Nelson Ko's Blog

I’ve decided to do something experimental for this development economics paper I have to submit towards my master’s degree. I’m going to look at education as a network good. By network good, I mean that it exhibits network effects and externalities, and becomes more valuable to any particular user when there are more users on the network, just as is experienced in telecommunications systems. I’m going to try and weave the network economics literature into traditional analysis of externalities in education. There might also be interesting insights into the discussion around the role of standards in education. This is nevertheless going to be controversial.

The role of government intervention in education remains a hotly debated topic especially in the context of developing countries. Much of the argument revolves around whether substantial positive externalities exist in the consumption of education by individuals. If social rates of return to education are significantly higher than private rates of return, government intervention is more likely to be warranted. This paper will review existing literature on the social rates of return to education and critically examine the arguments for the presence of positive externalities in education.

This paper will attempt something new, borrowing concepts from the literature of network economics, in order to better conceptualize education as a social public good. Network economics has its roots in the study of transport and telecommunication networks, both of which like education are goods that were once thought of as pure public goods, but have in recent times been considered more as private goods. The modern economy will be very much diminished without the transport, telecommunications, and information networks that are central to the process of economic and technological development. Education is similarly central to the process of economic development, even while there is debate over its status as a social public good or a private good.

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