Current Issues in Language Planning

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Language Planning and Economics

François Grin

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Language Planning, 4:1, 1-66, DOI: 10.1080/14664200308668048
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Language Planning and Economics

François Grin1
University of Geneva and Education Research Unit, Geneva, Switzerland

This paper proposes a comprehensive overview of the ‘economics of language’. This

field of research, which is grounded in the discipline of economics, displays a strong
interdisciplinary orientation, which places it on the fringes of mainstream economics.
It studies the ways in which linguistic and economic processes influence one another. It
is also well placed to contribute to the evaluation of public policies regarding language,
because it offers analytical tools for the systematic identification and measurement of
the advantages and drawbacks of policy alternatives.I begin by discussing the reasons
why an economic perspective on language is scientifically and politically relevant; I
then review some of the attendant epistemological and methodological issues, before
moving on to an overview of the main lines of research in language economics. A full
section of this paper is devoted to the economic approach to language policy, and
another focuses on an application to education policy, detailing the economics of
second or foreign language education. The paper aims at making the key economic
tools accessible to readers from varied academic backgrounds; it also emphasises the
need to combine disciplines to develop an inclusive methodology for the selection,
design, and implementation of language policies.

Keywords: Language economics, language policy, policy analysis, diversity,

rates of return on language skills, costs of language policy

Introduction
Because language issues are present in every aspect of human experience, they
are of interest not only to language specialists, but to practitioners of all social
sciences. This wide relevance of language issues as objects of study is evidenced by
the attention they have received, first and foremost, on the part of sociologists.This
has contributed to the emergence of ‘sociolinguistics’ as a full-fledged field of
specialisation which researchers may access not only through linguistics, but also
through sociology. To a lesser degree, the disciplines of anthropology and political
science have also been taking an increasing interest in language matters.
Over the past 35 years, however, economics has also been used to investigate a
variety of language problems. The ‘economics of language’, or ‘language
economics’, as a field of research plays a marginal role in academia, but an
increasingly important one in practice. The goal of this essay is to take stock of the
contributions of language economics and to assess their relevance, with particu-
lar emphasis on applications to language planning.
The paper is organised as follows: The second section, ‘The Need for an
Economic Perspective on Language Issues’, discusses the reasons for developing
an economic perspective on language issues. The third section, ‘Language: Too
Much Alive for the Dismal Science?’, addresses epistemological and method-
ological problems raised by the application of economics to language. The fourth
section, ‘The Economics of Language: History and Main Strands of Research’,

1466-4208/03/01 0001-66 $20.00/0 ©2003 F. Grin

CURRENT ISSUES IN LANGUAGE PLANNING Vol. 4, No. 1, 2003

1
2 Current Issues in Language Planning

contains a brief historical account of the development of language economics,

followed by a review of the literature arranged in five thematic areas. The fifth
section, ‘The Economics of Language Policy’, focuses on the economics of
language policy, examining in particular the reasons for state intervention, the
‘value’ of language, optimal diversity, and principles of policy evaluation. The
sixth section, ‘An Application: Language Education Policy’, examines at closer
range the application of economic analysis to language education policies. The
concluding section is devoted to a brief critical assessment.

The Need for an Economic Perspective on Language Issues

The rise in subjective diversity
While the field of language economics is epistemologically anchored in the
discipline of economics, it remains relegated to the outer fringes of the latter. If a
field of specialisation may be said to have a centre of gravity, it could in this case
be located somewhere in a virtual territory bordered not only by economics, but
also by policy analysis, the sociology of language, sociolinguistics, and the
education sciences. This relative marginalisation, however, is mitigated by the
fact that the need for an economic perspective on language matters appears to be
on the rise. Various global trends in the areas of language, ethnicity and culture
are giving increasing relevance to the examination of specific problems where
the economics of language can help. Four such trends should be mentioned:
· First, the geopolitical recomposition of Eastern Europe and the Common-
wealth of Independent States (CIS) 2 following the fall of the Berlin Wall on 9
November 1989 has made room for the reassertion of a wide range of local
and regional identities which had been suppressed for decades. To the
extent that these identities are associated with certain languages, the latter
are more generally visible now than they were in the 1960s, when the first
papers in language economics started to appear.
· Second, the end of the 20th century and the beginning of the 21st century
are witnessing migration flows of unprecedented magnitude and diver-
sity; the pairs of countries defined by a migrant’s country of origin and
country of destination are more varied than ever before. Population move-
ment, far from being strictly associated with economic hardship or political
oppression, increasingly concerns highly trained professionals as well.
Taken together, these trends result in linguistically, ethnically and cultur-
ally more diverse environments, particularly in urban settings.
· Third, the development of supra-national institutions such as the European
Union (EU) give rise to new language contexts. These may be described as
additional layers in our ‘linguistic environment’ (a term discussed in more
detail below), where these layers are characterised by the diversity of the
languages at hand and the potential rivalry or even conflict between the
different languages spoken by different groups of users.
· Fourth, the complex web of processes often subsumed under the general
term ‘globalisation’ manifests itself, among others, by an increase in the
share of international trade in world production, as well as by a decline in
the relative cost of travel and telecommunications. Both evolutions increase
Language Planning and Economics 3

the likelihood or decrease the cost of regular contact with a wide range of
people using a wide range of languages.
It is therefore useful to make a distinction between ‘objective’ and ‘subjective’
(or ‘perceived’) diversity, and to note that this rise in subjective diversity is fully
compatible with a decline in objective linguistic diversity around the world, to
which many commentators have been alerting us (e.g. Crystal, 2000; Grimes,
1998; Skutnabb-Kangas, 2000). Yet what matters here – particularly from the
standpoint of economics – is that the increase in subjective diversity we are
confronted with raises policy questions that need to be solved.

Conflict and threat

Against this backdrop, language economics is gaining recognition, because
linguistic diversity is both conflictual and threatened. Since both dimensions are
often addressed separately, it is useful to pause for a moment and consider why
both need to be taken into account.
The conflictual nature of linguistic diversity stems from the fact that groups
using different languages often compete for access to material and symbolic
resources, and some authors (e.g. Nelde, 1997) point out that there is no language
contact without language conflict – it being understood that conflict is not neces-
sarily armed or even violent, and may be confined to political rivalry in the
framework of democratic institutions. Language need not even be the major fault
line separating parties in a conflict – other markers of identity, such as religion,
often prove much more divisive. Rather, one might say that all other things being
equal, language contact tends towards conflictuality. Rivalry or conflict does not,
of course, occur between languages but rather between users of different
languages, and it has more than one economic dimension.
Three main types of connection between the spheres of language and econom-
ics may be identified, and each provides a context for rivalry or conflict:
· First, economic factors (which may be treated as ‘variables’ or more complex
‘processes’ – a distinction I shall return to shortly) affect the fortunes of
different languages, both at the micro and at the macro level. For example,
at the micro level, the relative prices of different language-specific goods
and services (such as books in different languages) are likely to affect
patterns of language use, whether directly through consumer decisions to
purchase them or not, or indirectly through the greater or lesser provision
of public services in certain languages, to the extent that such provision is
sensitive to costs. At the macro level, patterns of international trade are
likely to influence language dynamics, both informally, in interaction
between economic actors and formally, through the choices made by large
organisations (such as multinational corporations) to favour certain
languages for internal communication).
· Second and reciprocally, language variables (and/or processes) have an
impact on economic variables (and/or processes) – again, at the micro as
well as macro level. For example, at the micro level, a person’s language
skills may give rise to wage rate differentials that reward those skills. Skills
are better rewarded in some languages than others, illustrating a form of
competition between languages. At the macro level, the demographic size of
4 Current Issues in Language Planning

