ECO 481: Examining Returns on Investment in Education

This economics assignment analyzes the returns on investment in education, examining the higher returns observed in primary education, women's education, and low-income countries. It explores the concept of diminishing marginal returns and its relevance to educational investments. The assignment delves into the dilemma of public financing of education, considering its potential impact on economic growth and the importance of higher education. It includes a response paper analyzing an article on the role of early life health interventions on mortality and academic achievement, discussing the data, methodology, findings, and the student's perspective on the article's implications for educational policies and outcomes. The assignment also examines the connection between health and welfare policies and education production, highlighting the need for early life health interventions for academic success, and presents relevant research and references.

ECO 481 ECONOMICS OF EDUCATION
Student Name

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1) Psacharapoulos, 1985 and Psacharapoulos, 1994 suggest a higher return for:
Primary education
The efficiency, equity, and financial implications of calculating education returns have
made it popular to use. Comparing the returns of various educational investments and rating
them might help education officials make well-informed investment choices. Previous
research has shown that the private return on investment in primary education has dropped,
albeit by a small amount (Sahnoun, & Abdennadher, 2021). Research reveals that investing in
the general curriculum, women's education and nations with low per capita income has the
most payoffs. The societal return on investment in elementary education remains the greatest
of any sector in the world. Societal and private returns usually fall in accordance with per
capita GDP in all countries.
Women’s education
Women's education has a greater overall payoff than men's education; on the whole, It
is better to go to school for academics rather than vocational training since the unit cost of
vocational training is considerably greater, and it is better to work in a competitive industry
than in a non-competitive one because of the higher return on investment for the former. A
woman who has acquired more education should save more lives due to better sanitary
conditions because of the increased societal advantages that come with it. Lacking actual
evidence on education's benefits to society, most estimates place a premium on advantages
and disadvantages that can be explicitly quantified in dollars. There is a greater difference
between costs in the social rate of return estimates and expenses in the private rate of returns
calculations, therefore the social returns are typically lower. Since the only real difference
between private and public rates of return is the incorporation of social expenses in costs, the
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disparity between corporate and public education subsidies can be seen (Kurt, & Gumus,
2021).
Low-income countries
Education's rate of return on investment (ROI) is quite similar to other types of
investments. Investment returns are an annual (%) yield, like savings account or government
bond returns. It summarises the expenses and benefits experienced throughout the investment,
expressed over time. In line with human capital theory, returns on educational investments
have been calculated since the late 1950s. According to human capital theory, spending
money on education now will pay off in the future in higher output.
Please explain the potential reasons why we observe a higher return for the
abovementioned investments.
Would “diminishing marginal returns” be an argument in explaining the questions in
“section a”? If yes, why? If not, then why not?
Yes, there is a decrease. If you follow the law of diminishing marginal returns, you
will only see smaller increases in output with subsequent additions after you reach your
optimal level of capacity. Comparable microdata from 12 countries was used to estimate
private marginal rates of return on schooling. The payoff from schooling had a considerable
nonlinearity, both economically and statistically. In general, basic and secondary education
yielded substantial growing returns. Higher education has historically shown substantial
decreasing returns. Averages of the rate of return to education tend to overestimate the
marginal rates of return at low and high levels of education while underestimating the
maximum rate of return at the centre of the educational spectrum (Mic, & Rahmije, 2019).
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Moreover, the findings imply that calculating the return on education investment may
be much more difficult than previously assumed. It is especially difficult to determine the link
between education and behaviour when natural trails are used. As suggested by Card, the
marginal causal impact can explain why IV returns estimates are typically larger than OLS
returns estimates. A higher rate of return can be predicted from instruments that measure
exogenous variation in educational attainment towards the middle of the distribution (where
the marginal causal effect is greatest).
They also find higher personal returns than social returns for education, which makes
education provision with public subsidies "regressive". If this is the case, would public
financing of education be a bad investment? Please explain the dilemma.
In many people's minds, going to college has a favourable economic influence. Human
capital and knowledge are essential for economic growth, which can only be achieved via
higher education (Barro and Sala-i-Martin, 1995; Romer, 2001). Innovative researchers must
accept and communicate existing knowledge in modern societies as well as push the technical
boundary. Although the importance of higher education in driving economic growth is widely
accepted, the way higher education systems are set up differs widely from country to country.
Higher education has always been tied to the government due to the extensive regulatory and
financial support structures (direct and indirect). Aside from this general shared characteristic,
countries differ in their approaches to student selection, tuition fees, student assistance
programs, and public funding for education and research. Since the university system is
deeply rooted in a country's heritage, it takes on a distinctive national identity. In certain
nations, the role of government is currently being reexamined. Priority one is given to highly
skilled graduates who are marketable in a wide range of professions due to the "knowledge
economy" in which we live. To the dismay of many, much fewer students than expected are
