This paper attempts to determine whether the relationship between education and income
results because schooling allows individuals to earn higher income or because higher
income individuals purchase more of all normal goods, including schooling. Education
is treated as a joint product, producing potential wage gains and utility simultaneously.
The framework permits estimation of the rental price of a unit of education, net
of consumption effects. The major finding is that education does causally produce
income. By moving from 0 years of schooling to 12 years, the mean individual approximately
triples his wealth. More surprising is that education is a bad." Individuals stop
short of acquiring the wealth-maximizing level of education because of the disutility
associated with school attendance.