this reform over the coming eighty years.

"With a perspective that looks far into the future, the Bertelsmann Foundation has entered new education-policy territory," Dr. Joerg Draeger, executive board member of the Bertelsmann Foundation, said. Analogous to the climate discussion, a long-term horizon is also necessary in education: "Education reform needs several decades until its effects are completely felt in society and on the labour market. For this reason the reform effects must be assessed on a long-term basis."

From the OECD's report: Top of the Class  -- High Performers in Science 2006

According to the calculations of the study, the benefits of a reform up to 2030 would amount to €69 billion, which exceed the annual public education costs for elementary and middle schools. Up to 2074 the additional growth would sum up to ca. €1.75 trillion, which is about the level of the current German national debt. In 2090 finally - - the end point of the long-term horizon - - the benefits amount to €2.8 trillion. This is more than Germany's present annual GDP and is 28 times higher than the current economic stimulus packages.