Question

1) What are the main ways in which the private return and the social return to education differ? (Word limit 150)

Answer 1

It is important to make the distinction between the private and social rate of returns to education. The private rate of returns to education is the increase in the earnings from an additional year of education for an individual who makes the investment decision on education, while the social rate of returns to education measures the increase in national income resulting from the same year of education . It is often the social rate of returns to education that provides a basis for government programs, such as scholarships and education loans that are aimed at increasing the levels of education of individuals.