Econ of Education Policy Quiz 1

Human capital

skills and attributes that make a person productive in the labor market

examples of human capital

technical skills, social or soft skills, critical thinking and problem solving

why do we spend so much on education?

workers with more education should earn more money and be more productive. overall economy depends on human capital

why is the US 11th in spending but only 22nd in test scores?

efficency, are resources used in ways that maximize learning? allocation: are resources targeted to where they help most? incentives: do systems reward what we actually want? implementation: great policies can fail in practice.

tradeoffs

why do we use economics to evaluate education policy?

economics measures our choices of under scarcity of resources like money, time, labor, or physical resources. measure how do different incentivies affect educational outcomes. using empirical tools of causal analysis.

intended and unintended consequences of No Child Left Behind

we focused on students who were just below proficiency cut off. devoted less attention to students far below or far above the cutoff. only focused on english and math. reduced instruction in untested subjects. focused on passing the exam.

supply and demand curves

supply in education

schools choose quantity to maximize quality access or profits given regulations, funding, and capacity constraints

demand in schools

parents and students choose quantity to maxmize utility given costs, preferences, and budget constraints. education market isn’t perfectly competitive.

Normal market failures

1. monopolies

2. information asymmetry: families can’t easily observe school quality (transparency issue)

3. barriers to entry

4. externalities: education benefits society, not just the individual

5. positive externalities: social benefits of education. how society benefits from an individual attending school separate from personal benefits

6. credit constraints: kids can’t borrow against future earnings

7. economies of scale create barriers to entry and natural monopolies: curriculum, assessment, oversight, infrastructure

differences between education markets and other markets

1. Not perfectly competitive

2. asymmetric information

3. local production

4. peer effects

5. education as a customer input technology: meaning students aren’t merely consumers they have to invest or input into the production of their own education

6. the existence of spillovers

social benefits of education

1. higher civic engagement and voting

2. lower crime rates

3. positive spillovers to others’ productivity

4. stronger communities and economic growth

5. social cohesion

6. greater long-term health

7. increased taxes through increased earnings

8. less stress on social saftey nets

types of education policy

1. total resource policies: incrase the total amount of funding to a school or to individuals making education policies

   1. ex: grants, universal pre-k expansion

2. input-based policies: targeted at specific inputs to the education process, such as class sizes, teachers, or offering of certain educational programs

   1. ex: class size caps, curriculum adoption, tutoring mandates

3. output-based policies: alter the incentives schools, teachers, and student face, with the objective or promoting certain educational outcomes

   1. ex: performance-based funding