17th International Vernon Smith Prize 2024

XVII. International Vernon Smith Prize

The 17th International Vernon Smith Prize was an essay competition for the advancement of Austrian Economics – sponsored and organized by ECAEF – European Center of Austrian Economics Foundation, Vaduz (Principality of Liechtenstein).

The Award Ceremony took place on February 17, 2025 in Vaduz:

 

 

 

2024 Topic: Is education a public or a private good? Who gains from being educated?

It’s  always worth reading up on Wilhelm v. Humboldt’s seminal book On the Limits of State Action (1792/1852/1969) and his take on the nature of education that is never objectively valuable. Rather it is a good or service that satisfies a personal desire and is subjectively valued. However, today most people believe that education is a Public Good because it seems good for the public and thus should be provided by governments either free or at reasonable cost. For the most part though, this claim fails the characteristics of a Public Good definition^[1]. In view of that, a Public Good not only must be viewed as nonexcludable, meaning the producer hardly can prevent nonpayers from using it. It is also nonrivalrous as its consumption doesn’t impede others to consume it too, even at the same time. Thus in theory as well as in reality, education ought to be defined as a Private Good^[2], even when supplied by governments, for its consumption is rival and consumers can be excluded and even rejected.  Some goods and services may be non-excludable but rival and some are non-rival but excludable. Education purchased from or otherwise provided by any erudite institution foremost benefits an individual consumer by commanding higher salaries, developing critical character skills or career advancements, among countless other gains. Nonetheless, the un- or intended consequence of any education is the fact that all members of society may also profit from an individual’s acquired wisdom, factual knowledge or certain abilities. By unintentionally benefitting both, the individual and society at large, education thus may be characterized as a Merit Good^[3],a good or service that has beneficial (or negative) spill-over effects between individuals as well as to society at large. While education itself at all times has net positive externalities, the case is less clear for public education systems, because for political reasons they are mostly organized as a Public Good. As by definition, no one may be excluded and their curricula are typically rivalrous. Thus their level of education necessarily ought to be lessened to a degree that suits all. In other words, the layer of collective instruction typically mirrors the prevailing Zeitgeist and respective political will at all times. Thus as a result the hazard of public schooling is not only the corrosion of a humanistic framework that promotes social cohesion, critical thinking and the freedom of speech in a society of independent people. The mostly intended bias in governmentally controlled institution of all kinds also contributes to the rapid decline of all levels of education. Public education thus turns into a Public Good with negative externalities that impede the protection of individual-, political- and economic freedom. However, the nature of education is never objectively valuable, rather it is a good or service that may satisfy an individual desire, which is subjectively valued.

 

The winners and the winning essays of the XVII. edition of the Vernon Smith Prize were: