page_title: Education economics
section_title: Investment costs
hierarchical_section_title: Education economics / Education as an investment / Investment costs
caption_attribution_description: English: Average years of schooling versus GDP per capita (USD 2005). Logarithmic scale on horizontal axis. Data according to Weil, D. (2009) Economic Growth. Pearson Addison-Wesley.
context_page_description: Education economics or the economics of education is the study of economic issues relating to education, including the demand for education, the financing and provision of education, and the comparative efficiency of various educational programs and policies. From early works on the relationship between schooling and labor market outcomes for individuals, the field of the economics of education has grown rapidly to cover virtually all areas with linkages to education.
context_section_description: Investments in human capital entail an investment cost, just as any investment does. Typically in European countries most education expenditure takes the form of government consumption, although some costs are also borne by individuals. These investments can be rather costly. EU governments spent between 3% and 8% of GDP on education in 2005, the average being 5%. However, measuring the spending this way alone greatly underestimates the costs because a more subtle form of costs is completely overlooked: the opportunity cost of forgone wages as students cannot work while they study. It has been estimated that the total costs, including opportunity costs, of education are as much as double the direct costs.
  Including opportunity costs investments in education can be estimated to have been around 10% of GDP in the EU countries in 2005. In comparison, investments in physical capital were 20% of GDP. Thus the two are of similar magnitude.
caption: Average years of schooling versus GDP per capita (US$2005).
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