ABSTRACT
This chapter focuses on the policy issue which is that of public primary education. Technically speaking, education is an odd good because it does not easily fit into the public/private, pure/impure categories. Benefits are accrued individually. So, education is a private good, but there are huge positive externalities to having a well-educated population. Education is a publicly provided good and the underlining assumption is that the quality of education improves with funding. For low-income earners, funding for public schools is good since their children are attending them. For high-income individuals, the relationship is inverted: the more is spent on public schools, the worse off they are because their children are attending private schools. For the middle class there is some critical level of spending after which the middle class start sending their children to public schools instead of private schools.
