Public finance theory suggests a number of reasons government involvement in the allocation of resources might be equitable and efficient. What justifications can be made for government involvement in the provision of education? What types of educationpolicies should be implemented to further the efficient allocation of resources?
- nCollective benefits:
- User prices and private supply? There could be inefficient exclusion from
- collective benefits
(i.e. more students in the classroom until it is congested).
- and enforced monopoly:
- à Education is a local
- natural monopoly when the objective is that children attend the school closet
- to their house.
- à A school system’s bureaucracy may favor the idea that schools ought to
- be natural monopolies, b/c the competition by allowing students access to
- schools may be out of control (WHY?).
nExternalities and education:
- à Benefits of interaction
- with people who are more knowledgeable and educated.
- à Knowledge and education as
- foundations for economic growth.
- à The paternalistic case for compulsory
- à Every child has an entitlement to an
- education, because of the personal and
- private benefits to the children.
- hazard and social insurance:
- à By
- providing education as an entitlement, society hopes to make people
- self-reliant, and not dependent on future government income transfers.
à Moral hazard now: some children chose not to study.
à Social insurance tomorrow: protection for low incomes.
- Evidence: private schools
- in general provide better quality education that government schools. Think
- about why?
nResources and class size.
nInteraction with fellow students.
- nNorms of behavior, including attitudes to study and to the
- merits of academic success.
nThe home environment and attitudes of parents.
- nSocial norms about how conflicts or disagreements are
- n“Good” schools: better administrators, better-qualified and motivated
- teachers, more concerned parents. Could be government schools.
- à Children
- can be with other children whose parents are also willing to pay money for a
- better education.
- à Private
- schools provide education under competitive market conditions.