Why is it likely that in a system of private education (i.e., a system in which
individuals pay for their own education without government subsidy) there will be
underinvestment in education (consider the social benefits in addition to
individual benefits of education)?
The educational system and how to properly manage it is a debate among national,
state and local leaders. Education is normally an issue that is at the forefront of political
debates and high among the concerns of parents with school age children. Safety and
quality of education are often times reasons that parents choose to send children to
private educational institutions however there are many factors that play a part in the
overall decision and satisfaction level of making such a decision. One reason that
education may be seen as an underinvestment in the private school setting would be
the social benefits associated with a private school. Private schools in most cases,
requires the student to pay some type of tuition. Although there are scholarships
available at times, there are is a gap between lower income families sending children to
private schools as opposed to those more financially stable to do so. This also causes a
demographic disparity among minority families that can afford to send their children to
private schools. This relates to social issues due to the fact that parents feel as though
by limiting the interactions with higher risk children, and surrounding the children with
students that come from similar families and backgrounds, the social benefits outweigh
the educational value. School choice is a decision based on educational benefits but
also a system based along ethnic, racial and income groups (Goldhaber, 1996).
Do you think the interest on payday loans is too high or just right? Should
Christians charge poor people interest on loans?
Interest loans on payday loans are too high but those high interest rates are what allows
the firms to make money off of the short term loans. On a global level, the average
interest rate and associated fees average around 37 percent with rates being much
higher in some countries averaging at 70 percent (McFarquhar, 2010). From a business
standpoint, the name of the game is to make a profit however there should be a cap
placed on these types loans that should be lower than the 37 percent average. This is
due in part to that many that use these loans on a regular basis come from lower
income communities and are being taken advantage of due to their circumstances.
Many of them are in need of the money and are not in a position to worry about the
interest rate and fees that will have to be paid back. From a Christian standpoint, if it is
a Christian business that is facilitating the loan, then there should be an interest rate
charged, as the business cannot survive without charging interest. That rate should be
one that is not taking advantage of the situation and person. That would raise the
question of what is an acceptable rate and that could be based off of the loan amount
and repayment terms (length).
References
Agier, I. (2012). The role of credit officers in the performance of micro loans.
Economics of Transition, 20(2), 271-297.
Card, D., & Krueger, A. (1990). Does school quality matter? Returns to education
and the characteristics of public schools in the United States (No. w3358).
National Bureau of Economic Research.
Goldhaber, D. D. (1996). Public and private high schools: Is school choice an
answer to the productivity problem?. Economics of Education Review,
15(2), 93-109.
MacFarquher, N. (2010). Big banks draw profits from microloans to poor. New
York Times.
