Engel’s Law states that the share of food in household expenditure declines
with households’ total expenditure—a regularity that is clearly evident in
Pakistani household income and expenditure data. This study uses an “Engel
curve” to incorporate additional social effects—including the impact of education
on welfare—to infer the differential impact of education on measures of household
wellbeing across income groups and provinces. Our Engel curve specifications
close the gap between economic theory and empirical applications critical to
evaluating the effects of education on economic wellbeing. The results show that
net primary and matriculation education enrolment ratios can bring about a
significant improvement in people’s welfare. Accordingly, there is a need to
specifically redirect resources to Balochistan where access to educational
opportunities is rather low; and to increase access to such opportunities in Sindh
and Khyber Pakhtunkhwa. Data for the period 2008–11 shows that households in
the two lowest income groups are worst off in terms of access to educational
opportunities. Efforts should thus be stepped up to enhance their access to
educational opportunities at the primary and matriculation levels. The study’s
predictions are intended to guide policymakers in terms of where to concentrate
their efforts and reduce economic distortions, and move the economy onto a
sustainable path in the long run.