Explore government intervention contexts in Edexcel IAL Economics through education spending, linking microeconomic benefits to data and a supported judgement.
Between 2012 and 2021 government spending on education per person per year in high-income countries increased from $ 7507 to $ 8515. In low-income countries the increase was from $42 to $56 per person.
Evaluate the microeconomic benefits of increased spending on education.
Quantitative skills assessed
QS9: Interpret, apply and analyse information in written, graphical, tabular and numerical forms.
Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the general marking guidance.
The indicative content below exemplifies some of the points that candidates may make, but this does not imply that any of these must be included. Other relevant points must also be credited.
Knowledge, application and analysis ( 12 marks) - indicative content
- Increased external benefits- positive impacts on third parties
- Individuals become more skilled- able to access better paid jobs, resulting in more spending power that would result in increased demand for goods and services
- More skilled workforce- means output per worker is higher - this will benefit a business in terms of lower costs
- Higher income levels lead to more spending- tax revenue from indirect tax will increase- increasing money available to provide public services/ healthcare
- Increasing production possibilities as each unit of labour is more skilled and becomes more productive- PPF shifts right and the number of capital and consumer goods that can be produced increases. Economic growth- increased productive potential
- Businesses are able to produce more with the same amount of inputs so output of firms/supply may increase- shifting supply to the right and creating downward pressure on price
- Reduces market failure- where the market leads to an inefficient allocation of resources- the result is greater efficiency as education is consumed at the social optimum level
- Closing information gaps- where consumers or producers lack information to make rational decisions
- Reducing incidences of asymmetric information- where one economic agent has more knowledge than another- reducing the likelihood of producers exploiting consumers or vice versa
- Private benefits achieved by consumers of education, such as developed knowledge, improved skills, better job, higher pay, more utility from being able to buy more/better goods
Level
Mark | Descriptor
0 No rewardable material.
Level 1
1-3 Displays isolated, superficial or imprecise knowledge and understanding of economic terms, principles, concepts, theories and models.
Use of generic material or irrelevant information or inappropriate examples.
Descriptive approach which has no chains of reasoning.
Level 2
4-6
Displays elements of knowledge and understanding of economic terms, principles, concepts, theories and models.
Limited application of knowledge and understanding to economic problems in context.
A narrow response or superficial, only two-stage chains of reasoning in terms of cause and/or consequence.
Level 3
7-9
Demonstrates accurate knowledge and understanding of economic terms, principles, concepts, theories and models.
Ability to apply knowledge and understanding to some elements of the question. Some evidence and contextual references are evident in the answer. Analysis is clear and coherent. Chains of reasoning in terms of cause and/or consequence are evident but they may not be developed fully or some stages are omitted.
Level 4
10-12
Demonstrates accurate and precise knowledge and understanding of economic terms, principles, concepts, theories and models.
Ability to link knowledge and understanding in context, using appropriate examples which are fully integrated to address the broad elements of the question.
Analysis is clear, coherent, relevant and focused. The answer demonstrates logical and multi-stage chains of reasoning in terms of cause and/or consequence.
Evaluation ( 8 marks) - indicative content
- Government failures- where the spending on education results in a net welfare loss
- Information gaps mean the areas of education receiving funding are not appropriate
- Unintended consequences- education spending may result in an increase in supply of some workers and a decrease in supply in other areas
- Excessive administration costs- to implement more education spending more needs to be spent administering it- if these costs exceed the extra funding to schools then it is a government failure
- Opportunity costs- the cost of the next best alternative forgone- e.g. reduced funding for healthcare
- The impact of education spending takes a long time before it affects businesses as you have to wait for people to finish their education
- The increase in spending on education in low-income countries is just $ 14 per person which may not have a significant impact/the increase in spending in high-income countries is $ 1008 so is likely to have a more significant impact
- The increase in spending in low income countries is 33% and high income countries 13%- so more impact in low income countries
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-3
Identification of generic evaluative comments.
No supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2
4-6
Evidence of evaluation of alternative approaches.
Some supporting evidence/reference to context.
Evaluation is supported by a partially-developed chain of reasoning.
Level 3
7-8
Evaluation recognises different viewpoints and/or is critical of the evidence, leading to an informed judgement.
Appropriate reference to evidence/context.
Evaluation is supported by a logical chain of reasoning.