Kenya - Cost-benefit analysis in education : a case study on Kenya

Abstract

This study presents a cost-benefit approach to education that attempts to take into account a number of considerations left aside by previous studies. It concentrates on the income effects of education and provides a framework for an economic evaluation. The data derive from private and social rates of return to investment in education, wage employment alternatives for the future, and rates of return to increasing different kinds of expenditures per pupil. While the data from the study apply to the Kenyan case only, the conceptual framework and analytical methods employed in this exercise have wider applicability; it is on these concepts and methods rather than on the particular situation in one country that attention is focused. The study attempts to meet the usual objections raised in applying a cost-benefit approach to expenditure on a social product such as education. In addition to the analysis of the overall rates of return, the study analyzes the influences of educational policy variables, such as size of school, pupil-teacher ratio, teachers' salaries per pupil, on students' scores on the three major examinations. It then assesses the returns, in terms of additional earnings, to increased inputs into the school system.