Walter W. McMahon

Walter W. McMahon

Professor of Economics and
Professor of Education Emeritus
University of Illinois at Urbana-Champaign

Biographical Sketch

Professor McMahon is an economist engaged in research, writing, and guest lecturing on education and development, education financing, and macroeconomic analysis. His primary fields are the Economics of Education and Macro Economic Theory (unemployment, inflation, and growth).

He is the recipient of the Lifetime Achievement Award from the National Education Finance Association. His recent books are “The External Social Benefits of Higher Education” (Forthcoming 2022), Higher Learning, Greater Good: The Private and Social Benefits of Higher Education, Johns Hopkins University Press (2017,paperback edition), winner of the PROSE Award for the best book published in Education, Education and Development: Measuring the Social Benefits by Oxford University Press (2002, paperback 2004, revision forthcoming),Education and Development, an edited 4 volume reference work by Routledge (2012), and Improving Education Finance in Indonesia, UNICEF & Government of Indonesia (2002).

Recent journal articles include “The External Social Benefits of Higher Education: Theory, Evidence, and Policy Implications” in “The External Social Benefits of Higher Education”, Special Issue of the Journal of Education Finance, Edited by Walter McMahon and Jennifer Delaney, The Total Return to Higher Education: Is There Under-investment for Growth and Development?, Quarterly Review of Economics and Finance, Sept., 2018, (to download, see below),  Financing Education for the Public Good: A New Strategy in Journal of Education Finance Vol 40, No 4, May 2015, pp. 414-437; Education’s Effects on Individual Life Chances and On Development: An Overview with Oketch in British Journal of Educational Studies, 61:1 (March 2013), pp. 79-107; External Benefits of Education with D. Brewer and P. McEwan (eds.) in Education Economics by Elsevier (2010); An Analysis of Education Externalities and Development in the Deep South, Contemporary Economic Policy, Vol. 25, No. 3 (July 2007), pp. 459-482; Education Finance Policy; Financing the Non-Market and Social Benefits, Journal of Education Finance (December, 2006); and Lifelong Learning  in Developing Countries; An Analysis With Estimates of Private Returns and Externalities in The World Bank Policy Series (2004).

Professor McMahon will present “The Theory of Education Finance” at an Education Finance Symposium in Oxford on March 18, 2022. He presented the keynote address on Higher Education’s Effects on Life’s Chances and Development in Sweden at the TCO National Conference on Higher Education in Stockholm, Sweden (November 2012); Higher Education’s Effects on Life’s Chances and Growth in the UK, Sweden, and the US at the London Education Research Symposium (December 2012); and Economic and Social Impacts of Higher Education in Africa at the APLGU-USAID Public Forum in Washington DC (January 2013). He presented his research on Current Financing Issues in Higher Education and Development in Scotland for the UK Higher Education Funding Agencies in Edinburgh (2010), and also in Glasgow and Grontingen.

Professor McMahon has consulted on the relation of education to growth and development in 22 countries including Scotland (University of Strathclyde), England (LLAKES, University of London), the ILO in Geneva, the European Development Bank, Sweden, Canada, the US and the OECD. Consulting work in developing countries includes work in Pakistan, Nepal, Indonesia, Thailand, South Korea, Singapore, Kuwait, Malawi (SSA), and on Latin American countries  for USAID, the World Bank, UNICEF, The Kuwait Institute of Scientific Research, and UNESCO. Research support has been from the NSF, the Natioal Center for Education Statistics, the Spencer Foundation, the International Academy of Sciences, the LLAKES Centre (University of London), DFID in the UK, Strathclyde University in Scotland, and the Government of Canada. He is on the Editorial Board of the Journal of Education Finance and was a member of the Illinois State Commission on Higher Education Financing.

