Final answer:
Individuals may not consider the external benefits of education when deciding how much schooling to obtain. These external benefits, which enrich society, include better health, lower crime, and improved governance. Public intervention is used to achieve the social optimum by balancing the benefits and costs of education at a societal level.
Step-by-step explanation:
Understanding the External Benefits of Education
When individuals make decisions about how much schooling to obtain, they often do not consider the external benefits that education creates. External benefits, also known as positive externalities, are advantages that accrue to society as a whole and may not be fully recognized by the individuals making the decision about their education level. Such benefits include improved health outcomes for the population, lower crime levels, a cleaner environment, and a more stable, democratic government.
While individuals tend to focus on the personal benefits of education, such as the potential for increased future income, families may undervalue the education of certain groups (often girls) due to cultural or social factors that limit the perceived returns. Recognizing this, the public sector often intervenes to encourage a higher level of education which aligns with the social optimum. The social optimum is where marginal social benefits equal marginal social costs, leading to efficient allocation of resources for the benefit of society.