2.Personal Investments in Education

2.Personal Investments in Education - Personal Investments...

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Why get an education? What is the margin? Economic decision-making: marginal benefit > marginal cost What are the benefits? What are the costs? Who gains the benefits? Who bears the costs? Private Costs Direct Indirect Tuition Supplies Rent Forgone earnings Private vs Public Forgone "production" Foregone leisure Benefits Increased wages Increased knowledge Human capital/ social capital Typical Externality issue: individuals make decisions based on private costs/benefits In this example, total benefits >>> total costs, but in country B individuals don’t go. Bottom line: important to consider all the costs/benefits, and how they are allocated Important to consider all costs and all benefits BUT, education is a matter of timing , too. Costs come early, benefits come late With these differences in timing , how to assess whether education is worth it? => Present Discounted Value Country A Country B Costs Scholarship Personal Contribution to Tuition Cost of books, supplies, & bus pass,
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