Question

a. With aid of a diagram, carefully illustrate the private and social benefits and costs to education. Demonstrate that as more years of education are acquired the expected gains from education tends to increase for private individual but falls for the society as a whole. (Note: Indicate the differences in the educational preferences from the perspectives of the society and private person).

b. From (a) above, suggest some policy recommendations to governments in the developing world.

c. Discuss the following concepts population:
i. Hidden momentum of population growth rate
ii. Demographic transition

Answer 1

Private cost of education is the personal expenditure on education attainment. Social cost of education is personal expenditure & government's subsidy or other financial help for education attainment.

• Private cost of education increases at a decreasing rate with level of education. As, higher level education requiring expensive capital is usually subsidised (specially in developing countries). So, subsidised higher education implies social costs rise at an increasing rate with level of eucation.

Private benefit is the expected increase in income & standard of living of respective person, due to more education attainment. Social benefit is increase in socio economic efficiency, development, welfare due to people's more education attainment

• Private benefit of education attainment keeps on increasing at a rapid rate, in form of higher individual's expected income. However, Social benefit of education attainment increases more rapidly at basic education & slows down at higher education level. Such as, basic arithematic & language etc skills increase efficiency very sharply, which keeps on slowing down gradually with more education.

Developing countries face this issue of divergence between 'social & private net benefits to education'. A prospective sollution to this issue is suggested that : such economies' governments should subsidise primary education rather than higher level education.