Saturday, March 20, 2010

Cost and value in education

Dear Colleagues

Education is one of the most important value propositions in society, but it is rarely made a part of the dialog about funding education.

Take the two cases of (1) a child who gets 20 years of good education and ends up as a graduate of a top undergraduate university and then a graduate school and (2) a child who never goes to school and at 20 years old remains uneducated and illiterate. The "value" of the two situations is clearly very different. In the one case it is reasonable to expect an average annual remuneration that adds up over 40 years to (say) $4 million and in the other case the total might be just (say) $40,000 or maybe much less.

The cost of education is significant ... 20 years at $10,000 a year adds up ... but is only $200,000 compared to a very much bigger "value"

But if the costs of delivering education are worked on so that they reflect local costing and local values ... the costs may be quite modest ... and yet the value can still be substantial.

Educators and policy makers need dialog about the behavior of cost and the behavior of value so that a system can be designed in a way that there may be financing that is sustainable rather than merely some form of global welfare. Bottom line is that money for education is needed in the early years and the value is realized many years later. Money invested today to fund the costs does not realize value until 20 years later ... but it is worth doing.

How can education investment be funded ... who pays back the investor? A possibility is that a family should be responsible for the pay back. It should be easy to get an education, but the commitment has to be that the family that benefits is responsible to financial pay back some two decades later. Done well, this works. Without something like this most children in poor countries are going to be left behind ... not to mention an increasing number of children in formerly rich countries.

Please comment on this ... the value proposition is clear ... but how to actually organize a structure that will allow this to happen may not be easy!

Peter Burgess
Community Analytics (CA)

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