a language community is likely to stimulate aggregate demand for

language-specific goods and services consumed by that community. The
micro and macro levels are also linked to one another: some form of ascen-
dancy over business competitors (a micro-level link between firms, possibly
achieved through the dominant position of one’s language) will generally
facilitate access to economic resources or provide better conditions for secur-
ing economic gain, which will ultimately be observed at the macro level.
Third, economic arguments may be invoked to support claims made by
different parties in language conflict, as well as in the more specific
context of debate over competing language policy options. Consider, for
example, the issue of support to minority languages. Some claim that the
necessary measures are too expensive (thereby bringing economic
considerations into play) while others will argue that they are well worth
it (thereby resorting, deliberately or not, to a quintessentially economic
reasoning that hinges on the weighing of advantages and drawbacks,
even if those are neither material nor financial). Practically, authorities
developing language policy plans are also confronted with the need to
assess their costs and bring the latter in line with budget constraints. This
requires some evaluation work, in which economists have to enter the fray.
Let us now review these links between language and the economy with
respect to the ‘threatened’ character of diversity. We have recalled above that this
state of affairs is now amply documented. It also raises economic questions, many
of which are much the same as those that arise from conflict, and reflect the same
three types of linkages. For example, as regards the ‘economy®language’ cate-
gory of issues, one might ask how economic processes contribute to the demise of
small languages, and whether economic forces are intrinsically responsible for this
state of affairs, or whether these forces are merely a conduit through which inde-
pendent language dynamics operate. As to the reciprocal type of relationships
(‘language®economy’), some contend, for example, that minority language pres-
ervation makes a net contribution to economic welfare – is this indeed the case?
Finally, as regards policy matters, should scarce resources be devoted to minority
language protection and promotion, and if so, how much?
The above is but a sample of the many ways in which language and economics
are connected, and which the economics of language can help to investigate.
Such investigation is taking on increasing strategic importance, not primarily
because economic analysis might help to understand reciprocal causal links
between economic and language-related processes, but because owing to its
conflictual and threatened character, linguistic diversity calls for some kind of
intervention – which takes the form of language policies. We have also observed
that language policies, which mobilise material and symbolic resources and redi-
rect them in certain ways, have direct economic implications. Consequently, a
language economics viewpoint is more frequently required to evaluate possible
courses of action in language policy.

A supporting rather than central role

In a general introduction to the economics of language published some six
years ago, I suggested that the economics of language should be seen as a field of
Language Planning and Economics 5

specialisation in the making (Grin, 1996a).I believe this observation to remain, by

and large, true today. What has happened in recent years is a more general recog-
nition of the usefulness of an economic perspective on a broad range of language
problems, with a generally more favourable climate (albeit moderately so)
towards interdisciplinary work.
Since this point is not always apparent in the language economics literature,
let it be made here without further ado: in my view, the chief usefulness of an
economic perspective on language probably is not so much that it helps to under-
stand language-related processes as such. Economics as a discipline does not
have much of a claim to being particularly well-suited to this task, although some
interesting insights into patterns of individual language behaviour or meso-level
patterns of language dynamics can be acquired through economic modelling
resting on the concept of ‘network externalities’ (see the section headed ‘The
Economics of Language: History and Main Strands of Research’ below). The
chief usefulness of language economics is derived from its capacity to formulate,
evaluate and compare policy options regarding language, and hence to assist in
decision-making.
In relation to this, it is important to stress that economic tools do not replace
political debate or contributions from other disciplines. The economic analysis of
language-related processes, as these are affected, among other factors, by
language policies, does require reference to some concepts developed in other
fields, such as the sociology of language. This alone indicates that the endeavour
must be interdisciplinary. A no less important point is that language policies ulti-
mately require political decisions. Even if the treatment of language economics
proposed here emphasises its application to policy aspects (which presupposes
that political choices have been made upstream), the policy discussion cannot
take the place of the political one. Hence, propositions derived from a language
economics perspective on language policies are only intended as an input in a
wider political debate on ‘language-in-society’.
This paper attempts to provide a balanced overview of this field of investiga-
tion. Given that other contributions, some published in recent years, contain
fairly extensive reviews of language economics, I shall avoid repeating what the
reader can easily find elsewhere (Grin, 1994, 1996b; Grin & Vaillancourt, 1997;
Vaillancourt, 1985a). Moreover, striking developments in language economics
over the past five years have been relatively few, with new results mainly in two
areas: the theoretical and empirical assessment of language policies, and the esti-
mation of rates of return on foreign language skills with novel, sometimes
tailor-made data sets. For these various reasons, the rest of this paper, rather than
focusing on a literature review, will emphasise analysis and commentary.

Language: Too Much Alive for the Dismal Science?

The meaning of scarcity
Economics is sometimes called the ‘dismal science’. As often is the case with
witty yet unflattering labels, it does hold some truth, but some commentary is
needed in order to assess its actual import. Such commentary can also provide a
suitable entry point into a discussion on the nature of economics as a discipline
and on its applicability to language issues.
6 Current Issues in Language Planning

What makes the exercise particularly apposite is the fact that one sometimes
encounters, among scholars from the language disciplines or other social
sciences, what amounts to a form of a priori aversion towards economics. This
hostility is perhaps not entirely undeserved. However, it is not always grounded
in a robust grasp of economic analysis, and I submit that, if appropriately under-
stood and put in its proper place, economics can offer analytical and method-
ological tools relevant to the study of language, in particular language policy,
and offer insights that other approaches do not provide.
The paternity of the label ‘dismal science’ is generally attributed to the British
historian Thomas Carlyle (1795–1881), who witnessed the wretched living condi-
tions of much of the British working class and observed that this state of affairs
was sadly compatible with economists’ analyses of economic processes. Some,
however, trace the expression back to the prediction by Malthus, at the end of the
18th century, that the production of goods (in particular food) would always be
outpaced by population growth, dooming large tracts of mankind to perpetually
hover on the edge of starvation. Malthus’s predictions have been disproved, as
shown by the growth of per capita product in the long run, which has allowed an
average level of prosperity far beyond the expectations of most ‘classical’ econo-
mists.3 Nonetheless, the derogatory label has remained, unchallenged even by
most economists, many of whom apparently assume that being dismal is some-
how a proof of seriousness and scientific accomplishment.4
What certainly is true is that economics constantly reminds us of limitations –
more precisely, of the fact that resources are limited, and that this imposes
constraints on human action. This is reflected in the modern definition of the
discipline. Definitions have changed over time. In the 4th century BC, Aristotle
had defined economics as the science of the acquisition of wealth. In the intro-
duction to his weighty tome on the history of economic thought, Blaug (1985)
records three types of early definitions, namely: the study of the nature and
causes of the wealth of nations; the study of the laws governing the distribution
of the products of agriculture and mining; and the study of the laws of capitalism.
More recent (that is, post-1870s) definitions, listed by Becker (1976: 3) typically
include the study of the allocation of material goods to satisfy material wants; the
market sector; and the allocation of scarce means to satisfy competing ends. This
latter definition is certainly the most profound – and probably the most widely
accepted. One of its chief virtues is that it avoids an obvious problem with more
substantive definitions of economics, which stems from the fact that demarcating
any particular phenomenon as ‘economic’ is purely arbitrary. For example, as
many economics textbooks point out, inflation, unemployment and
consumption, which are regarded as quintessentially economic questions, also are
political, sociological or psychological ones. Conversely, typically ‘political’
processes, such as voting behaviour or the adoption of a public policy, present
indisputably economic dimensions. Characterising this discipline with respect
to others therefore calls for a shift of emphasis from subject matter to approach,
and this is precisely what the last of the above definitions achieves: economics is
fundamentally a way of looking at human experience as a tension between ends
and means.
This definition was first formulated expressly by Robbins, who described
economics as ‘a science which studies human behaviour as a relationship
Language Planning and Economics 7

