Unit 1: Distance Education & the Economics of Education

In this unit we are introduced to the economics of distance education. We know education is seen as an
investment in human capital. The term human capital implies treating people as a commodity with a
numeric value (Schultz, 1961). Some people find this term difficult to accept as it turns a person into a
commodity; but its important to look at a human in objective terms, in terms of the value they bring to
a business when evaluating whether to hire or promote them, and what to pay.
Education, therefore, is critical because of the value it adds to a person. Isnt that why were in this
Masters program? To add value to our professional marketability?
We read an interesting article on whether education is an elixir or snake oil. Personally, coming from a
high tech field, education is the elixir. And the school from which one graduates adds even more value.
Business and government institutions will pay more for the individual with more education; but as Wolf
(2002) explains, not all education is created equal. Some degrees are worth more than others. This is
commonly known and understood, but what isnt common knowledge is the cost of education to society
as a whole. To the individual, the cost of education, besides the out-of-pocket expenses, is the money
they are not earning while in school and not working. To society, the costs are looked at in terms of
whether or not the results of such costs benefit society as a whole.
Overall, studies show that educated persons will earn more over their lifetime than their less educated
peers (Wolf, 2002).
References
Schultz, T.W. (1961) Investment in human capital. The American Economic Review, 51(1), 1-17. Retrieved
from
Wolf, A. (2002). Elixir or snake oil? Can education really deliver growth? In A. Wolf (Ed.), Does education
matter? Myths about education and economic growth (pp. 13-55). London: Penguin books.