Question

3. Does government intervention crowd out private education? Does government spending improve education outcomes? Explain.

4. Describe if there is a relationship between public spending and the quality of education and whether education increases earnings?

Answer 1

3.   At times government intervention is required to achieve economic efficiency. Economic efficiency is achieved when nobody can be made better off without someone else being made worse off. Such efficiency enhances prosperity by ensuring that resources are allocated and used in the most productive manner possible. Government intervention in the education sector has been justified on various grounds. It has been argued that in the real world, there are many instances in which private markets fail to produce the socially optimal quantities of goods and services

• Government intervention would widen the range of choice available to parents. Given, as at present, that parents can send their children to government schools without special payment, very few can or will send them to other schools unless they too are subsidized.
• Subsidizing purely vocational education increases the economic productivity of the student but does not train him for either citizenship or leadership. It is clearly extremely difficult to draw a sharp line between these two types of education. Most general education adds to the economic value of the student — indeed it is only in modern times and in a few countries that literacy has ceased to have a marketable value. And much vocational education broadens the student’s outlook. Yet it is equally clear that the distinction is a meaningful one. For example, subsidizing the training of veterinarians, beauticians, dentists, and a host of other specialized skills

4.           To evaluate the efficiency of public spending on education, various indicators can be used: For instance, percentage of population enrolled in primary schools, secondary schools and tertiary schools, along with a few quality-based indicators, such as Youth Literacy Rate and the World Economic Forum (WEF) indicators for the quality of the education system.

Unrestricted spending increases led to better student outcomes (8 out of 9 studies show positive results), textbook spending improves outcomes in primary school (just one study), a mixed bag on construction spending (4 out of 7 studies show positive results), and that spending targeted to low-income schools in New York City had unclear (but likely null) effects.