between ends and scarce means that have alternative uses’ (Robbins, 1935:
16–17). In other words, economics as a discipline exists only because of scarcity: in
a world of boundless plenty, resources would not be scarce, and the problem of
their allocation would simply not arise. If, therefore, the discipline of economics
is, in essence, nothing but a constant reminder of the prevalence of some ‘princi-
ple of reality’ (perhaps over some less stern ‘principle of pleasure’), it is not
surprising that many should see it as dismal. This, however, may not be the chief
reason for its unpopularity with some practitioners of other disciplines in the
social sciences, whose determinism (as with much of structuralist theory in
mainstream sociology) can be seen as no less pessimistic, and just as reductionist.
As we shall see shortly, the causes of some of the hostility may have their roots
elsewhere. For now, we can nonetheless take ‘scarcity’ as the starting point and
ultimate justification for all economic theorising.

Scarcity and choice

One question to address is whether scarcity is a relevant issue to begin with.
There can be little doubt that it is, and this point should not detain us too long: for
most people, needs and aspirations exceed resources, which logically implies
that some form of scarcity exists.5 Recall first that nothing, in economic theory,
mandates a restriction to material or financial resources, and that intangibles like
social networks and interpersonal affection are, from the perspective of
economic analysis, perfectly relevant resources.
That resources are at least perceived as limited can be illustrated by the follow-
ing experiment: most human beings, if asked to choose between having ‘more’ or
‘less’ resources than they currently enjoy, will express a preference for ‘more’
over ‘less’, whether the resource at stake is money, love, health or friendship.
Furthermore, even a person blessed on all these counts will be confronted with
one absolute limitation, namely, time. Wealth may give access to better health
and hence increase life expectancy, but this is true only within limits, and
(beyond a certain age) with a tendency to decreasing physical and mental abili-
ties. Moreover, as Linder once observed, even immortality would not solve the
problem of scarcity:
in an economic heaven, the problem of time will be particularly pressing.
We will find there an infinite volume of consumption goods, which plea-
sure-hungry angels will feverishly try to exploit during the limited time at
their disposal per day. That one may in this heaven enjoy eternal life as a
consumer fails to alter the situation. This can increase the total satisfaction
derived over the course of centuries. What we are interested in, however, is
the yield per time unit. To maximize this, time must be carefully stewarded
by the students of Epicureanism. (Linder, 1970: 13; emphasis mine)
In the more mundane context in which most humans live, scarcity, whether
serious and life-threatening or merely annoying, is an everyday reality. If
scarcity is such a pervasive aspect of human experience, its logical, unavoid-
able consequence is the need to make choices in order to use scarce resources
wisely. Choices may be influenced, or in large part constrained by social
norms (possibly mediated through an individually developed habitus in
Bourdieu’s sense), but some space for choice will nonetheless remain, and it is
8 Current Issues in Language Planning

this space that economists are interested in. Hence, economics does not merely
(and negatively) confine us to a depressing world of scarcity and frustration – it
also stresses (positively) the role of choice, in which actors have a not insignifi-
cant degree of personal freedom. As such, it contains a full-blown theory of
agency,6 and the emphasis on a certain ‘approach’ (as distinct from a certain
subject matter) as the truly distinguishing feature of economics as a field of scien-
tific inquiry does not strip it of all substantive content. It is worth, at this point,
repeating Becker’s famous observation that when there are no alternatives, there
is no choice, and where there is no choice, there is no economic problem; put
differently, this simply means that more than most social scientists, economists
are wedded to the notion of the autonomy of actors. The strengths and weak-
nesses of economic theory as a theory of human behaviour (as compared to other
theories of agency developed in other disciplines, in particular sociology) raise
questions we shall return to later; the important point here is that the subject
matter of economics is how humans make choices,7 and that the need to make
choices is a result of scarcity.

The relevance of rationality

The economic approach to human behaviour is based on one very simple,
possibly simplistic hypothesis, namely, that actors use their limited resources
rationally by making choices regarding the allocation of these resources in such a
way as to maximise their satisfaction (or, in economic parlance, their ‘utility’).
This is assumed to apply to any actor, and given economists’ concern with gener-
ality, they are less interested in particular social actors operating in a given
context than in the generic actor or agent, often called the ‘homo œconomicus’.
This approach has strengths as well as limitations. Its strongest suit is that owing
to its very generality, it can make a defensible claim at grounding a general,
deductive theory of human behaviour, rather than case-specific, ad hoc interpreta-
tions of the idiosyncratic action of actors in a particular situation. Another strong
point is that the twin assumptions of ‘rationality’ and ‘utility maximisation’ are
so general that they are difficult to fault substantively. This point has often been
made by scholars in other social sciences, such as the anthropologist Cancian,
who observed almost forty years ago that:
[utility] maximization is one of the standard restatements of the a priori
truth that all human behavior is patterned; that all human behavior has a
reason. The use of maximization as a scientific strategy involves seeking
out the motives (or whatever the investigator sees as the impetus of behav-
ior) and attempting to rank-order them so as to see the behavior as the
(conscious or unconscious) maximization of these things. They become the
ends being maximized . . . It is in this sense that all people always maximize
or economize. There can be no argument about it. (Cancian, 1966: 47)
It is easy to criticise this approach as ‘reductionist’, but it is far from clear that
it is – and such criticism is sometimes uttered by commentators who use theo-
ries of actors’ behaviour that are no less reductionist, and possibly even more
so, without their being aware of it.8 A properly applied economic analysis,
precisely because it starts out from an assumption about human behaviour that
is so general as to be almost tautological, forces the analyst to be precise about
Language Planning and Economics 9

