Monday, February 06, 2006

Economic arguments for public funding of higher education

Over at Brad DeLong's blog, there is an interesting and informative argument going on about whether public funding of higher education is a good thing.

DeLong starts off with the view that public funding is not desirable:

A policy of no debt--a policy of publicly-funded college education for all--thus looks to us economists like a policy of taking from the relatively poor (the working classes who don't go to college do pay taxes) and giving to the relatively rich (the middle classes who do go to college) who earn much higher relative wages now than they did a generation ago.

This has been my view too. Look at it this way: if the above argument is valid in a rich country with more than 30 % of its high school graduates going on to college, just imagine how much stronger this argument is for a country like India, where only 6 % of the relevant age group attends college (I don't have statistics about high school graduation rates in India).

His commenters present a whole host of arguments for why public funding is a good idea. Let me just point to a couple of them. The first one is that college educated people are better off (by upto 80% in the US), and so end up paying more taxes over their working life. So, they do repay their debt. The second one is about the government taking a bet -- more like group insurance, actually -- on the ability of educated people to do great things not only for themselves, but also for the country; if you don't like the word 'bet', call it an 'investment' in human capital! Along the way, you find information about the Australian system which, according to the commenter, is "enormously popular". In addition to economic arguments, the comments there offer other kinds of arguments, too -- legal, moral, political, etc. -- both for and against public funding.

You really ought to read the the whold thing, including comments.


  1. Anonymous said...

    True. Higher education subsidies can go, but they must go only on the condition that all that money is going to go for improving primary education. As long as we don't get the math right, things will remain this way...

  2. Abi said...

    Kumar: It looks like the entire education pie is likely to become bigger this year. If it happens, we don't have to think in terms of primary-vs.-higher education trade offs. I hope it happens.