Economics
of Education
Presented
at a conference titled
The economics of education is about
understanding of how and why people make decisions to invest in education. It
also means the effect of education on long term social and economic outcomes.
It is also about the behaviour of those institutions involved in the production
of the education. The basic tools of economics provide the required framework
to evaluate education policies including early childhood interventions, pre-university
and university educational choice and financial aid.
The demand of education is based on
the model of human capital theory. So the education is seen as investment and
the acquisition of knowledge and skills as increasing the efficiency and output
which in turn increases earning; both at individual level and the national
level. On the other hand, the long term benefits that is more intrinsic such as
the appreciation of literature sometimes is referred to as “cultural capital”.
Perhaps in the GNH term, both human capital that is skilled and the cultural
capital which forms one of the important pillars of GNH are both relevant.
While the human capital can drive the technological progress and therefore
directly contribute to economic growth, the intrinsic value that education
provides helps to avert social evils and create an environment that is
conducive to growth and productivity. Statistics have shown that countries with
higher enrolment/graduation rates have grown faster than without. Example, USA
between 1910-1950 had the high school movement which resulted is boosting
economic growth in seventies and eighties. With the universal primary education
or education for all up to high school in Bhutan we could expect similar boost
in economy in next 10-20 years. At the same time, in addition to economic
growth, the value of learning history, literature and the social sciences will
add to curb social evils in the society and bring peace and harmony. Therefore
to me, the output of the production function of education is in both the terms
of the labour market success as well as the production of responsible citizens
who are positive and in appreciation of
cultural and natural heritage of the country.
Lastly, I would like to touch upon
the important paradigm shift in the investment on education at all levels.
Conventionally provision of schooling is largely provided and financed by
governments, especially the ones with socialist principles of governance.
However, with high demand for education and the diversion of government’s fund
in other sectors, the private sector investment on education is increasing at a
great speed. This is evident in the South Asian regions too and Bhutan is
slowly picking up. Some 25 years ago Bhutan saw its first private school which
emerged at the sheer necessity to meet the growing needs. Today we have several
private schools including a private college. We also understand that the more
private colleges are in the making and the education city that is developing is
also going to be a private enterprise.
One of the common concerns of the
private institutions is the quality of students supplied. If I give instance of
my own college, we are at par if not better in terms of physical infrastructure
and the faculty, with the government college. But because the government
colleges are fully funded, all the top performers are lost to the institution
leaving average or below average performers for RTC. This situation could be significantly
changed with the concept of public-private partnership (PPP). The immense pressure that the public
sector investment on education could be eased with PPP. It is hoped that this
partnership can lead to competition and expansion of equitable access and
quality education at large.
The above can be achieved by
financing the students or providing scholarships to the students rather than
the institutions and letting the students choose the best institutions,
entirely based on the programs and the quality. A responsible democratic
government will provide better choices to parents and students and open up greater
opportunities to them. Further, a democratic government need to properly
account for the quality and effective use of public resources. Of course the
government should also have its say on quality assurance. Therefore, the
success of PPP in education depends on quality assurance mechanism put in place
in consultation with the institutions, interventions such as teacher training,
school improvement initiatives (if required), bench marking etc.
With these initiatives, it
is hoped that the pool of educated people in the market will have equitable qualities
and abilities to compete and deliver effectively.