the logical links that enable her to link the general theoretical plane of the ratio-
nality assumption with observed patterns of behaviour. In this exercise, succes-
sive reductions from a complex, multi-faceted reality to a simpler (but, one hopes,
heuristically valuable) abstraction need to be identified and expressly formu-
lated.
The rationality hypothesis, in that it relates ends and scarce resources, is actu-
ally extremely malleable and open to imports from other disciplines. For exam-
ple, the precise nature of the ‘ends being maximised’ (to use Cancian’s phrase)
will vary according to time and place, history, custom and culture. Economists
can use information provided by anthropologists, sociologists, political scien-
tists and psychologists regarding not only how these ends are chosen, but what
they are and, consequently, what is being maximised. In the same way, findings
from other social sciences provide information about the constraints under which
‘utility’ is maximised – these constraints, after all, are merely a manifestation of
the scarcity of resources, or of restrictions on the ways in which resources may be
used. Hence, as has already been noted, both the ends and the means connected
by a utility-maximising behaviour can be of any nature – tangible or intangible,
financial or symbolic. Rationality is procedural rather than substantive. This
makes it possible for economists to study production, consumption, markets,
prices, wages or interest rates, but also to apply their analytical tools to health,
education, the environment – or language.
The rational calculus of utility maximisation is, of course, not synonymous
with egoism, and Schenk notes that ‘[i]t is well-known in economics that the
assumption of self-interest can lead to cooperative and altruistic behavior [The
less well-known converse can be shown] that altruism can lead to behavior
which appears based on self-interest’ (Schenk, 1987: 192). Economics is mainly
based on philosophical utilitarianism, but authors like Nobel Prize laureate
Amartya Sen usefully remind us (1985) that this intellectual tradition (whose
classical formulation is attributed to Jeremy Bentham) comes in different and
subtle variants, and that it incorporates a distinctive ethical perspective. Not only
is it, therefore, a far cry from what some deride as crass materialism, but there are
no convincing grounds to construe ‘utilitarianism’ as an insult, although some
do – sometimes, one suspects, with a limited grasp of what the discipline of
economics actually is about.
Nonetheless, the economic approach to human behaviour does have limita-
tions. These limitations, however, are not consubstantial with the discipline, and
should rather be associated with two features of a very different logical standing.
The first limitation is associated with the methodology that economists generally
favour; the second has to do with the praxis of some economists as social actors in
the academic context. Let us examine these limitations in turn.

Formal modelling and its limitations

Formal modelling is used in all disciplines in the social sciences; however, it
has a distinguished tradition in economics, which prides itself on its extensive
use of it, particularly in theoretical as distinct from empirical research. Models
are usually defined as abstract, simplified representations of the problem to be
studied. What economists regard as a model, however, usually requires a more
elaborate and formal construction than in most other disciplines in the social
10 Current Issues in Language Planning

sciences. For example, a typology of language functions, because it rests on the

analytical development of categories of language behaviour, may be described
by sociolinguists as a model (e.g. Appel & Muysken, 1987), but it would not, in
economics, be called one. An economic model is always made up of two catego-
ries of ingredients, namely, variables and relationships between them; and at
least some of these relationships should be causal ones.9 These relationships need
not be formulated in great detail; however, what is usually expected of them is
some information as to whether a (positive or negative) change in the value of an
independent variable will induce a (positive or negative) change in the value of a
dependent variable. Suppose for example that Y stands for the labour income of a
generic actor (the ‘homo œconomicus’) while Q stands for his demand of a partic-
ular good or class of goods (say, clothing). One would normally expect a person’s
demand for the good to be an increasing function of his income, all other things
being equal. Hence, one of the most elementary models of individual demand as a
function of labour income would be of the form:

Q = f(Y)

where the gradient of the relationship between Q and Y is assumed to be positive;

put differently, the first derivative of Q with respect to Y is larger than zero. This
general analytical form can be given a specification such as:

Q = a + bY

where a ³ 0 and 0 < b < 1. This specification would imply that even when income is
negligible or zero, the actor’s demand for the good will be positive, and that
increases in his income will give rise to less-than-proportional increases in his
demand for the good (for example, if b = 0.8, a 10% increase in income will result
in an 8% increase in demand). Hence, it is not sufficient, in economic modelling,
to state that a certain variable ‘will depend’ on another – for example, to state that
a person’s consumption choices ‘will depend’ on social class, or that a bilingual’s
choice to use one language or another ‘will depend’ on respective positions of
power between himself and an interlocutor. Quite obviously it will, and the real
questions are ‘how?’ and ‘how much?’. Barring duly argued exceptions, the
direction (if not the magnitude) of the implied cause-and-effect relationships
must be specified.
No matter the discipline in which it is applied, this insistence on the specifica-
tion of relationships offers the notable advantage of forcing the analyst to spell
out her assumptions, which gives rise to a degree of transparency and logical
rigour that other analytical devices do not always guarantee (on this question
and its application to the study of language problems, see Pool, 1991a).
Modelling ‘makes explicit assumptions that would otherwise remain hidden
and hence unexamined’ (Mayer, 1993: 123). Yet this type of transparency and
rigour does not come without a price, for two reasons. First, the approach is
epistemologically perilous. Owing to their formal elegance, algebraic models can
be seductive, and it is all too easy to assume that beauty of form will necessarily
be matched by relevance of content. This is obviously a logical error of major
proportions, but one to which many users of formal modelling fall prey. If only
because economists more systematically use this type of tool, this error occurs
Language Planning and Economics 11

more frequently among economists than among practitioners of other social

sciences. Therefore, it bears repeating that a model is nothing but a form of
discourse about reality. This restriction should be taken one step further by
stressing that the rationale of this type of discourse is not to resemble, let alone to
replicate reality, but to constitute a useful instrument helping us to reflect upon
and understand reality. When seen in this light, analytical, possibly formalised
(algebraic) models can be uniquely powerful and transparent tools in the study
of selected relationships between selected sets of variables. Models serve to clar-
ify the logical implications of a relationship between pairs of variables, and force
analysts to apply demanding standards of logical consistency. However, these
benefits will accrue only if the limitations of formal modelling are clearly
acknowledged.
Second, because formal modelling, particularly in the form favoured by econ-
omists, insists on ‘signing the effects’ (that is, giving the sign, positive or negative,
of the derivative of a dependent with respect to an independent variable – or
combination of primary variables in a model), both categories of variables must
lend themselves to a quantitative interpretation. In other words, the method
demands that it always be possible to express each variable in terms of ‘more’ or
‘less’, that is, to project it on a quantitative scale. This is not a problem when
studying relationships between variables that are primarily defined by their
quantitative aspect, such as the unit price of a good or the quantity of that good
exchanged on a market during a certain period. Hence, economic analysis is
well-suited to the study of markets whose equilibrium is defined in terms of
quantity and price. It is, however, much less satisfactory in the case of variables
that may have a quantitative dimension (ultimately, all variables do), but whose
quantitative dimension is neither particularly interesting in itself, nor particu-
larly pertinent in a given analytical endeavour. For example, when studying the
link between a person’s social class and their education, representing the latter as
a certain number of years of schooling may be useful, but will only allow investi-
gation of a small part (not necessarily the most relevant one) of the links between
socio-economic background and education, because it will fail to account for
many of the qualitative dimensions of that person’s education – as compared to
the qualitative dimensions of the education received by another person from
another socio-economic background. The application of multivariate analysis to
quality data sets may mitigate this problem – but then only to a certain extent.
Still, an economist’s path of least resistance is towards variables that have a
more or less obvious quantitative interpretation and can be connected with one
another using mathematicallanguage. This unavoidably induces a bias in favour
of the study of relationships between variables that can more easily be formu-
lated in this way. It follows that variables that do not lend themselves to quantita-
tive expression will often be simply ignored, or flattened out to the extent that
most of the phenomenological depth is squeezed out of them. Formal modelling
has a tendency to produce interesting analyses of the relationships between vari-
ables, but often terribly dry (and certainly reductionist) characterisations of the
variables themselves. That these problems are not always solved to satisfaction is
reflected in the ambiguity of economists’ relationship to methodology. On the
one hand, there is a constant insistence on the analytical rigour with which the
algebraic formulation of relationships between variables is dissected. On the
12 Current Issues in Language Planning

