The investment in future growth By and large scholars in the social sciences accepts the assumption that an increase in the educational level of a population leads to higher productivity, and thus increased wealth. It is therefore thought to be of great importance that a government does everything in its power to increase the educational level of its population. However, first we should ask what is actually within their power.
A popular assumption made by many is that there exists a linear relationship between the amount of money used on education and the quality of the output. To a certain degree this might be true. However, as with many other investments in productive capital, in this case human capital, the marginal product of an additional pound used on education (production) will diminish and after a certain point you will experience a fall in output. Also, the quality of output i.e. the quality of education and the achievements of students is dependent on many other factors apart from funding.
Perhaps psychology plays a part. ‘Pygmalion in The Class Room’ is a study undertaken by Robert Rosenthal and Lenore Jacbosen in 1965. It shows that higher expectations from teachers towards pupils’ achievements increases the knowledge and IQ of those the pupils. In short the achievements of pupils are closely related to the teachers belief in the abilities of the pupils. In fact, an increase in money spent on education might not be as effective as teachers believing in their students. As such, instead of putting more money into education, governments might be better off decreasing the administrative burden placed on teachers. This might allow more teachers the space and time to inspire.