Education: When Do You Have Enough?
How many extra years of college education do you intend to acquire? How do you know
if it is really worth the effort to continue pursuing extra years of formal education? You
know that extra education is worthwhile but how do you know when you have enough?
How do you know when it is time to stop going to college and time to start applying what
you have learned to earn an income?
These are important questions to ask because you have limited resources—time, effort,
energy, and money—to use in acquiring extra education or to use in earning an income.
You need to know how to answer the question about how much education is enough so
that you will use those scarce resources efficiently. With this goal in mind it would not
be wise to follow the well meaning but misleading advice to “get all the education you
can”.
To allocate your time, effort, and energy efficiently you should not continue your formal
education once the marginal benefit (MB) of doing so falls below the marginal cost
(MC). To answer the question about how much education is enough you need to conduct
a thorough cost/benefit analysis. What you will notice through doing the analysis is that
staying in college year after year eventually results in the MC of the extra education
exceeding the MB.
What factors account for such a result? There are two. The extra benefit of extra
education, extra skills and knowledge, begins to fall as you continue to increase the
resources—your time, effort, energy, and money—devoted to increasing your skills and
knowledge. Simultaneously, the extra cost of acquiring the extra skills and knowledge,
forgone income, rises as you acquire extra years of education. This happens because as
you acquire extra skills and knowledge your value to an employer rises, too. Your
earning capacity is greater than before you had acquired the extra skills and knowledge.
As you continue your education you must forgo that higher income you could earn, so
your opportunity cost (MC) of acquiring more education has risen.
Eventually, what will happen as the MB of extra education falls while the MC is rising?
The MB will fall below the MC. It is then that you know, through applying a cost/benefit
analysis, that it is time to stop going to college and time to start using what you have
learned to earn an income.
Respond to the items that follow.
PROVIDED.
TYPE YOUR RESPONSES IN SPACES
What is the action being contemplated?
What is the marginal benefit associated with the action?
What is the marginal cost associated with the action?
Now incorporate the specific information from the items above into the general decisionmaking rule found in your economics module, page 76 “Cost/Benefit Analysis (Marginal
Analysis) or learning plan activities for on-line classes. Use the statement and adapt it to
your situation, If the (expected) marginal benefit of doing something is greater than or
equal to the (expected) marginal cost, do it. Or, if the (expected) marginal cost of doing
something is greater than the (expected) marginal benefit, don’t do it.
How will you determine the value of the extra skills and knowledge obtained through the
extra years that you attend college?
INSTRUCTOR APPROVAL
This artifact and the attached self-reflection statement for the economics
course requirement are to be included in the student’s General
Education Program Portfolio.
STUDENT:
___________________________________________________
(Please Type Your Name Here)
This artifact and the attached self-reflection statement are an example of the student’s
ability to apply the concepts, principles, and thinking processes related to the General
Education outcome for economics: Apply the foundational elements of economic
reasoning to personal and business decision making.
Instructor’s Signature: _
__________________________ Date:
_
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