Question

 

Is education a public good? Does education have external benefits? If so, what are some of those public benefits? In your opinion are the external benefits large or small? Why? What should government do to promote the efficient provision of products that have external benefits? If you think that government should put more resources into education, what might be some of the opportunity costs of that decision? How would an economist determine the right amount of government support for education?

Answer 1

Education has the characteristics of both public and private good. For instance, education can lead to exclusion as a student would not be given admission if he or she has not paid the fees. This is with respect to a private college or university education, as the government tries to subsidize education in the lower and secondary levels and there are even public colleges that are financed through tax revenue. Hence it can be termed as a partially public good as can be made available in the market place like any private good or can be supplied by the government (free of charge). Education induces a positive externality hence should be universally subsidized. The government predominantly undertakes the lower and secondary education as the marginal cost for public schools is zero and also it provides a minimum education level to the citizens. The minimum level of education is a must to survive in civil society, hence it can be viewed as a public good. Education provides a benefit of jobs and also public education helps integrate all children into society. The government should devote more resources to education which will indirectly reduce its expenditure on other programs of adult skill development. The amount of government support should depend on the marginal cost of education provided, being equal to the marginal benefit of educated citizens(jobs, research, firms).