Economic Evaluation of Education and Health Projects
Like projects in other sectors, education and health projects involve flows of expenditures and benefits over time. Unlike other sectors, however, the measurement of benefits is particularly difficult. Since the early 1960s, and increasing number of economists are treating expenditures on education as investment in human capital. Viewed as such, education can be subjected to the same type of economic analysis as any other type of investment that has identifiable costs and benefits that are measurable in monetary terms.
Education increases people's productivity. If the labor market works well, higher productivity will result in higher income. Comparing the earnings of individuals with say, a university education to the earning of an appropriate control group with only a high school education, then, would be one way of measuring the benefits of a university education in dollar terms. In general, the net benefits of an education for an individual can be measured by assessing the value of his/her incremental earnings over his/her
Working life, and subtracting the direct cost of the education (tuition, books, etc.) plus the income forgone while attending school.