pursuing degrees in engineering and the scientific sciences(Mic, & Rahmije, 2019).
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Consequently, we must discuss education's private and social advantages,
appropriateness and effectiveness in shaping the composition of graduates, and the
appropriateness and efficacy of government efforts. The second problem is that not everyone
has equal access to higher education. However, the ongoing discussions over reforms to
student financial assistance and how to allocate student seats among schools with a restricted
capacity must be taken into consideration. Finally, we'll discuss the importance of both
diversity and openness in postsecondary learning. Education establishments are working to
increase transparency in the global higher education industry as a result of the change to the
Bachelor-Master paradigm. Increasing international labor mobility should be easier if the
range of credentials accessible to foreign employers becomes more evident(Sahnoun, &
Abdennadher, 2021).
Please find a journal article that is related to the subjects we had covered In the
classroom. Write a response paper on that article. Please provide the reference of the
article. Response papers usually include:
TOPIC: THE ROLE OF EARLY LIFE HEALTH INTERVENTIONS ON
MORTALITY AND ACADEMIC ACHIEVEMENT.
A summary of the article, including their reasoning, data, methodology, and Findings
Children that receive more medical treatment at birth have lower mortality rates and
do higher academic achievement, according to the results of this study. We found that babies
born weighing less than 1,500 grams have a lower mortality rate and higher grades and
standardized tests later in life based on genuine administrative data from two countries. There
is emerging evidence that early childhood care has an impact on health outcomes, including
death. Additionally, it provides fresh data on long-term externalities that should be taken into
account in the future when evaluating similar efforts. Statistics suggest that the introduction of
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surfactants had a substantial influence on mortality reduction and academic success. Health
care disparities may begin as early as conception and have long-term consequences, such as
worse academic attainment and other life outcomes for those who receive more medical
treatment later on in life. Better instructors, resources, and infrastructure in schools should be
prioritized, as should wider public policies like improved infant care to impact current
educational inputs. Improved neonatal and childhood years health care has been shown to
reduce mortality and increase long-term academic achievement. We can see the short- and
long-term effects of childhood health interventions using data from Chilean and Norwegian
health parameters and school records. Though a great deal of effort goes into improving early
childhood health all through the world, policymakers must know if these efforts have a long-
term benefit because perinatal and neonatal health care differs greatly from nation to country
(and even within countries)( Bharadwaj, & Neilson, 2011).
The stated goal of these drugs is to improve child health and reduce mortality, but
spillovers and other long-term advantages like increased academic attainment are crucial to
their effectiveness. This study demonstrates the impact that health and social regulations play
in the education production process as well as the necessity of early life health interventions
for academic achievement. Future studies should focus on the processes by which this
association occurs, rather than just establishing a correlation between early childhood health
treatments and later academic achievement. It is important to know which interventions have
the most impact from a policy standpoint for babies like these since they get a "bundle,"
which may include surfactants, of medical therapy. Post-hospital inputs such as parental
investments in medical procedures and their impact on long-term outcomes are also
significant to study topics for the future. Despite the fact that we observed that different
investments had just a little impact on this application, future studies should shed more light
on this crucial behavioral reaction. Instead of saying that early childhood health care is critical
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in all nations, the data suggests that it is important regardless of the country's economic or
social development stage( Bharadwaj, & Neilson, 2011).
Your take on the article (your perspective, your thoughts).
To me, early life health interventions have a major influence on mortality and long-
term academic achievement. If a newborn has a birth weight below a certain threshold, we use
a rule of thumb to categorize them as VLBW patients and provide them with special care. We
found that children in Chile and Norway who received more medical attention at birth had
lower death rates and higher test scores and grades in schools, using extensive official
statistics on schooling and birth records. The improvement's standard deviation ranges from
0.15 to 0.22. Because their birth weight is less than the threshold used in medical care,
patients who are categorized as VLBW (Very Low Birth Weight) get extra attention. This
was, I believe, their train of thought. We found that children in Chile and Norway who got
more medical attention at birth had lower death rates and higher test scores and grades in
schools, using extensive official statistics on education and birth records. The standard
deviation of these improvements is between 0.15 and 0.22. There are numerous reasons to
look at the influence of early-life health interventions on student success, but one of the most
significant is to demonstrate how health and welfare policies affect education production in
general.
While early childhood health interventions are linked to subsequent academic success,
further research should look at how this linkage arises. In this circumstance, babies get a
"bundle" of medical therapy, including a surfactant, but it would be helpful to know which
intervention or combination of interventions has the most impact from a policy viewpoint.
Even though our data suggest that different investments had just a minor influence here,
future studies should provide insight into this critical behavioral reaction. Chile and Norway
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have extremely different levels of development, but these findings are consistent with prior
findings by Almond et al. on mortality in the United States because of this study (2010).
Health care for young children is crucial in many countries, regardless of their economic or
social development stage.
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