Given below are two statements, one is labelled as Assertion (A) and the other as Reason (R).
Assertion (A) : Investment in human capital yields returns in the future.
Reason (R) : Education and healt

Question

Given below are two statements, one is labelled as Assertion (A) and the other as Reason (R).
Assertion (A) : Investment in human capital yields returns in the future.
Reason (R) : Education and health make people more productive.
Select the correct answer from the code given below :

UnlockIAS · Accepted Answer

Correct — D, Both (A) and (R) are true and (R) is the correct explanation of (A). The Assertion is true: in economics, spending on education, training, health care, migration for work and job-market information is classified as investment in human capital rather than as consumption, precisely because the outlay is made today while the return — higher earnings for the individual and higher output for the economy — accrues over the whole of the person's working life. The Reason is also true: education raises a worker's knowledge, skill and ability to absorb new technology, and good health raises stamina and cuts days lost to illness, so both make a worker produce more per hour. Crucially, the Reason is not just a second true sentence sitting beside the first — it names the exact mechanism by which the first works. Investment in people pays off later BECAUSE it makes them more productive, and that extra productivity is what the future return consists of. Since (R) supplies the causal channel for (A), the key marks (d).

Why the other options are wrong — (a) It gets the truth of both statements right but severs the link between them. There is no other route by which investment in human capital delivers a future return — the return simply is the higher productivity, and hence higher earnings and output, that education and health generate. This is the option a candidate marks when he treats (R) as an unrelated fact rather than reading it as the reason for (A).  (b) (R) is not false. That education and health raise labour productivity is the founding proposition of human capital theory and is backed by a large body of returns-to-schooling evidence; it is also the reasoning NCERT uses when it explains why an educated, healthy workforce lifts national income.  (c) (A) is not false. If investment in human capital yielded no future return, there would be no case for treating education and health spending as investment at all, and no basis for the human capital literature. Both the individual return (higher lifetime earnings) and the social return (a more skilled, healthier population) are well documented.

Concept: Human capital is the stock of knowledge, skill, competence and health embodied in a population, which determines how much that population can produce. Human capital formation is the process of adding to that stock — chiefly through education and health care, and also through on-the-job training, migration in search of better work, and information about the labour market. The idea, developed by Theodore W. Schultz and Gary S. Becker, is that money spent on people should be analysed the way money spent on machines is: as an investment carrying a measurable rate of return, not as consumption that vanishes once made.

State PCS 2025 Q68 — Economy PYQ with Answer

State PCS 2025 Q68 — Economy PYQ with Answer