Externality and Literacy: A Note

Abstract

Kaushik Basu and James Foster (1998) have opened up an interesting approach to the measurement of literacy, in which the phenomenon of externality has an important role to play. The externality these authors examine is what one may call a ‘material’ externality, and they demonstrate that reckoning such an externality in the measurement of literacy provides an instrumental justification for ‘horizontal equity’. The present note elucidates this link through a specific formulation of the Basu–Foster thesis. It also suggests that, apart from a ‘material externality’, there is also a ‘psychic externality’ to be considered. The ‘psychic externality’ runs in a direction somewhat orthogonal to that of the ‘material externality’ postulated by Basu and Foster, and it is shown that reckoning such an externality in the measurement of literacy provides an instrumental justification for being sensitive to levels of literacy-attainment in comparisons of literacy improvements. In a broad sense, the note suggests that considerations of ‘identity’ can be formulated through alternative conceptions of ‘externality’, which turn out to have unexpected implications for the assessment of ‘equity’ and ‘improvement’ in literacy comparisons.

Acknowledgements

Thanks are owed to Kaushik Basu for rectifying an error, to participants at the University of East Anglia Seminar for reactions, and to an anonymous referee for helpful suggestions.