Honors include the Lifetime Achievement Award in Education Finance, and Distinguished Research Fellow from the National Education Finance Association, the PROSE Award for the best book in Education (2010), ODK Scholarship-Leadership Honorary University of Iowa, graduation with Honors (Iowa), and recognition by the National Academy of Sciences for Economic Development work. He has been a Visiting Fellow at the Brookings Institution, London School of Economics, University of Sussex, INSEE (Paris) Research Department, Erasmus University (Rotterdam), and Institute of Economic and Social Research (Stockholm). He is past Chair of the Faculty Advisory Committee of the Illinois Board of Higher Education and of the University YMCA Board of Governors where he is currently a member of the Board  of Trustees. He is a member of the Champaign Urbana Symphony Board.

His lifetime of research seeks efficiency and equity in the education of young people, and includes some work on the macroeconomics. He believes that investment in human capital through education, as well as economic stability and growth are vital to the well being of graduates and their families and in the aggregate to the growth and broader development of each nation.

Downloadable Appendices and Papers

The following can be downloaded from Downloadable Appendices and Papers

  •  “The Theory of Education Finance”, Power Point slides.
  • The Total Return to Higher Education : Is There Under-investment for Growth and Development?, Quarterly Review of Economics and Finance, 2018.
  • The Total Return to Higher Education, Data Appendices:
    • Technical Appendix
    • Social Rates of Return Data and Calculations, US, 2012, 2014, 2015, 2016,2017
    • Sum of Private Non-Monetary Valuations 2016
    • Private Non-Monetary Benefits C1A, 2016
    • Private Non-Monetary Benefits C1B, 2016
    • Social Benefit Calculations, 2016
    • OECD Back-up Data, 2014 
    • Financing Education for the Public Good: A New Strategy, May 2015
    • Improving Education Finance in Indonesia
      • Contents, Preface, Executive Summary
      • Chapter 1, Introduction
      • Chapter 2, An Adequate Education for Each Child
      • Chapter 3, Resources Per Pupil at the School Level
      • Chapter 4, Sources of Resources per Student; Current and Potential
      • Chapter 5, The Social Benefits of Education in Indonesian Communities
      • Chapter 6, Improving Education Funding Methods in Indonesia
      • Chapter 7, Conclusions and Recommendations
      • Education’s Effects on Individual Life Chances and Development: An Overview, BJES 2013: Life Chances Appendices A-D.
        • Appendix A, Correction for Net Ability Bias
        • Appendix B, Estimates of Unit Costs
        • Appendix C, Education’s NM Effects on Life Chances and Development
        • Appendix D, Earnings Data and Narrow Earnings-Based Social Rates of Return
        • Deep South Appendices
        • Education and Development Appendix A
        • Education and Development Appendix B
        • Indirect Benefits; the Dynamic Model: Indirect Social Benefits estimated by simulation methods using the dynamic model.
  • EXCEL Spreadsheets Calculating US, UK, and Swedish Social Rates of Return: Earnings data (on the right) and institutional and forgone earnings costs (on the left) can all be overwritten for future updates; the formulas underlie each cell:
    • Table C-1 US, UK N-M Private Benefit Calculations Final
    • Table C-2 Basis for Valuing Private N-M Benefits
    • Table C-4 US, UK NM Social Benefit Calculations
    • Table C-5 Social Benefit Valuation Method
    • U.S. Social Rates of Return
    • U.K. Social Rates of Return
    • Sweden Social Rates of Return
  • External Benefits of Education – Encyclopedia, 2008
    • External Benefits Text
    • External Benefits Standardization
    • Abstract, Figures, Tables, & References
  • IGPA Toolbox and Op-Ed Papers: Explains Sources and Methods underlying IGPA Toolbox and Op-Ed Papers of 3-24-14.
    • Higher Education Costs and Benefits
    • Higher Education Budget Issues 2014
  • OECD Codebook for Psach-McMahon, 2007
  • Why Families Invest in Higher Education

               Please find the preceding materials in Downloadable Appendices and                               Papers folder