Opportunity cost

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Definition
‘An opportunity cost is defined as the value of a forgone activity or alternative when another item or activity is chosen. Opportunity cost comes into play in any decision that involves a trade-off between two or more options. It is expressed as the relative cost of one alternative in terms of the next-best alternative’ (Reference for Business, 2021).

Concerning education, families consider opportunity costs of sending their children to school. The first type of opportunity costs consists on the loss of returns from the income of child labour, but also loss of the child’s informal contribution to the household such as taking care of younger siblings, performing household chores, and caring for livestock. The second type of opportunity cost relates to the ‘loss of consumption of other goods caused by expenditure on education’ (Bray, Ding, and Huang, 2004 cited by The World Bank, 2009: 31). This type of opportunity cost reflects how much ‘a family values investment in human capital relative to investment in physical capital or consumption’ (Bray, Ding, and Huang, 2004 cited by The World Bank, 2009: 31).

References
IIEP-UNESCO; UNICEF; GPE (Global Partnership for Education); UK Foreign, Commonwealth & Development Office. 2021. ‘Chapter 11 Inclusive Education for Children with Disabilities’. In: Education Sector Analysis Methodological Guidelines – Volume 3. Retrieved from: https://unesdoc.unesco.org/ark:/48223/pf0000377738/PDF/377738eng.pdf.multi

Reference for Business. 2021. ‘Opportunity Cost’. In: Encyclopedia of Management. Accessed 25 August 2021: https://www.referenceforbusiness.com/management/Ob-Or/Opportunity-Cost.html#ixzz74aU7F9E8

The World Bank. 2009. Six steps to abolishing primary school fees: Operational guide. Washington D.C.: The World Bank. Retrieved from: https://www.globalpartnership.org/content/six-steps-abolishing-primary-school-fees

To explore further
The World Bank. 2009. Six steps to abolishing primary school fees: Operational guide. Washington D.C.: The World Bank. Retrieved from: https://www.globalpartnership.org/content/six-steps-abolishing-primary-school-fees

UNESCO. 2015. Education for All 2000-2015: Achievements and challenges. Paris: UNESCO. Retrieved from: http://unesdoc.unesco.org/images/0023/002322/232205e.pdf

UNICEF Regional Office for South Asia. 2014. All Children in School By 2015, Global Initiative On Out-Of-School Children: South Asia Regional Study Covering Bangladesh, India, Pakistan and Sri Lanka. Kathmandu: UNICEF Regional Office for South Asia. Retrieved from: http://www.indianet.nl/pdf/GlobalInitiativeOnOut-Of-SchoolChildren.pdf

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