The document discusses the key principles of economics of education. It explains that economics of education applies economic principles to the field of education. It examines how educational managers make choices to utilize scarce resources and aims to achieve the best educational outcomes. Education and the economy are mutually dependent, as increased investment in education promotes economic growth and national development by enhancing skills. Education is viewed as both an investment in developing human capital and as an industry that employs people and provides services.

1. Principles of Economics
of Education
Course VI - Module II
Unit 5.A
RaviMishra(M.Sc.,M.Ed.)
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2. Meaning
• Economics of Education is the application of Economic
principles, concepts, laws to the process of Education.
• It is the study of how educational managers make official or
approved choices from scarce available resources which is
meant for the realisation of the best possible educational
outcomes.
• In its global sense economics of education could be regarded as
that branch of economics that relates the various aspects of
economics to education, with the aim of ensuring efficiency in
the allocation and utilization of resources in education
• Nwadiani (2000) has defined it as “the study and practice of
resources generation, allocation and utilization”, and their
relationship with education and the general economy of the
society.
RaviMishra(M.Sc.,M.Ed.)
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3. Principles
of
Economics
of
education
Stake
holdersLimited
resources
Mutually
dependent
relationship
Education
as
industry
Aims of
Education
Education as
Investment
Returns of
Education
Education for
Economic
growth
Returns
of
Educatio
n
Impact on
Productivity
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4. Stake holders
• There are three decision makers or stakeholders in the educational
system. These are,
(1) The society
(2) The institutions or providers (suppliers) of education
(3) Individual or households (purchasers of educational
services)
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5. Limited resources
• Educational Resources are Limited resources: such as men,
money, materials are limited in supply and serve as input into
the educational system.
• These inputs include –M4T
1. Men (M): teachers, policy makers, non-teaching staff;
2. Materials (M): students (raw materials), teaching and
research materials, teaching aids and other equipments;
3. Money (M): cash, cheque and notes;
4. Management (M): polices, plans, programmes, time table
and educational laws; and
5. Time
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6. Mutually dependent relation
• Education and economy are regarded as mutually dependent.
• Interconnected & interrelated
• Demand and Supply relationship
• Investment in education is an important condition for promoting both
economic growth and national development. Increase in quality of
Education is the basis for increase in national Income, GDP, Economic
growth, etc.
• Education is a Source for Acquiring Relevant Skills and Expertise and
countries with better skilled labour-force, develop faster
• Economics decides proper utilization of limited resource
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7. Education as Investment
• Education is an essential investment whose return are in form
of useful, dynamic , efficient citizen.
• Education also has ‘investment value’, those who acquire
addition schooling earn more over lifetime , achieve higher
levels of employment , more satisfying careers
• More Informed and socially active citizens.
• More contribution to national growth.
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8. Education as Industry
• Education is a growth industry and provides employment and
produces services needed by the total economy
• Education produces no-material goods which satisfy human wants
• education is amenable to supply-demand analysis. As students,
parents and employees, and the government demand education at
different prices and this demand is met by the education output as
educated manpower, well trained citizens, literate people, etc.
• Education produces a society with productive capacity to satisfy
the material and non-material wants of the population
• Education produces a society with productive capacity to satisfy
the material and non-material wants of the population
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9. Returns of Education
• Economic growth and development
• Increased participation in democratic and social process
• Overcoming poverty and prosperity in life
• Increased capabilities, productivity well oriented labour force
• Education develop social capital to cater the demand of
socialization
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10. RaviMishra(M.Sc.,M.Ed.)
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11. • ECONOMICS, can be summarized as essentially dealing with the
following areas, among others:
• 1. Production of wealth, goods and services.
• 2. Income distribution, involving devising equitable means to ensure fairness
and equity in the distribution.
• 3. Allocation of scarce resources, using appropriate criteria.
• 4. Human capital utilization, to take care of the problems of unemployment,
under-employment and productivity.
• 5. Economic growth and development.
• 6. Planning, financing and costing of plans to ensure effective and efficient
use of resources.
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