ECONOMICS of EDUCATION

                                             ECONOMICS of EDUCATION

The economics of education is the field that applies economic principles to understand issues surrounding education, such as its financing, provision, and the efficiency of educational programs and policies. It examines the costs and benefits of education for individuals and society, human capital formation, educational planning, and the link between education and overall economic development. The field analyzes how factors like supply and demand influence educational outcomes and evaluates the effectiveness of different educational approaches. 

Characterization

Akarowhe found that Economics Education can be seen as a process, science and product: as a process - economics education involves a time phase of inculcating the needed skills and values on the learners, in other words, it entails the preparation of learners for would-be-economics educator (teachers) and disseminating of valuable economics information on learners in other for them to improve their standard of living by engaging in meaningful venture; as a science, it means that it is a body of organized knowledge which is subjected to scientific test; as a product, economics education involves the inculcation of saleable values/skills/disposition which are desirable by employers of labour and the society at large.

Economics programs

Micro- and macroeconomics begin with the joint-concepts of supply and demand. Microeconomics develops these respectively for firms and individuals, assuming businesses seek to maximize their profit under the various regimes of competition, and that consumers, similarly, are attempting to ”maximize utility” given their resources; the price will correspond to the point where supply and demand are equal, i.e. a "partial equilibrium". Macroeconomics focuses on the sum total of economic activity - similarly analyzing various equilibria - covering the performance, structure, behavior, and decision-making of an economy as a whole. At the “intermediate” level, microeconomics extends to general equilibrium, to an analytic approach to demand-modeling where curves are derived from utility functions, and to game theory as applied to competition, and hence supply; intermediate macroeconomics covers various advanced models of the economy, differences between schools here (particularly New-Keynesian, New-classical, and Monetarist), and the related policy analysis. At the graduate level, the treatment focuses on microfoundations - where macroeconomic models aggregate microeconomic results - and dynamic stochastic general equilibrium, allowing for heterogeneity, thereby relaxing the idea of a representative agent. In many programs, approaches from heterodox economics are introduced at more advanced levels, especially behavioral economics and experimental economics; here, the key ideas of individual rationality and equilibrium are questioned, and the relevant topics are then revisited.

Econometrics concerns the application of statistical methods to economic data so as to give empirical content to economic relationships. The study begins with the single-equation methods, i.e. (multiple) linear regression, and progresses to (multivariate) time series, simultaneous equation methods and generalized linear models; at the graduate level, the treatment in parallel emphasizes the underlying statistical theory. Students are trained on packages such as STATA, EViews and R. Mathematical economics may be studied in its own right, or via incorporating advanced mathematical-techniques into the micro- and macroeconomic courses; commonly applied are optimization methods and dynamic systems modelling (for cases of "dynamic equilibrium" as above). At advanced levels, real analysis is used to abstract the economic relationships studied. Courses in decision theory, game theory and (agent-based) computational economics may be taught separately. Many universities offer the further specialized Bachelors and Masters "in Econometrics / Mathematical Economics / Quantitative Economics".

Micro- and macroeconomics begin with the joint-concepts of supply and demand. Microeconomics develops these respectively for firms and individuals, assuming businesses seek to maximize their profit under the various regimes of competition, and that consumers, similarly, are attempting to ”maximize utility” given their resources; the price will correspond to the point where supply and demand are equal, i.e. a "partial equilibrium". Macroeconomics focuses on the sum total of economic activity - similarly analyzing various equilibria - covering the performance, structure, behavior, and decision-making of an economy as a whole. At the “intermediate” level, microeconomics extends to general equilibrium, to an analytic approach to demand-modeling where curves are derived from utility functions, and to game theory as applied to competition, and hence supply; intermediate macroeconomics covers various advanced models of the economy, differences between schools here (particularly New-Keynesian, New-classical, and Monetarist), and the related policy analysis. At the graduate level, the treatment focuses on microfoundations - where macroeconomic models aggregate microeconomic results - and dynamic stochastic general equilibrium, allowing for heterogeneity, thereby relaxing the idea of a representative agent. In many programs, approaches from heterodox economics are introduced at more advanced levels, especially behavioral economics and experimental economics; here, the key ideas of individual rationality and equilibrium are questioned, and the relevant topics are then revisited.

Econometrics concerns the application of statistical methods to economic data so as to give empirical content to economic relationships. The study begins with the single-equation methods, i.e. (multiple) linear regression, and progresses to (multivariate) time series, simultaneous equation methods and generalized linear models; at the graduate level, the treatment in parallel emphasizes the underlying statistical theory. Students are trained on packages such as STATA, EViews and R. Mathematical economics may be studied in its own right, or via incorporating advanced mathematical-techniques into the micro- and macroeconomic courses; commonly applied are optimization methods and dynamic systems modelling (for cases of "dynamic equilibrium" as above). At advanced levels, real analysis is used to abstract the economic relationships studied. Courses in decision theory, game theory and (agent-based) computational economics may be taught separately. Many universities offer the further specialized Bachelors and Masters "in Econometrics / Mathematical Economics / Quantitative Economics".

