Normative Economics of Education Distribution: Equity-Efficiency Trade-off
The paper deals with normative economics of education distribution. Traditionally, education is considered under positive economics of externalities, the presence of which leads to underproduction of educational services in comparison with socially optimal amount. However, the normative aspect of education distribution is also important. The distribution of education according to wiliness to pay principle leads to the consolidation of social inequality, therefore significant share of educational services is distributed through non-market mechanisms. The paper is devoted to the analysis of these mechanisms. It is shown that with the non-market distribution of educational services society may be willing to sacrifice some degree of efficiency in maximizing aggregate returns to education gains in exchange for a distribution that is perceived to be more fair; this is known as the ‘equity-efficiency trade-off’. Distribution of educational services on a meritocratic principle, which maximizes the aggregate returns to education, leads more affluent students receive more educational assets.