ABSTRACT
This chapter considers the comparative costs of distance and conventional education systems, the internal cost-efficiency and the cost-effectiveness of distance teaching, and the policy implications of the economics of distance education. Traditionally most costs in conventional educational institutions are treated as variable costs directly related to student numbers. Distance education changes the production function of education by substituting a range of media for teachers. In distance education very significant costs can be incurred in the preparation of teaching materials before students enter the system and irrespective of the number likely to be enrolled. A further factor which needs to be taken into account is the value of recurrent education in maintaining the earnings potential of graduates over their lifetime and in facilitating career changes. The vast majority of cost studies of distance education concentrate on the institutional costs of the system as reflected in the operating budget.
