Ravi

Mish

ra (M

.Sc.

, M.E

d.)

Principles of Economics of Education

Course VI - Module IIUnit 5.A

1

Ravi

Mish

ra (M

.Sc.

, M.E

d.)

Meaning • Economics of Education is the application of Economic

principles, concepts, laws to the process of Education.• It is the study of how educational managers make official or

approved choices from scarce available resources which is meant for the realisation of the best possible educational outcomes.

• In its global sense economics of education could be regarded as that branch of economics that relates the various aspects of economics to education, with the aim of ensuring efficiency in the allocation and utilization of resources in education

• Nwadiani (2000) has defined it as “the study and practice of resources generation, allocation and utilization”, and their relationship with education and the general economy of the society.

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Ravi

Mish

ra (M

.Sc.

, M.E

d.)

P r i n c i p l e s o f

E c o n o m i c s o f

e d u c a ti o n

Stake holdersLimited

resources

Mutually dependent relationship

Education as

industry

Aims of Education

Education as Investment

Returns of Education

Education for Economic

growth

Returns of

Education

Impact on Productivity

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Ravi

Mish

ra (M

.Sc.

, M.E

d.)

Stake holders

• There are three decision makers or stakeholders in the educational system. These are,

(1) The society

(2) The institutions or providers (suppliers) of education

(3) Individual or households (purchasers of educationalservices)

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Ravi

Mish

ra (M

.Sc.

, M.E

d.)

Limited resources

• Educational Resources are Limited resources: such as men, money, materials are limited in supply and serve as input into the educational system.

• These inputs include –M4T1. Men (M): teachers, policy makers, non-teaching staff;2. Materials (M): students (raw materials), teaching and research materials, teaching aids and other equipments;3. Money (M): cash, cheque and notes;4. Management (M): polices, plans, programmes, time

table and educational laws; and5. Time

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Ravi

Mish

ra (M

.Sc.

, M.E

d.)

Mutually dependent relation• Education and economy are regarded as mutually dependent.• Interconnected & interrelated• Demand and Supply relationship

• Investment in education is an important condition for promoting both economic growth and national development. Increase in quality of Education is the basis for increase in national Income, GDP, Economic growth, etc.

• Education is a Source for Acquiring Relevant Skills and Expertise and countries with better skilled labour-force, develop faster

• Economics decides proper utilization of limited resource 6

Ravi

Mish

ra (M

.Sc.

, M.E

d.)

Education as Investment• Education is an essential investment whose return are in form

of useful, dynamic , efficient citizen.

• Education also has ‘investment value’, those who acquire addition schooling earn more over lifetime , achieve higher levels of employment , more satisfying careers

• More Informed and socially active citizens.

• More contribution to national growth.

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Ravi

Mish

ra (M

.Sc.

, M.E

d.)

Education as Industry• Education is a growth industry and provides employment and

produces services needed by the total economy

• Education produces no-material goods which satisfy human wants

• education is amenable to supply-demand analysis. As students, parents and employees, and the government demand education at different prices and this demand is met by the education output as educated manpower, well trained citizens, literate people, etc.

• Education produces a society with productive capacity to satisfy the material and non-material wants of the population

• Education produces a society with productive capacity to satisfy the material and non-material wants of the population

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Ravi

Mish

ra (M

.Sc.

, M.E

d.)

Returns of Education • Economic growth and development

• Increased participation in democratic and social process

• Overcoming poverty and prosperity in life

• Increased capabilities, productivity well oriented labour force

• Education develop social capital to cater the demand of socialization

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Ravi

Mish

ra (M

.Sc.

, M.E

d.)

10

Ravi

Mish

ra (M

.Sc.

, M.E

d.)

• ECONOMICS, can be summarized as essentially dealing with the following areas, among others: • 1. Production of wealth, goods and services. • 2. Income distribution, involving devising equitable means to ensure fairness

and equity in the distribution. • 3. Allocation of scarce resources, using appropriate criteria. • 4. Human capital utilization, to take care of the problems of unemployment,

under-employment and productivity. • 5. Economic growth and development. • 6. Planning, financing and costing of plans to ensure effective and efficient

use of resources.

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