Question

How are the benefits of human capital different from that of physical capital?

Answer 1

Human capital benefits not only the owner but also the society in general. For example, an educated person can effectively take part in a democratic process and contribute to the socio-economic progress of a nation. Similarly, a healthy person prevents spreading of contagious diseases and epidemics by maintaining personal hygiene and sanitation. Thus human capital creates both private and social benefits.

On the other hand, physical capital creates only private benefits. It happens because benefits from physical capital flow to those who pay the price for the product and services produced by it.