Abstract

This paper considers the sources of skill formation in a modern economy and emphasizes the importance of both cognitive and non-cognitive skills in producing economic and social success, and the importance of both formal academic institutions and families and firms as sources of learning. Skill formation is a dynamic process with strong synergistic components. Skill begets skill. Early investment promotes later investment. Non-cognitive skills and motivation are important determinants of success and these can be improved more successfully and at later ages than basic cognitive skills. Methods currently used to evaluate educational interventions ignore these non-cognitive skills and therefore substantially understate the benefits of early intervention programmes and mentoring and teenage motivation programmes. At current levels of investment, American society under-invests in the very young and over-invests in mature adults with low skills.

Author Keywords: Skill formation, early interventions, human capital, non-cognitive skills.

*1 This version of the paper was presented at the Aaron Wildavsky Forum, University of California, Berkeley in April 1999. A previous version of this paper was presented as the Gideon Fishelson Memorial lecture at Tel Aviv University, December 1998.

^f2 Correspondence to: James J. Heckman, Department of Economics, University of Chicago, 1126 E. 59th Street, Chicago IL 60637, U.S.A. E-mail:jheckman@midway.uchicago.edu