Finance programs

Economics is commonly combined with Finance as an undergraduate double major; depending on the program, the economics coverage may be theoretical, as for the standard degree, or applied, as for business degrees. Similarly, Professional certification programs, such as the CFA and CIIA, often include topics in economics. At the postgraduate level, the macroeconomic element will, again, be similar to the business masters, but may also emphasize forecasting - which is widely applied in asset allocation and other financial applications such as financial analysis - and is then (slightly) more theoretical. Managerial-type microeconomics may be included in programs with a strong business focus, such as the Master of Science in Finance; otherwise, microeconomics is explicitly included only in the more theoretical Master of Finance programs, here emphasizing concepts from financial economics such as expected utility (regardless, relevant concepts are covered when required as underpin to a specific module)

Innovation efforts in education

The flexibility of charter schools to choose curriculum, programs, and instructional methods, involve the community and parents, and offer specialized programs provides room for innovation in these areas. Charter schools tend to serve a higher proportion of Black, Hispanic, and economically disadvantaged students compared to traditional public schools. Over time, the representation of Black and Hispanic students in charter schools has increased, reinforcing their role in catering to marginalized communities. In terms of performance, charter schools have shown significant improvement. Charter Management Organizations (CMOs), which run multiple charter schools, have been particularly effective in accelerating student achievement. However, there remains variability in performance, with some charter schools excelling while others lag behind traditional public schools.  

Investment in educational research and development (R&D) is crucial for fostering innovation and improving student outcomes. Programs like the Investing in Innovation (i3) and the Education Innovation and Research (EIR) Program have funded numerous projects aimed at developing, validating, and scaling effective educational practices.

There are a few contributors. One is that education helps individuals develop skills and knowledge in a number of important areas, which in turn enriches the labour pool and stimulates economic outputs. For example, education can:

1. Develop critical thinking and problem-solving skills.
2. Increase literacy levels and cognitive skills.
3. Boost personal capabilities, efficiency, and productivity.
4. Foster a sense of entrepreneurship.
5. Inspire creativity and creative thinking.
6. Build new skills in emerging areas, such as technological change, as well as in scientific advances or new societal concepts.
7. Deepens knowledge, enabling new discoveries, inventions, information, products, and ideas.
8. personal economic benefits of education

Human capital theory suggests that any investment in education pays off in higher wages. However, it’s worth noting that the earlier this investment occurs, the better. American economist James Heckman developed what’s called the Heckman Curve to show that the highest rate of economic returns comes from the earliest investments in children’s education, allowing children to progressively build up skills and knowledge.

Even so, higher levels of educational attainment are typically coupled with economic gain. A study conducted by economists George Psacharopoulos, a professor in global human development, and Harry Patrinos, an adviser at the World Bank, found that each additional year of education increased a person’s income by 10%. Another study, meanwhile, found that a one-year increase in higher education stock could raise the growth rate of GDP per capita by 0.24 percentage points.

So while a decision to pursue higher education may require a personal investment – of both time and money – employers commonly pay higher wages for roles that require a higher level of education, making higher education a sound investment in the long-run.

The magic of economic principles

Here are six useful principles we’ve learned from economists – and one awesome superpower!

1. People must choose because of scarcity. Most situations involve making choices. People evaluate the costs and benefits of different alternatives and choose the alternative that seems best to them.
2. People’s choices involve costs. Costs do not necessarily involve money. The most important type of cost is opportunity cost: the next best alternative that people give up when they make a choice.
3. People respond to incentives in predictable ways. Incentives are actions or rewards that encourage people to act in a certain way.  Incentives can be either positive or negative. When incentives change, people’s behavior changes. 
4. People create rules that influence individual choices and incentives. How people cooperate is governed by written and unwritten rules.  As rules change, incentives–and consequently people’s behaviors–change.  
5. People gain when they trade voluntarily. People can produce goods and services at lower opportunity costs when they specialize in what they do best.  Then they can trade what they produce for goods or services that would be more costly for them to produce. In this way, both sides gain. 
6. People’s choices have consequences that lie in the future. Important costs and benefits in economic decision making are those that will appear in the future. The study of economics stresses the importance of making decisions about the future because we can influence only the future; we cannot influence things that happened in the past. 

The new field of behavioral economics illuminates cognitive biases, such as emotions and beliefs, that affect our economic decision-making and lead us to behave less rationally, but still in predictable ways. The magic of understanding economics is it helps you see the hidden side of everything–seeing the unseen. It’s a superpower!  

For men who went to one of a relatively small set of fancy private schools, getting into one of the top programs of study at an elite university gave a big boost to their chances of rising to the very top of the business leadership and income levels. For example, into the highest 0.1% of incomes.

However, for women and for men who didn’t go to one of those private schools, graduating from the top programs at the top universities didn’t lead to the very top jobs or incomes.

To say it slightly differently, these schools are causally important in attaining top positions, but, at least in Chile and for the business-focused positions I studied, those benefits only go to some. Rather than reducing inequality, elite schools tend to expand gaps by baseline socioeconomic status. This is really quite a different finding than you see at the bottom part of the college distribution, where it seems like public universities create a leveling effect. It’s also different from what I found when I looked at other fields of study, such as medicine, which can lead to high incomes but typically not to the very top of the distribution or to top corporate roles.

School choice is a confusing process. When we started, nobody had done the work to see whether families participating in the choice process had the information they needed to put together their best applications to the school choice system. The approach the schools used asked families to solve a complicated strategic problem in order to submit their best application. They needed to understand not just which schools they liked, but also their chances of getting into each school given their application, which in turn depended on knowing the system rules and who else was applying to what school. We conducted surveys of participating families and found they generally did not know all of this. The system was frustrating and expected too much.

Our research suggested it made sense to change to an approach that didn’t demand an informed strategic method of families. We worked with New Haven to improve the algorithm. But once we got the back end—the algorithm—right, then it became clear we needed to make the front end work better.