investing in people

I was sitting in an economics class last night. I know, it's horrible to have a late-night class.
We were talking about economic value and economic costs.
Economic costs, by definition, includes actual cost (out-of-pocket) and opportunity costs (the cost of the next best foregone opportunity).
For example, what is the economic cost of sending a 12 year-old girl to school in rural India?
It is the cost of tuition and the additional cost of lost production from the young girl on the family farm (or possibly other forms of labour-intensive work).
What is the determinant of the fate of the girl?
It all depends whether the out-of-pocket costs is higher than the opportunity costs of the girl.
Often the opportunity cost is higher than the actual cost for this situation. The returns for the manual labour is easy to realize and more immediate. But how would the world change if we started investing in people?
It's a hard concept to grasp.
When investing in bonds and equity, the returns have a defined horizon. The risk is finite and often calculable within certain margins. When investing in people, there are no set horizons for realizing the returns. The risks are much more variable (but in some regard, also much more manageable).

It's hard to gauge the return on investment when you're investing in people. The economic value they create are very small and hard to track and calculate. Often, the return isn't fully realized until generations later.
The risks involved is also harder (and easier at the same time) to control. Harder in the sense that people change all the time. People's potential and behaviour have many more variables to consider compared to equity and bonds. At times, their behaviour can be random (no statistical precedence/foreshadowing). Compound all that variability with the behaviours of others. We then will have a huge problem.
However, on the flip side, people can be nurtured and taken care of and thereby eliminating many variables. The person (or people) we are investing in can be guided to success and empowered to bring success to many generations afterwards.

If we consider the economic value of lowered welfare costs, lower crime rates (and lower crime-related costs) and many other positives brought about with an empowered generation (and generations after), this pales in comparison with the out-of-pocket costs. Soon the opportunity cost for the girl in this example becomes a short-term investment, a relatively insignificant one. The economical value she will bring to, not only her family, but also her community and society at large is many folds the opportunity cost.

We are a powerful generation (youths of today). We can change perception of economical value. We can create value through social entrepreneurship. We can drive change today.

Tomorrow, we will become older. We will be in affluent positions (not that we aren't already). We will eliminate the issues and problems that have plagued past generations.

Photo credit: screen capture from http://www.girleffect.org/video 

Together, let's drive change.

http://www.girleffect.org/video
Special thanks to and inspired by S.M.