Why We Learn? The Economics of Education
Have you ever asked yourself why you learn? From an economic perspective, learning is costly. We incur a lot of costs when learning that include time, opportunity cost (foregone benefits), mental costs, effort and quite possibly actual monetary costs. What is in it for us? This article attempts to explain why people so often value learning so highly.
It has for quite some time been normal to see people attending many years of schooling. However, the reasons for society wanting us to be well educated tend to be implicit. The economics of education is a branch of economics that attempts explicitly to explain why people learn.
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According to this subject, education is an investment in oneself made in the expectation of future returns in the form of money that will, in turn, determine one’s economic status in a society.
The logic behind studying for many years is to acquire better skills and knowledge that increase the likelihood of one’s being in demand in the labour market. Skills and knowledge gained through education would allow a person to be more productive and be able to contribute better to society, as well as to have the chance to lead a prestigious life style.
Normally, education creates a lot of opportunities in life. As compared with an illiterate person, an educated person is expected to be employed in better job positions offering a higher salary, job stability, pension benefits, secured and higher social status, and a happier and healthier life. From the perspective of economic theory, completing many years of schooling is positively and significantly associated with higher levels of earnings in the long run.
The role of education in principle is to improve the way of thinking, understanding and taking advantage of real-world situations and be able to make rational, informed and optimal decisions.
Recently, researchers have been scrutinizing the variation in the returns that typically accrue from different levels of schooling. On average, there is a 10% difference in the level of return from different levels of schooling.
It is axiomatic that differences in earnings accruing from different levels of education are signals and incentives that an increased investment on education pays more return. It is thus, clear that the more education someone has, the more his or her earnings are. The myriad benefits that derive from education are enjoyed by the individual, society and the nation and the world as whole.
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Article Writer & Content Contributor
- October 26, 2020
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The opinions expressed in this article/publication are those of the authors. They do not necessarily reflect the opinions or views of GiLE or its members.
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