We often wonder, is education a quasi-public good? Education can be considered a consumption good and an investment good. Consumption goods are those purchased for some personal utility. In this case, a college degree can provide the consumer with qualifications, enjoyable years in college, and possibly a better job at the end. An investment good is one that provides social benefit to society. While it may not be a quasi-public good, it certainly provides benefits for consumers.
Non-rivalrous
Education is considered a mixed good by most economists and educationists. This is because a mixed good has two components: a private good and a non-rivalrous external benefit. A non-rivalrous good provides a private good but also provides a non-rivalrous external benefit that does not reveal itself in the market mechanism. Examples of mixed goods include public transport, health-care, refuse collection, and fire-service.
A private good, on the other hand, can be rivalrous to a public good. A private business may be able to build a road and implement tolls, but it is highly unlikely that a private company would do so on a national scale. Hence, a public good cannot be exclusive, even though it benefits individual consumers. It is a good for the public if it does not harm any individual, and it is therefore non-rivalrous to others.
However, the economic definition of a public good does not include education. It can also be rivalrous to a certain extent because it can exclude others. For example, the state cannot ensure equal access to education for disadvantaged students. In addition, a school can refuse applicants based on where they live and whether they can afford the school. In addition, schools can discriminate between different classes, reducing the quality of education.
Non-excludable
Many economists and educationists consider education to be a quasi-public good. Public goods are nonrivalrous and cannot be sold for a profit, so they cannot be classified as private goods. Quasi-public goods have some features in common with private goods, however: they provide nonrivalrous external benefits that cannot be revealed through the market mechanism. Examples of mixed goods include health-care, public transportation, refuse collection, and fire-service.
Generally, an improved educated population will benefit society. This means that these citizens will produce higher quality goods and services. For instance, hard-working individuals who complete medical school will benefit society by providing valuable services. This positive externality can be thought of as an increase in productive abilities due to an alternative policy. This can be considered an additional positive externality, as there are several forms of it. The most common is the social rate of return.
The definition of public goods varies from everyday use. For example, public transportation cannot be used by everyone, because it has limits. Some users may be left behind during rush hours. However, it has certain benefits that make it a quasi-public good. These positive externalities may be related to public goods, but they are not the same thing. Education is a quasi-public good that is largely a public good.
Social benefit
Most economists and educationalists view education as a mixed good with characteristics of both public and private goods. In Zambia, for example, all levels of education were considered a public good at the time of independence. Quasi-public goods have properties that are characteristic of both public and private goods, including partial excludability and rivalry. Public goods, such as roads and tunnels, are considered quasi-public goods because they have characteristics of both.
The distinction between a public good and a private good is based on the idea of positive externalities. In other words, when something benefits society, it creates a positive impact on all parties. Moreover, earning a college degree increases your own earnings, but also has benefits for those around you. Economist Enrico Moretti has shown that cities with higher rates of college graduates pay higher wages to non-college graduates. Higher levels of education produce more productive workers who, in turn, create more jobs.
Similarly, a healthy population benefits individuals. The population is less likely to have contagious diseases and is more productive than an unhealthy one. Clubs also produce services for a specific group of beneficiaries. For instance, a lighthouse requires a boat to access, and people who visit it have a desire to explore the coast. Education is a quasi-public good for social benefit. When we think of these goods, we typically imagine them as government-provided services, but they are not necessarily so.
Expenses
The debate over whether education expenses are a public good focuses on the difference between a private and a quasi-public good. Higher education is clearly a private good, but it is also possible for a university to force students to pay tuition before receiving the education. The latter view is the most common. However, the distinction between a private and quasi-public good is also relevant to policy issues. There are two different ways to classify higher education, making it difficult to determine what type of public good it is.
First, a public good can be a benefit that accrues to a third party. The government may provide this service for a public good, but the provision of the service can be considered unfair and unjust. Therefore, the provision of public goods is not always morally or economically beneficial. Moreover, the provision of public goods is often disproportionate to the interests of the wealthy and exacerbates inequalities.
The benefits of higher education go beyond individual benefits. They impart ideal values to society and develop knowledge for its own sake. Thus, these are not only individual benefits that justify the government’s subsidy, but also important for former students. Higher education graduates may enjoy a higher income, better jobs, and more leisure time, which are all benefits of public subsidisation. Therefore, it would be justified to subsidize the supply of higher education, irrespective of the costs.
Importance
Generally, public goods are purchased by governments or collectively by the population, as in the case of education. In representative democracy, the people vote for the candidate with the same priorities as themselves, in this case, education. In the 2000 presidential election, education ranked high among Americans’ top priorities, so candidates focused on this issue to attract voters. Public goods are purchased by reallocating resources from private to public uses, usually through taxes levied on households and businesses. These taxes reduce the purchasing power of people and change the composition of the total output.
Public goods can be defined in many ways, but one of the most common is a free-rider problem. While some people may prefer to not pay for a public good, there are cases when a private company produces it and reaps the benefits without reducing the benefit for others. Another example is air pollution, which has a dual nature. In addition to polluting the atmosphere, factories also release harmful gases.
Public goods can be divided into national and local ones. National public goods are generally the same as those of the public sector, but there are important differences. Global public goods, for example, are generally more expensive, and a healthy population is more productive than one that is unhealthy. The club or organization producing the service serves a specific group of beneficiaries. Similarly, a lighthouse requires a boat and the desire to travel to the coast.
Value
Most economists and educationalists see education as a mixed good. While private goods are excludable, mixed goods provide nonrivalrous external benefits that are not revealed by the market mechanism. These nonrivalrous external benefits include health-care, public transportation, refuse collection, and fire-service, to name a few. Consequently, the value of education is not fully determined by the cost of tuition, but rather by the level of participation in it.
The debate about whether higher education is a public good hinges on whether we consider it a pure good. Although universities receive substantial government subsidies, they do not qualify as pure public goods. In such cases, a government should subsidize education to increase its availability and spread its benefits. This way, more people can pursue higher education. Further, the government might pay only 10% of the cost of a college degree, and the rest would have to be paid by the student.
The return on investment in education has been studied in many countries over the years. For example, studies done in 98 countries between 1960 and 1999 found that there was an average social return of 18.9% for formal education. However, it is not known whether these returns are equal. For example, some studies show that more advanced education results in lower crime. Another study, by Acemoglu and Angrist, used mandatory school laws in Turkey and found that the rate of reduction in crime was much higher than expected.