Human Capital

Gary Becker, the Nobel Laureate in Economics, addressed the "human capital" aspect of school choice in a presentation in Grand Rapids, Michigan, on October 24, 1996.¹¹ Human capital is the investment in training, education, health, values, and other aspects of human potential. Human capital investments increase the ability of people to create wealth.

Becker called the current century the "age of human capital," citing the tremendous growth in investment in human capital in this century, and the resulting huge increase in wealth. He noted that the widely varying economic growth rates among nations could best be explained by investments in human capital rather than by raw materials or other measures. Immigrants in the United States, he noted, have traditionally sacrificed in order to provide a better education for their children—a vivid example of investment in human capital. Becker noted, however, that the public school "monopoly" is a significant deterrent to further investments in human capital in the United States. He noted the "well documented" quality of private school education, particularly at Catholic schools. In his view, the unavailability of parental choice harms the poor in particular, since they do not have the same ability to move to better neighborhoods or purchase private schooling as do middle- or upper-class parents. He suggested vouchers as a workable solution to this problem, since they would enable parents to choose where to send their children.¹² Finally, he noted that the improved competition would not only benefit the children who moved to private schools, but also the children who remained in the public system.

Becker’s remarks support a tuition tax credit plan in the State of Michigan as presented in this study. While this study argues that tuition tax credits are superior to vouchers, their ability to empower parents to improve their children’s education is roughly the same.