other hand, one often encounters a certain reluctance to seriously address more
fundamental questions pertaining to the soundness of the assumptions made
about these relationships, and even more so about the variables which these rela-
tionships connect. Taken to extremes, this can result in disappointing analyses,
which are far removed from perceived human experience. The economist Daly
once derisively observed that ‘Layer upon layer of abstruse mathematical
models were erected higher and higher above the shallow concrete foundation of
fact. The behavior of a peasant selling a cow was analyzed in terms of the calculus
of variations and Lagrangian multipliers . . . ’ (Daly, 1977: 3).

Is economics exclusionary and imperialistic?

The crux of the matter, therefore, is to use economics where it is useful, recog-
nising its contribution to the analysis of some problems, but not to stretch it
beyond what it can actually say. Unfortunately, economists do not always exer-
cise similar caution, and before closing this section, it is useful to discuss the ‘dis-
mal’ epithet in relation with the practices of economists as members of an
academic profession.
Economists’ work often lends itself to criticism for the reasons just discussed;
yet what is at stake may be not so much the contents of economic research as the
philosophy with which it is sometimes carried out. As we have seen, modern
mainstream economics makes abundant use of formal modelling. However,
whereas simple models can be illuminating and reveal aspects that other forms
of analysis would have left in the dark,10 many mathematically refined models
(quite apart from the question of their topical relevance – see the quote by
Herman Daly just above) are simply inaccessible to the layman – and, increas-
ingly, to other economists who are not specialists of the specific class of models
concerned. The inner dynamics of the profession, which primarily rewards
dazzling mathematical prowess (usually a condition for publishing in the most
prestigious academic journals) encourage economists to prioritise the display of
mathematical apparatus, to the point that some economic research is closer to
applied mathematics than to an investigation of the actual processes of allocation
of scarce resources. In so doing, economists themselves disregard the law of
diminishing returns, which, of course, also applies to mathematical sophistica-
tion as a tool of scientific inquiry. The actual practice of many economists some-
times ends up sterilising not just the answers, but the questions themselves.
Furthermore, it is difficult to shake off the accusation of exclusiveness, or even
arrogance that can be levied against some members of a profession whose choice
of language (mathematics) shuts other scholars out: although the reluctance that
economics sometimes inspires in some quarters may, in part, be due to simple
frustration at not being able to follow its methodology, it probably also reflects an
understandable impatience in the face of a sometimes deliberately esoteric
discourse.
The issue of ‘economic imperialism’ is quite different, and can arise in two
distinct guises. On the one hand, one might brand as ‘imperialistic’ the behav-
iour of researchers (say, economists) who work on issues that were tradition-
ally treated by scholars from other disciplines (sociologists, anthropologists,
historians, etc.). Such criticism, however, is hard to countenance, unless one is
to adopt a deeply corporatist view of research, in which certain disciplines hold
Language Planning and Economics 13

a monopoly over certain types of issues. A sounder perspective must be to recog-

nise the essential complementarity of different disciplines. As a consequence, no
discipline is intrinsically more or less legitimate than any other to produce scien-
tific discourse about any particular set of issues; simply, some disciplines will
have more to say than others about them. Gary Becker, whose many publications
have often been cited by critics as instances of crass imperialism, because, in
particular, of his work on the family, accepts the label of ‘economic imperialist’ if
it refers to his application of an economic approach to domains traditionally
studied in other disciplines (see Swedberg, 1990, Chap. 1).
By contrast, the stance adopted by some economists with respect to this issue
is questionable. One such example is a recent essay by Lazear (2000) in one of the
most prestigious journals of the profession, which starts out by proclaiming that
‘economics is not only a social science, it is a genuine science’ (read: ‘other social
sciences are not’), and goes on to assert that ‘economics is the premier social
science’. In support of these claims, Lazear describes findings from economic
modelling on demography, discrimination, social interaction, religion, law, etc.,
suggesting that these findings are more important and relevant than those which
other disciplines have yielded. The argument, however, remains unconvincing.
His brief account, among the various areas addressed, of economic contributions
to language (which, surprisingly, ignores most of the work produced in
language economics over the past 35 years) highlights only a couple of results
from this literature, some truly important (e.g. Church & King, 1993), some not,11
and it should be a cause for concern that a paper devoted to establishing the supe-
riority of economics over other social sciences purports to make this case almost
without a single reference (out of 110) to publications from disciplines other than
economics or business. Readers may then legitimately wonder on what basis the
critic judges the vast tracts of scholarly work he presumes to criticise.
A more reasonable path certainly lies far away from such extremist views. It
requires neither a wholesale condemnation of all the work of economists as
empty formalism and reductionist nonsense, or the dismissal of all sociological
work as hopelessly illogical ramblings and flights of metaphor. It stands to
reason that any social process or any aspect of human behaviour can be
approached from the complementary perspective of the various social sciences.
No process can be fully understood by using one perspective alone, and, depend-
ing on the case at hand, some disciplines will have relatively more to say than
others. Most commentators will probably agree that the relative contribution of
economics (by comparison with that of other disciplines) is high in the study of
market equilibrium, and low in the study of intra-family exchange. Yet this does
not mean that sociologists have nothing to say about market equilibrium, or that
economists cannot offer insights into intra-family exchange. Quite simply, the
relative contribution of each approach will vary from case to case. This general
conclusion carries over to the study of language issues: economists will have
many useful things to say regarding some language issues, and little regarding
others.
Fortunately, recent evolution, particularly in the second half of the 1990s,
suggests that entrenched battles between academic disciplines are progressively
making way for a more balanced recognition of complementarities. In his inter-
view with Swedberg (1990: 33ff.), Becker notes a greater readiness to exchange
14 Current Issues in Language Planning

between economists and sociologists in the United States. Mayer (1993) stresses,
within economics itself, the legitimacy of two different strands of research,
namely formalistic and empirical research. The (still modest) influence of
socio-economics which, less than a field of investigation, describes a philosophy
of research in the social sciences, may also be seen as a promising sign of more
integrative work in years to come.
For the most part, economic research on language and language planning is a
deeply interdisciplinary endeavour. Having described the epistemological back-
ground in which it originates, it is now time to move on to an overview of the
literature in the economics of language.

