Education as an Economic Good

Education : Necessary Cost or Wise Investment?

V.Thanikachalam, Ph.D

The most important resource of India

• Her citizens• Not its soil, minerals,climate or extent of

territory

Economics

• Study of human wants ,and their satisfaction;concerned with production and consumption of goods and services

Goods

• Those things that satisfy human wants

Economic

• Scarce; can be economized

Nonmaterial

• Services;usually in short supply

Consumer

• Goods used to satisfy wants

Producer

• Goods used to produce other goods

Durable

• Can be kept or stored

Multiple

• Can be used more than once

Economics

• Is concerned with two primary phenomena,desires and resources

• Economic issues involve a basic confrontation between opposing forces

• Desires and resources,man and environment • The confrontation is brought into being

primarily because desires are infinite,whereas resources are finite

In The history of civilization

• Is a continuous illustration of man’s wants exceeding his means.

Education : an important industry

• It utilizes money and valuable resources to produce its product

• One of the largest industry in India• Produces intangibles in the form of

valuables,but immeasurable goods or services

• Objective data readily available to determine its financial input.

Education…

• It is NOT devoid of a profit motive and is largely operated by NON GOVERNMENT ORGANIZATIONS(Private Trusts) but,dependent on government for its financial support.

Education produces non-free services

• Education is not a free good in economic sense

• Students are loosing income while attending college (indirect cost)

• Capitation fee(banned,but collected and paid)

• Living expenses and tuition fees paid

Purchaser of Educational Services

• Education is a consumer good

Teachers

• Salary is augmented owing to the accumulated of large amount of education

• Confirms the fact that education is simultaneously a producer good

• It produces ability to satisfy his wants

Technical services by the graduates

• Multiple-use• Durable

Education aids economic growth

• Increases human productivity• Gains in social ,political, economic life• Costs of education are in reality necessary

and real investments in human capital.

Relation of education economic growth

• Is very real

Technical Education

• Provides the intelligence and skill essential to modern industry

• Contributes to health and safety• Results in better conservation of natural

resources• Leads to personal thrift and the developing

of capital resources

Engineering Education

• Is the basis of efficiency in business management,export of products

• Increases the volume and lifts the level of consumer demands

• Improves the earning power and spending power of the people

• Accelerates the economic life stream of the nation

Allocation of funds

• The marginal rupee principle• The point of diminishing returns• Investment in human capital

Education is an investment in human growth

• John Kenneth Galbraith• Harold Groves• Milton Friedman• Theodore Schultz• Charles Benson

Education as an agent of growth

• An important role of education is to contribute directly indirectly to the development of national economics

Education –catalyst of change

• Furnishes the information and skills base • Rational thought and attitudes• Values• Aptitudes• Motivation to change the irrelevant and

obsolete practices• Paves ways to respond to the emerging

challenges

Economic benefits of educationto individuals

• Enjoy a broader range of job opportunities• Provides security against loss of jobs

Role of technical education

• To develop people to meet the human capital demand

• A catalyst of socio-psycho-cultural changes in developing economics

Educational development

• Should precede the development of other sectors of economy

Expenditure return

• Direct financial return due to competency• Financial options• Hedging options• Non-market returns• Residence-related benefits• Employment –related benefits• Social benefits

Non-economic benefits

• Education an investment in people• Knowledge base of education• New knowledge, innovations,and

inventions contribute greatly to economic growth

• They enable the efficient production of new goods and services

Impact of industrialization

• Technical education emerged as one of the most important source of the accumulation of human capital which itself was regarded as instrument of generation of wealth.

Thank you

•Invest more in education to achieve excellence.