Education is important. It is how we pass accumulated knowledge and wisdom on to subsequent generations. An educated populace is generally associated with higher economic development and prosperity. People with higher educations have an advantage over their competitors with lower educations and tend to earn more over their lifetimes. With that in mind, what is the value of the service called education?
That is like asking what is the value of food. The human body needs food for survival, and well-nourished individuals tend to perform better than malnourished ones. Nutrition, however, comes from a vast array of sources. The human body does not need refried beans to survive, nor does it need filet mignon. The economic value of a particular item in a particular location, usually measured by the price at which willing participants agree to buy and sell, is determined by the relative scarcity of the item with regard to the number of people who desire it and have the ability to pay. Refried beans are plentiful in relation to the demand for them, and thus the price is low. Filet mignon, in contrast, is very desirable while its supply is limited. The unit price, therefore, is high.
The general category of education does not have any value, just as the general category of food does not have any value. Both are simply abstract descriptions for convenience in conversation and discourse. Nobody ever buys food in the abstract. People buy particular items, taking into account their own scarce resources and the prices of competing goods in a way that they perceive will benefit them the most. Those with limited resources will tend toward less expensive items in order to preserve those resources for other things that they need. Those who are better off are more likely to purchase filet mignon, because the enjoyment they get is not likely to be offset by severe lack in other areas. The opportunity cost for expensive meat is less for them than it is for others.
The value of a particular education for a particular individual arises from the value that the person can offer to customers of that skill set. The more people who desire your services and the more value you can add, the more likely you are to earn a good living. There are people who did not finish high school who have become tremendously successful business people. Skilled tradesmen can prosper when they manage well. What they offer to customers satisfies their needs and wants. The customers perceive that they are better off after dealing with them. They have created value, and that is what makes their skills valuable to buyers.
Nobody buys or values a unit of generic education. It doesn't exist. Particular institutions that impart skills that many people seek, however, can certainly make it easier to create more value, to be more financially successful, and contribute to progress. From another perspective, some people spend many years and tremendous sums of money on formal education, building an expertise in an esoteric subject that nobody else cares about. They will not prosper until they can connect what they love doing with something that others need or want. The economic value of a skill, in all cases, arises from its scarcity in relation to the demand for it.
Many people think that education is inherently valuable and that everyone should get a university degree, regardless of the subjects studied or the skills obtained. Ask an unemployed graduate or a highly educated burger-flipper. If there are no buyers for their education, that education isn't very valuable, at least from an economic point of view.
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