The Economics of Language: History and Main Strands of

Research
Historical overview 12

The history of the economics of language as a field of research on the fringes of

economics as a discipline dates back to the mid 1960s. For a long time after, econ-
omists’ contributions on language issues remained unrelated to each other, and it
is only in recent years that a greater degree of interconnection has appeared,
reflected in more frequent cross-referencing. Furthermore, early studies in the
field directly responded to the social and political issues their authors were
confronted with – namely, the relative socio-economic position of Latinos in the
United States, or English–French earnings differentials in Canada, particularly
Québec.
The beginnings of the economics of language can be represented in terms of
three generations of studies. Since these are reflected in current strands of
research to be reviewed in the following sub-section, references to the relevant
literature are, for the most part, deferred until then.
The first generation of studies is mostly made up of empirical (that is, statisti-
cal) work and largely coincides with the 1960s, although its roots can be traced
back to Becker’s (1957) economic analysis of (racial) discrimination, and its
formal analytical application to language proposed by Raynauld and Marion
(1972). It views language primarily as an ethnic attribute: having a particular
language as one’s mother tongue ascribes a person to a particular group, and this
language-based ascription may have an effect on that person’s socio-economic
status, particularly his or her earnings. This approach, which clearly harks back
to the ‘identity’ function of language regularly mentioned in the sociolinguistic
literature, has been used to analyse earnings differences between black and
white United States residents, or between anglophones and francophones in
Canada. In terms of economic analysis, it is closely related to the modern study of
discrimination, which stresses empirical and methodological aspects and
emphasises issues of gender and race (see e.g. Oaxaca, 1973), more than analyti-
cal aspects in relation to language.
A second generation of studies, which largely coincides with the 1970s and
early 1980s, emphasises the human capital nature of language, about which more
will be said in the following section. This opens the way to a different perspective
on language, favouring, in particular, linkages with education economics, which
had also emerged in the 1960s. The analysis, which is examined at closer range
Language Planning and Economics 15

below under the section heading ‘An Application: Language Education Policy’,
goes as follows: particular language skills can be interpreted, in the same way as
other types of skills, as a form of capital because it is an area in which individuals
and societies can profitably invest. Deliberately acquired language skills can
therefore be seen as a source of economic advantage. This approach harks back to
the generic communication function of language encountered in sociolinguistic
work, and has often been applied in empirical work on the socio-economic status
of immigrants in the United States (particularly native speakers of Spanish) to
assess the value to them of acquiring English.
A third generation of studies, opened up by Vaillancourt (1980), considers
both language functions jointly as determinants of labour income. Languages are
seen not only as elements of identity or as potentially valuable communication
skills, but as a set of linguistic attributes (embodied in individuals) which together
influence actors’ socio-economic status.
Although the historical sources in language economics can, for the most
part, be arranged in the categories just described, some isolated contributions
since the early 1960s do not fit into this pattern. This is, for example, the case of
an often-mentioned paper by Marschak (1965), simply entitled ‘Economics of
language’, which discusses the internal evolution of linguistic codes as a
permanent drive towards more effective communication (where effectiveness
is understood as requiring the lowest possible time input to communicate a
certain message). Therefore, apart from the chronological distinction just
presented, a possibly more fundamental categorisation can be proposed, not
only in order to accommodate the progressive expansion of language econom-
ics to a broader range of questions going beyond the study of earnings, but also
to propose a general definition of language economics as a field of research in
its own right.

A definition
Let us first observe that for the most part, the studies mentioned so far are
due to North American scholars. They stress the role of language as an explan-
atory factor of economic variables – usually as a determinant of labour income.
In the late 1980s, economists from other parts of the world became more active
in the investigation of the language–economy relationship, often focusing on
the reverse causation, namely, the role of economic variables as explanatory
factors of linguistic variables. Examples include the effect of prices or earn-
ings on individual patterns of language use or on language dynamics – with
an occasional emphasis on the case of regional or minority languages in West-
ern Europe.
This contrast suggests that a general definition of language economics may be
articulated in terms of the causal directions investigated. Furthermore, particu-
larly since the 1980s and more so since the 1990s, a rising number of contribu-
tions, both in Europe and North America, started looking at the role of economics
as a tool for evaluating the effects of language policies, particularly in terms of the
costs and benefits of different policy options.13 In this case, standard economic
variables such as prices, earnings, transaction costs, etc. do not necessarily inter-
vene, and the ‘economic’ nature of the approach is evidenced by the fact that the
advantages and drawbacks of language scenarios are weighed against each
16 Current Issues in Language Planning

other. This line of research is a direct illustration of the economic approach as

defined by Robbins. Using this breakdown, a definition first proposed a few
years ago (Grin, 1994a)and used again in later work seems to remain appropriate
today:
The economics of language refers to the paradigm of mainstream theoreti-
cal economics and uses the concepts and tools of economics in the study of
relationships featuring linguistic variables. It focuses principally, but not
exclusively, on those relationships in which economic variables also play a
part.
The ‘paradigm of mainstream theoretical economics’ to which this definition refers
is encapsulated in the Robbins definition presented above in the section headed ‘The
Need for an Economic Perspective on Language Issues’, and stresses the util-
ity-maximising choices made by actors whose resources are scarce.
The second half of the definition, which refers to relationships that do not
necessarily feature economic variables, may deserve additional commentary. For
most people, whether economists or not, economic variables typically include, in
micro-economics, variables like prices, quantities supplied or demanded, wages,
earnings, the return on capital, etc., and the way in which these variables tend
towards an equilibrium value on markets for given goods and services. In the
realm of macro-economics, typical economic variables include aggregates like
consumption, investment, exports and imports, their combination into an aggre-
gate product (for example GDP), the rate at which the latter changes (growth), an
aggregate price level and its rate of change (inflation), unemployment, etc.
However, such variables need not be present in an economic analysis of
language policy. Consider, for example, the question of whether a policy to intro-
duce a given minority language as a school subject should prioritise the formal
training of language teachers or the development of teaching materials – both of
which can be considered explanatory factors in the study of the resulting
language skills of learners. None of the variables linked by this causal relation-
ship are standard economic variables, yet the treatment of the question may be
essentially economic, in that it puts forward a certain notion of effectiveness,
both as an operational concept and as a relevant evaluation criterion. Incidentally,
evaluations of this kind make up one of the core work areas of education econo-
mists – an area to which we shall return in ‘An Application: Language Education
Policy’.
Finally, readers will observe that the definition makes use of the concept of
‘variable’. There is no question that variables are analytical constructs with a
certain degree of arbitrariness, and that they should be understood as such, along
with their limitations, as pointed out at the end of the section above on ‘The Need
for an Economic Perspective on Language Issues’. Nonetheless, they remain
heuristically relevant concepts, which for the sake of definitional crispness may
be preferable to the notion of ‘processes’. The reason is that the characterisation
of a process necessarily requires a no less arbitrary definition and use (whether
explicitly or not) of variables. Hence, a strict reference to ‘processes’ could turn
out to be merely euphemistic; it seems therefore preferable to refer to ‘variables’,
it being clear that they have no existence of their own and are, quite simply,
useful.
Language Planning and Economics 17

