We study the causal effect of general education on returns to wealth ( k -returns) using a school reform that increased the length of compulsory schooling in Norway in the 1960s. OLS estimates reveal a strong, positive, and statistically significant correlation between education and returns to individual net worth. This effect disappears in IV regressions, implying that general education has no discernible causal effect on individual performance in capital markets, whose heterogeneity largely reflects individual ability and risk tolerance. In contrast, we find that education causes higher returns in the labor market ( l -returns). We consider a number of potential explanations for this important asymmetry.
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Fagereng et al. (2026) studied this question.