Concept of Economics of Education

Economics of education is relatively a new field of academic discipline. The importance of systematic study of economic aspects of education were realized in the mid of twentieth century. So, the history of Economics of education is not very old. The subject matters of economics of education are concerned with both Economists and Educationists. The different economic aspects of education are also differing from country to country based on their economic system, economic growth and development. For example developed country invests more on their education comparing to the less developed country. The relationship between economic growth and educational development in the countries is always seen positive. So, Economics of Education is a new, dynamic and specialized field of study.

A country's government has to take decisions on three central problems of education. Central problems arise because of the scarcity of resources. 

These are:

 • What type of education the country needs for its human capital formation?.

 • How to produce educational opportunities and social set up for providing education?.

 • For whom the educational facilities to be produced?. 

These three are the crucial problems to be solved by the respective government of the country. In this context, economics of education gives right path to choose the alternatives available in solving these three central Problems. Economics of education has to deal with how the government, society, institution and household use limited human and material resources to satisfy the unlimited wants of education. So, Economics of education is not only a theory based knowledge area but also a practical approach to address the educational challenges

DEFINITION

According to Babalola, Economics of Education studies human behaviour in terms of decisions, actions and reactions about schooling. It analyses, how the individual learner takes his decision on the investment and expenditure of a particular level of education.


Nature of Economics of Education

1) Scientific discipline: The focus of economics of education is to optimum use of educational resources, tools and techniques to achieve the educational objectives. Thus the economics of education is a science of allocating scarce educational resources among competing alternatives to education in order to achieve its goals. It is the science that deals with rationalization of scarce educational resources to achieve optimal goals of education. 

2)  Applied subject: Economics of education applies the theories and principles of economics to the field of education. The main function of economics of education is to address the issues of resource allocation and distribution to achieve the objectives of education. 

3) New and emerging branch of education: Economics of education relatively a new and emerging branch of education. It evolves as a separate branch of study only in the mid of twentieth century. 

4) Dynamic content areas: The subject matter of economics of education is very dynamic. The new ideas are continuously added to the subject matter of economics of education. It encourages the extensive research studies to expand its content areas. 

5) Systematic body of knowledge: Economics of education is a systematic body of knowledge. It is the byproduct of extensive research studies in economics rather than the spontaneous recognition of the economic dimensions of education. 

6) Interdisciplinary in nature: Economics of education is interdisciplinary in its nature. The subject matters of economics of education are related to education, economics, mathematics, government system, management etc. It is seen that the content of economics of education are interrelated. 


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