The Price of Knowledge: Economics of Education

Why should we study the economics of education? One answer is the significant amount of money that individuals and society spend on education across all levels. In 2024, the United States alone spent nearly $1.5 trillion, or about 5.5% of GDP, on education. Likewise, governments throughout the world devoted considerable resources on the financing and operation of schools. These investments in education are motivated by the belief that the strength of the economy depends on the knowledge and skills of the workers. But does higher education expenditure cause better learning outcomes? Does better test score cause higher economic growth? How do policymakers design education policies that produce skills valued by society and rewarded in the labor market? How do the organization of schooling and incentive structure affect students, teachers, parents, and learning outcomes?

We will engage these questions both substantively and as a way to learn about how quantitative methods - e.g., cost-benefit analysis, and causal inference - are used to design, debate, and evaluate public policies. As such, this class is valuable for (i) students who are interested in education policy debates, (ii) who want to learn about the increasingly dominant role of causal inference models in public policy design, or (iii) who want to acquire quantitative reasoning skills through an applied, policy-oriented approach.

Topics may include return to schooling, education production function and inputs, financing of local K-12 schools, teacher labor market, incentive and students’ performance, and peer effect and learning environment effect. Throughout the course, you will have ample opportunities to develop quantitative reasoning skills, including causal analysis, natural experiment, and randomized control trials. Some knowledge of introductory microeconomics is beneficial but not required. Students will be evaluated through leading group discussion of assigned reading materials and developing a summative research proposal on a relevant topic.

Course Number
HS1125
Area of Study
Educational Studies, Environmental Law & Politics
Course Level
Introductory
Instructor
Duc Hien Nguyen