Main research directions

Let us now turn to a review of the main directions of research in language
economics. For reasons explained in the introduction, this overview is kept delib-
erately short and the list of authors mentioned, though fairly extensive, is not
intended as exhaustive. The interested reader is directed to other work (in partic-
ular Breton, 1999a, 1999b; Grin, 1996b; Grin & Vaillancourt, 1997; Vaillancourt,
1985a) for additional references. Two major topics, namely, the economics of
language policy and the economics of language skills, which are introduced only
briefly in this section, are examined at closer range below under ‘The Economics
of Language Policy’, and ‘An Application: Language Education Policy’. In this
literature review, all formal notation is avoided. While this will prevent us from
presenting the detail of the analytical models, it will suffice to offer an account of
the main ideas on which they rest.

Language and labour income

The study of the effect of linguistic attributes (that is, a person’s L1 and/or their
skills in other languages, which will be referred to as a person’s L2 or set of L2s)
on earnings (or, equivalently, ‘labour income’) remains, throughout the history
of language economics, the single most important area of research. It is also one
which, as we shall see in ‘An Application: Language Education Policy’, has direct
relevance for language education choices. Its basic idea is that linguistic attrib-
utes can influence earnings in two different ways.
First, membership of a language group may give some an edge in the labour
market and put others at a disadvantage. This is the situation when a person’s L1
can be seen as a determinant of labour income, and where the disadvantage (or
privilege) of birth is reflected, in particular, in lower (or higher) wage rates.14 Of
course, if educational levels or other socially legitimate determinants of income
are correlated with linguistic attributes, members of a particular language group
will logically tend to earn less than members of another language group, inde-
pendently of their language attributes. The question therefore is whether
language itself, other things being equal, does result in earnings differentials.
In order to treat this question theoretically, economists have tried out a wide
range of models. Let us first consider the case of L1 as a determinant of labour
income. Such language-based differentials may result from a deliberate intent,
by members of another (presumably dominant) language group, to exert
discrimination, possibly by manipulating the rate at which the goods primarily
produced by one of the two groups are bought and sold (Raynauld & Marion,
1972). If the relative price of labour-intensive goods goes down, and if the domi-
nated group has relatively more labour than capital to contribute to the economy,
the share of aggregate income accruing to this group will go down. This will also
tend to reduce the income accruing to the owners of capital in the dominant
group (because the combination of capital and labour in production will diverge
from what it would have been in a non-discriminatory optimum), but this is a
price that they may be willing to pay, just as Becker (1957) assumed that some
people have a ‘taste for discrimination’ which will be satisfied at the cost of some
forgone income.
A variant of this explanation, relying on another and presumably less deliber-
ate discrimination strategy, has to do with the existence of different networks of
18 Current Issues in Language Planning

access to employment (Migué, 1970). Suppose that the population is made up of

two language groups, A and B. The employer belonging to the A group may
prefer to hire workforce from the same group, because cultural proximity will
make it easier to assess ex ante the employee’s productivity (this strategy is some-
times called ‘statistical discrimination’). In a related model, Lang (1986) explains
earnings differentials not as the result of any prejudice or discriminatory intent,
but simply as the consequence of communication costs between A-speaking
employers and B-speaking employees; this communication cost will largely be
borne by the latter, whereas A-speaking employees, with whom employers are
able to interact at no extra cost, are exempted from it.
Second (or foreign) language skills can be a profitable investment for a
number of reasons, in particular if employers reward them. They will do so if a
bilingual employee, all other things being equal, is more productive than a
unilingual one – typically because he or she can carry out duties that a unilingual
could not. Beyond this general interpretation derived from basic labour econom-
ics, the investigation of the micro-level processes that explain the value of second
language skills remains limited to exploratory models (e.g. Sabourin, 1985)
studying, for example, the role of matching between the linguistic characteristics
of a job and the language attributes of a worker. The importance of language
skills in a matching procedure that starts at hiring is confirmed by (non-
representative) survey results in Canada (Chorney, 1998), but questioned by
surveys of Australian business firms (ALLC, 1994). For the most part, however,
the study of the role of L2s as determinants of income remains empirical.
Independently of the reasons behind language-based earnings differentials,
their existence has been shown empirically in a variety of contexts. However, it is
difficult in practice to separate empirical work focusing on the effect of L1 (in the
sense of ethnic membership), or on the effect of L2 skills (as a form of human capi-
tal) or on the effect of both language attributes. As noted at the beginning of this
section, almost all of the empirical work published after 1980 takes account both
of L1 and L2 as determinants of labour income, and most of the work mentioned
in this section does. It is therefore convenient to arrange empirical research on the
relationship between language and earnings in four groups according to the main
(but not necessarily exclusive) focus of the various contributions.15
· A. The measurement of language-based discrimination according to a person’s
first language has been studied in the United States (Fogel, 1966) and
Canada (Raynauld et al., 1969), and more recently in Switzerland (Grin,
1997b; Grin & Sfreddo, 1998). This research confirms the presence of earnings
differentials between persons belonging to different language communities,
even after controlling for their second language skills, including in the domi-
nant language of the country or region considered.
· B. The estimation of the value of second language skills, when the second
language in question is demolinguistically dominant in the region or country
considered, makes up the bulk of the economics literature (particularly the
work published in mainstream economic journals). This situation, of course,
most directly reflects the experience of immigrants. It has been studied with
sample data on immigrants on the United States (see pioneering work by
Grenier, 1984; for an overview, see Bloom & Grenier, 1996; for a set of very
Language Planning and Economics 19

