Education: Good or Bad?

Education is, to a considerable extent, a private good. Purchasers of education benefit directly from what they pay for. Education is often viewed, however, also as a public good, primarily because of its positive spillover effects. In this article, I question that description and go even further, suggesting that given the way education is provided in the United States, it is at least in part a “bad” public good.

For economists, a public good is not simply something that is “good for the public”; it is something that benefits many people, including those who do not pay for it. Learning to read and write helps the individual and in that sense is a private good, but it also provides a public good because it makes people better citizens, acquaintances, and colleagues—contributing to the lives of others, even though they do not pay for those benefits. Advanced education similarly fosters greater productivity and innovation, improving the lives of everyone, not just those who bought the education.

In other words, education has positive externalities whose value is not captured by the person who pays for the education. Because these externalities exist, the argument goes, people tend to act as “free riders,” receiving the benefit provided by others without paying for it. Thus, fewer people are willing to provide education than would be willing without such spillovers because they are not rewarded for some of the output they produce. Therefore, according to most economists, education will be undersupplied (Cowen 2007).