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Spring 2006

ISSN 0890-913X

Volume 22, Number 2

Categories: Education | Spring 2006

Positive Externalities and Government Involvement in Education

Joshua C. Hall, West Virginia University

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JournalofPrivateEnteiprire,VolumeXXI,Number2,Spring2006PositiveExternalitiesandGovernmentInvolvementinEducationJoshuaC.Hall*WestVirginiaUniversityIn1962,MiltonFriedmanpublishedCapitalismandFreedom,acollectionofessaysontheproperroleofgovernmentinafreesociety.Inthatbook,Friedmandiscussestheroleofgovernmentwithregardtoeducation.Hearguesthatgovernmentinterventionintoeducationisjustifiedonthegroundsthattherearepositiveexternalities(whathecalls"neighborhoodeffects")toeducation.AlthoughFriedmannolongersubscribestothisview(FriedmanandFriedman,1987;Kane,2002),hisargumentisstillcitedasevidenceofwidespreadacceptanceofaneedforgovernmentinvolvementineducation(LevinandBelfield,2003).Thispaperre-examinesthepositiveexternalityargumentinlightofsubsequentresearch.ThePositiveExtemalitYArgumentPositiveexternalitiesoccurwhenanexternalbenefitisgeneratedbytheproducerofagoodbutbecausethereisnomarketfortheexternalitytheproducercannotgetcompensatedforproducingthisextrabenefit.Incaseswheretheproductionofagoodproducespositiveexternalities,themarketpriceofthegoodwillnotreflectitstruevalueandanunderproductionofthegoodwilloccur.Thepositiveexternalityargumentisperhapsthemostcommonlycitedjustificationforgovernmentinvolvementineducation(Poterba,1996).*TheauthorwouldliketothankMarkGillis,RobertLawson,twoanonymousrefereesandparticipantsatthe2004AssociationofPrivateEnterprisemeetings.FinancialsupportfromtheEarhartFoundationandtheInstituteofHumaneStudiesisgratefullyacknowledged.JoshuaC.Hall165

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Metadata [hide]

Title	Positive Externalities and Government Involvement in Education
Authors/Creators:	Joshua C. Hall, West Virginia University
Year:	2006
Volume:	22
Number:	2
Pages:	165 - 175
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	Educational policy, Government policy, Externalities, Milton Friedman, Economics of education

Citation:
Hall, Joshua C. / 2006. "Positive Externalities and Government Involvement in Education." The Journal of Private Enterprise, 22(2): 165-175.