DIANA O.

ORIAS AB-ECO 2-H

THE ECONOMICS OF EDUCATION: INVESTMENT IN HUMAN CAPITAL

The economics of education is the study of how people and society chose, with or without the use
of money, to employ scarce productive resources to produce various types of trainings, the development
of knowledge, skill, mind, character, etc. especially by formal schooling. Economics of education is the
study of economic issues relating to education including the demand for education, the financing and
provision of education, and the comparative efficiency of various educational programs and policies.
From early works on the relationship between schooling and labor market outcomes for individuals, the
field of economics of education has grown rapidly to cover virtually all areas with link ages to education.
Education significantly impacts economic development as it promotes economic growth by providing
individuals with additional skills and greater access to resources foster positive change with communities.
Understanding economics will make you a better thinker and problem solver. The concepts learned will
help explain your own behavior when it comes to allocating your time, money and other resources, and
will help you make intelligent and rational decisions. The study of economics helps the students to
broaden their knowledge. Students can be aware about most of the interesting and logical facts about the
behavior of human beings. The students increase their knowledge through the study of various economic
theories, important principles laws and generalization. As a result economists of education would like to
acquaint themselves as the magnitude of costs and benefits that may be associated with investment
decisions on education and training. Education must be brought under economic tools of analysis just like
it happens with other sectors of the economy. Education has both investment and consumption aspects.
Education is regarded as consumption good when the resulting learning experiences, qualities and
outcomes are for immediate satisfaction. As a consumer good, education is saugnt as an end product in
itself or for present enjoyment. In the other hand, if education is used as a means towards the attainment
of other ends or further productive purposes in future, it’s considered as a producer or investment good.
Education as an investment involves present sacrifices, eg. foregoing present consumption or satisfaction
for the sake of future benefits (both monetary and non-monetary). Education as an investment involves
acquisition of some useful abilities which have some social and economic value.