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Explain Rate of Returns Approach to Educational Planning

Explain Rate of Returns Approach to Educational Planning

Answers

Raphael
According to this approach, investment in education should take place in such a way that the returns from the investment are equal to the returns from other kinds of investment of capital, e.g., investment in industry. This principle is known as ‘equi-marginal returns’ in economic theory and could be extended to educational sector.
This approach treats education as an investment in human capital and uses rate of returns as a criterion in allocation of financial resources. The approach implies that if the rate of return is low, expenditure on education should be curtailed.
However, in reality, it is difficult to apply this approach to education due to problems associated with measuring rate of returns in education.
An educated person’s earnings or rate of returns depend upon his/her innate intelligence, parental socio-economic status, motivation and aspirations. Hence, it is not easy to attribute the rate of returns only to education acquired. Hence, this approach is least frequently applied to education.
raphael answered the question on August 4, 2021 at 05:53

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