Chapter 17 - The economics of education. After completing this unit, you should be able to: Describe the level and changes in educational attainment over time, describe the costs and benefits of education, define human capital,…
Trang 1Introduction to Economics: Social Issues and Economic Thinking
Wendy A Stock
PowerPoint Prepared by
Z Pan
Chapter 17
The Economics of Education
Copyright © 2013 John Wiley & Sons, Inc / Photo Credit: ©Catherine Yeulet/iStockphoto
Trang 2Ø Describe the level and changes
in educational attainment over
time
Ø Describe the costs and benefits
of education
Ø Define human capital
Ø Model the positive externalities associated with education
Ø Evaluate why some education
Trang 3Copyright © 2013 John Wiley
& Sons, Inc.
3
Educational Attainment of U.S Population
Trang 4The costs of education include opportunity costs and direct costs.
Ø Opportunity costs: the opportunity costs of
education are measured as the value of foregone earnings, since time spent in school could have
instead been spent working.
Ø Direct costs: tuition, fees, books, supplies, and
other items necessary to attend school
Costs of Education
Trang 5Copyright © 2013 John Wiley
& Sons, Inc.
5
Costs of Education
Trang 6Ø Marginal costs of education are the incremental costs associated with obtaining an additional year of
education
Marginal Costs of Education
Trang 7Ø The Benefits of Education include:
Ø Job opportunities, pay, health
Ø Human Capital: The acquired skills and
knowledge that make people more productive
Copyright © 2013 John Wiley
& Sons, Inc.
7
Benefits of Education
Trang 8Ø Private Marginal Costs are marginal costs that accrue only to the producers of a good or
service
Ø Social Marginal Costs are marginal costs that accrue to society as a whole
MC social = MC private + Negative Externality
Impacts of power generation
Trang 9Copyright © 2013 John Wiley
& Sons, Inc.
9
Benefits of Education
Trang 10Benefits of Education
Trang 11Copyright © 2013 John Wiley
& Sons, Inc.
11
Marginal Benefits of Education
Trang 12THE OPTIMAL LEVEL OF EDUCATION
Trang 13Ø Positive Externalities are benefits received by
third parties.
Ø Negative Externalities are costs imposed on third parties.
Ø Education is associated with positive externalities.
Ø benefits to children of educated parents
Ø lower crime rates
Ø reduced dependence on welfare
Ø lower probability of reliance on unemployment
compensation
Ø increased rates of voter participation
Ø increased social stability
Copyright © 2013 John Wiley
& Sons, Inc.
13
EXTERNALITIES
Trang 14Ø Private Marginal Benefits are marginal benefits that accrue only to individual decision makers.
Ø Social Marginal Benefits are marginal benefits that accrue to society as a whole
MBsocial = MBprivate + External Benefits
Private Marginal Benefits vs Social
Marginal Benefits
Trang 15Copyright © 2013 John Wiley
& Sons, Inc.
15
Positive externalities of education
Trang 16Because the optimal private level of educational attainment is lower than the socially optimal level, many societies provide incentives to encourage people to pursue education.
Governments subsidize education by:
Why Is Education Publicly Provided?
Trang 17Copyright © 2013 John Wiley
& Sons, Inc.
17
Education Spending in the U.S.
Trang 18Ø Research does not uniformly support the idea that more spending on education generates
better student performance
including graduation rates and standardized test scores, indicate very little, if any, improvements
in student performance since the 1970s
Education Outcomes in the U.S.
Trang 19Copyright © 2013 John Wiley
& Sons, Inc.
19
Education Outcomes in the U.S.
Trang 20Education Outcomes
Trang 21Copyright © 2013 John Wiley
& Sons, Inc.
21
Education Outcomes
Trang 22Ø School Choice
A set of school reform proposals that focus on
pay levels and pay structures for teachers
EDUCATION REFORM
Trang 23Copyright © 2013 John Wiley
& Sons, Inc.
23
1 Will we improve K-12 education if we
increase spending on K-12 education?
Why or why not?
2 Using the concept of positive externalities,
explain why most students are required to obtain vaccinations before they are
allowed to attend public school.
Trang 24Key Concepts
• Human capital
• Positive externalities
• Negative externalities
• Private marginal benefits
• Social marginal benefits