Education
Education is the single largest expenditure item for state and local governments
The united states spends more per pupil on education than most countries
-lags behind leading countries and even much less wealthy one,
Education has various public benefits(positive externalities) that may justify a government role in it’s provision.
Productivity: Society can benefit from the higher standard of living that comes with increased productivity
Citizenship: education may make citzens more informed and active voters, improving the quality of the democratic process
Educational Credit Market Failuare: The failuare of the credit market to make loans tha twould raise total social surplus by financing productive education
-without public education, many families would borrow money for their choldren’s education
-the market likely would not function well
Instead of providing loans to finance elementary and secondary education, the government directly provides a fixed level of publicly funded education
Failuare to maximize family utitlity
-parents may not be willing to reduce their consumpition to finance their children’s education
-parents do not maximize the utility of their entire familu
Redistrubtion
-as education is a normal good, higher income families will provide more education for their children than lower income families
-income mobilitiy has
Solving the Crowd Out Problems: Vouchers
One solution to the crowd out problem is educational vouchers
Educational Vouchers: A fixed amount of money given by the government to families with school-age children who can spend it at any type of school, public or private
-vouchers put private schools and public schools on an equal footing, enabling them to compete in a market setting
Vouchers should be able to adjust on the needs of students,
Voucher Proponents make two arguments:
Vouchers:
The Roleof the Government on Higher Education
About 43% of education spending is on higher education
-higher education in the united states is viewed as enormous success