Opportunity Cost


Opportunity cost is something that people and politicians often ignore and make incorrect decisions.

How much is education from 1st to 10th worth ?

A lot of people will calculate the fees paid, money spent by student and government on books, teacher infrastructure and come up with a figure of say Rs 5 L.

This might be the money spent on that education but the opportunity cost is the cost of second option which was mutually exclusive to the option 1.

If government had freed education from its clutches and independent and unaffiliated, unregulated institutions were allowed to give primary and secondary education. A lot of above average students could have gone to these schools and completed their 10th standard in say 8 years instead of 10.

This basically means those students would have started earning 2 years ahead of everyone else and would have retired two years late. So the additional money they would have earned by staying in that job would been 2 years of salary while retirement. Which could be anywhere from Rs 1 crore to Rs 50 lakhs.

So the opportunity cost of the government controlled education to students with above average IQ is few lakh rupees and not just Rs 5 Lakh.

 

Note: This is a reflective post. I am just trying to learn.

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