In the UK 7% of children are privately educated compared with 24% in Japan. Evaluate whether the provision of education should be left solely to market forces.

Reasons why it should be left to market forces: • competition in the provision of education can increase choice. Different types of education may be provided => profit motive could make more educational institutions enter the market which increases provision. • it may increase allocative and productive efficiency. The profit incentive may mean that the private sector will be more responsive to the demands of parents and may be more innovative. The schools will also be encouraged to keep costs low => could be passed on to consumers in terms of lower fees. • some economists suggest that paying for a product makes consumers appreciate it more and become more discerning. For example, some university students, paying higher tuition fees for their courses, are questioning the quality of the tuition they receive, with complaints about poor teaching rising (link this to the monopsony of gov on teachers which means lower wages and lower incentive). => dynamic efficiency in education could improve since more investment will take place. Reasons why it should not be left to market forces: • education is a merit good. If left to market forces, there may be under–consumption with parents and students not recognising the full benefits of education – information failure • education provides positive externalities which again means that if left to market forces, it will be under– consumed and so under–produced. external benefits of education => more people become educated as for example doctors and this could have a positive effect on the economy since it reduces the number of people who are not getting treated due to lack of doctors, and it boosts the productivity of the country which creates jobs even to those who were not involved in higher education. Also new markets might be created because education provides students with knowledge which can lead to innovations and therefore further knock on effects on the economy and on markets. • there is the issue of equity.

Education is an essential service which most people think everyone should have access to. If the poor cannot afford to pay for the education of their children or for many years of education, the children’s future job prospects are likely to be reduced • with greater purchasing power, the rich will have more influence over the type of education provided. Credit, where appropriate, knowledge/analysis of other, relevant factors. Possible routes into evaluation: • the merit good nature of education means that most governments and economists do not think that education can be entirely or largely left to market forces => Keynesian approach which talked about intervention VS Adam Smith approach who supported the free markets and laissez fair economics. • some economists suggest introducing an element of market pressure into the state system, e.g. by using voucher schemes to give parents purchasing power