Principles of economics of education

1. 1. Principles of Economics of Education Course VI - Module II Unit 5.A
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2. 2. 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. RaviMishra(M.Sc.,M.Ed.) 2
3. 3. Principles of Economics of education Stake holdersLimited resources Mutually
dependent relationship Education as industry Aims of Education Education as Investment
Returns of Education Education for Economic growth Returns of Educatio n Impact on
Productivity RaviMishra(M.Sc.,M.Ed.) 3
4. 4. 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 educational services)
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5. 5. 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 –M4T 1. 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; and 5. Time
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6. 6. 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 RaviMishra(M.Sc.,M.Ed.)
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7. 7. 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. RaviMishra(M.Sc.,M.Ed.) 7
8. 8. 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 RaviMishra(M.Sc.,M.Ed.) 8
9. 9. 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 RaviMishra(M.Sc.,M.Ed.) 9
10. 10. RaviMishra(M.Sc.,M.Ed.) 10
11. 11. • 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. RaviMishra(M.Sc.,M.Ed.) 11