17th International Vernon Smith Prize 2024


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.


All entries must meet the following 5 requirements:

1).   Entries may be submitted by individuals of up to 30 years (in 2024) and must be received on or before November 17, 2024.
2).  Entries may not exceed 10 pages, including a full bibliography and a 1/2 page abstract; 1.5 spacing; left/right margins no less than 1 inch.
3).  No entry may be generated by ChatGPT or other AI applications. Along with their entry participants must add their signed pledge to have written the contending essay
without any such support. Any use of an AI bot to fully or partially create the essay will be considered in breach of the academic plagiarism policy.
4).  Entries must be submitted in English in electronic form (PDF) to krl@ecaef.org and/or admin@ecaef.org and must include a current CV including date of birth and their signed pledge.
5).  Prizes are not transferable. An international jury will judge essays on the basis of originality, grasp of subject and the logical consistence of the argument. Winners will be
invited to present and defend their papers at a special event in Vaduz (Principality of Liechtenstein) on February 17, 2025. Their presence is mandatory.

1st Prize: €4,000
2nd Prize: €3,000
3rd Prize: €2,000


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1  The classic definition of a Public Good may be found in Paul A. Samuelson’s 1954 essay on ‘The Pure Theory of Public Expenditure’, Review of Economics and Statistics 36, #4.
2  An interesting classification of goods may be found in Elinor Ostrom’s 2005 work on Understanding Institutional Diversity, Princeton, NJ: Princeton University Press.
3  The classic definition of a Merit Good may be found in Richard A. Musgrave’s 1956/1957 essay on ‘A Multiple Theory of Budget Determination’, FinanzArchiv/Public Finance Analysis (1956/1957).

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