State, Households and Markets in Education: Government’s Unwillingness and Households’ Compulsion to Pay for Education vis-à-vis the Exploitative Markets

  • Jandhyala B. G. Tilak


The literature on economics of education has considered only two domains, individual and social, in the context of investment decision-making. But there are three distinct domains, namely, individual (household domain), market domain, and public (social) domain. Investment decision-making in these three domains is influenced by three different sets of considerations, and therefore, they need to be separately analysed, recognising, however, the interrelationship between them. This chapter, the 2003 Dr. Adiseshiah memorial lecture, analyses, accordingly, the three closely related aspects of financing education in India: the increasing reluctance of the government to spend on education, the phenomenon of compulsion to pay for education by the families, which is familiarly known, but not correctly termed, as ‘willingness to pay for education’ and the role the unregulated and unscrupulous markets play in education.


Sate spending Public good Merit good Human development Human right Public expenditure Budget Five-year plans School attendance ‘Willingness to pay’ Internal efficiency Household expenditure Excess demand Differentiated demand Education market Private sector 



Dr. Malcom Adeiseshiah Memorial lecture delivered on 21 November 2003 at the Madras Institute of Development Studies, Chennai. Grateful acknowledgements are due to V. K. Natraj, C. T. Kurrien, A. M. Nalla Gounden, A. Vaidyanathan, V. Loganathan, M. Anandakrishnan and others for their valuable observations.


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Authors and Affiliations

  • Jandhyala B. G. Tilak
    • 1
  1. 1.New DelhiIndia

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