recent results, see Chiswick & Miller, 2002; for a more detailed examination
of the link with skills levels, see Dávila & Mora, 2000), Canada (Chiswick &
Miller, 2000), Israel (Chiswick & Repetto, 2001), Australia (Chiswick &
Miller, 1985); and Germany (Dustmann, 1994; Dustmann & van Soest, 2001);
for some international comparisons, see Chiswick & Miller (1995). Unsur-
prisingly, these publications indicate that immigrants benefit significantly
from knowing the dominant language of their country of residence.
· C. The estimation of the value of second or foreign language skills, when the
language in question is not demolinguistically dominant in the region or coun-
try considered. This case can be further subdivided in two typical situa-
tions: one concerns the residents of a particular country (say, Austria) who
have learned a foreign language (say, English or Spanish); the other
concerns the members of one established language community in a multi-
lingual country (say, French-speaking Canadians or Flemish-speaking
Belgians) who have learned another official or national language (in these
examples, English or French respectively). Research into this question is
very much a Canadian tradition reflected in a large number of papers, offi-
cial reports and books (for an extensive review, see Vaillancourt, 1996; see
also Christofides & Swidinsky, 1998) mainly using census results. The
focus of the Canadian research is on earnings differentials between
anglophones and francophones, with particular attention to Québec. Cana-
dian results indicate significant variation between genders and across
provinces. The rates of return to French–English bilingualism are high in
Québec, but they tend to be modest elsewhere; they are also much more
likely to be significant for men than for women.
Swiss results using survey data on earnings and skills in the country’s
three main official languages (German, French and Italian), plus a foreign,
non-official language (English) similarly reveal considerable variation
depending on a respondent’s gender, the language region where he or she
resides, and the target language considered. For example, although the
rates of return on English-language skills are high throughout the country,
they come first (before French) in German-speaking Switzerland, but
second (after German) in French-speaking Switzerland (Grin, 1999c, 2001).
This case will be examined in more detail in ‘An Application: Language
Education Policy’.
One rare example of research on this set of issues in a developing country
is a paper by Chiswick et al. (2000) using survey data on Bolivia containing
information about respondents’ linguistic profile as ‘monolingual Span-
ish’, ‘monolingual indigenous and bilingual (which may in fact mean
competence in more than one indigenous language plus Spanish); results
indicate that monolingual speakers of Spanish fare better than bilinguals –
and, needless to say, monolingual speakers of indigenous languages. The
most straightforward interpretation of this finding should be that this
strongly suggests discrimination against speakers of languages like
Aymara, Quechua or Guaraní.
However, much hinges on the definition and reliability of language skills
categories in the data set. Most of the studies quoted here rely on fairly
20 Current Issues in Language Planning

vague categories; these categories sometimes refer to language use rather

than language skills. To my knowledge, the most detailed data base remains
the Swiss one, where a distinction is made between four different types of
skill (listening comprehension, speaking, reading and writing) and four
different skills levels (fluent, good, basic, none), with reference to a
self-evaluation grid inspired by the levels used in the European Language
Portfolio.16
· D. Finally, there are (still exceedingly rare) investigations of the rates of
return on immigrant languages in their new country of residence. They raise
the question of whether – contrary to what seems assumed a priori by much
of the research in group B above – immigrant languages might be an asset
rather than a hindrance. Both a Canadian study using census data covering
13 non-official languages (Pendakur & Pendakur, 1998) and a Swiss study
using survey data comparing Italian- and Turkish-speaking immigrants
(Grin et al., 2002) conclude that this value is, at best, very low; most of the
time, coefficients for immigrant language skills in earnings regressions are
either not statistically significant, or negative; some niche effects can be
found where immigrant languages translate into economic advantage, but
it would be hasty to generalise from mainly anecdotal evidence.
In the contributions falling in the B or C groups (and, to some extent, the D
group as well, since competence in an immigrant language may require a delib-
erate choice to maintain this competence), languages are primarily seen as
elements of human capital in which individuals invest. This interpretation,
however, requires qualification, because the investment may not be entirely
voluntary. Learners acquire other languages more or less successfully; language
acquisition may also occur through informal learning, through residence in a
foreign country, marriage with an L1 speaker of another language, or simply as a
result of the fact that they are led to make this investment because the authorities
require particular languages to be taught as school subjects as part of their educa-
tion policy.
The strategic importance of empirical work on language-based earnings
differentials, however, lies not only in its capacity to provide estimates of the
actual effect of language attributes on earnings. It also enables us to reconsider
critically some commonly held views, such as the oft-encountered metaphor of
‘language as value’, which, tempting as it is, usually falls short of a reliable guide
for policy action (see ‘The ‘value’ of language’ below). A related line of inquiry
focusing on the statistical link between linguistic identity (L1) and business
ownership must be mentioned here (see e.g. Vaillancourt & Leblanc, 1993). It
generates politically important information about the relative socio-economic
position of different language communities, showing, in the case quoted, that
francophone control over the economy of the Province of Québec has markedly
increased since 1961. However, the scarcity of data severely restricts possibilities
to replicate this research elsewhere.
Language dynamics
Sociolinguists themselves readily concede that their discipline has not
produced a general theory of language dynamics17 (e.g. Appel & Muysken, 1987).
Understandably, this theme keeps attracting considerable attention among
Language Planning and Economics 21

language specialists, particularly in the case of language decline and language

death (Crystal, 2000; Robins & Uhlenbeck, 1991; Skutnabb-Kangas, 2000), or in
the case of the spread of English (Ammon, 1994; Crystal, 1997; Graddol, 1997;
Pennycock, 1994; Phillipson, 1992; Watts & Murray, 2001). A general theory still
needs to be developed, although an essential milestone was reached with
Fishman’s analysis of language revitalisation (under the expression of reverse
language shift; see Fishman, 1991).
Economists have also tried their hand at this problem, developing various
models of language behaviour yielding implications for language dynamics,
starting with Hocevar (1983). Some models are static, in that they assume a
one-period calculus in which (often bilingual) individuals will decide which
language to use in different activities (e.g. Grin, 1990); other models are dynamic,
in that the economic model of language use at time t influences language use at
time t+1, then t+2, etc. (Grin, 1992; Pool, 1991b); these models lend support to the
tentative conclusion proposed by Nettle (2000), who suggests that economic
incentives determine language choices rather than the other way around.
A particularly interesting range of models examines the network effects associ-
ated with languages (apart from Pool, 1991b, see Church & King, 1993; Selten &
Pool, 1991): one intriguing dimension of languages, which sets them apart from
most other ‘commodities’ in an economic sense, is that when more people use a
language, the more useful it becomes, all other things being equal, to other people.
This is markedly different from, say, a public transport system (which becomes
less and less usable the more people travel with it) and of course from a standard
private good (say, an apple), which cannot be eaten (used) by different people
simultaneously.18
Another key implication of the network dimension of language spread
through deliberate language learning is that because some of the benefits that
result from language acquisition do not accrue to the individual (whereas learn-
ing cost does), people may be led to under-invest in second language acquisition.
This provides justification for state support to language learning not for political
or cultural reasons, but on the basis of hard-nosed economic considerations. The
reader is cautioned, however, that in the most direct applications of the
approach, this argument usually yields the recommendation that non-
anglophones should be encouraged to learn more English, rather than the other
way around. A related result obtains in Choi’s (2002) very abstract model of the
influence of international trade on language spread, which amounts to naturalis-
ing the dominance of English. Therefore, further model development, with a
more careful treatment of benefits and costs, is necessary to understand network
effects and to derive their policy implications. This more sophisticated treat-
ment, which should take non-market components of value into account (see ‘The
Economics of Language Policy’ below), may justify state support for the learning
of languages other than the most dominant one.
There is little doubt that the network effects of language play a major role in
language dynamics, and hence in the attractiveness of learning particular
languages. Hence, they also influence the context of language education poli-
cies. Network effects raise highly complex technical problems, which at this
time are not solved in the literature (or can be solved only in part, at the cost of
severely restrictive assumptions which detract from the practical usefulness of
22 Current Issues in Language Planning

the analysis). Further research into the ‘network externality’ effects of languages
and their implications for spontaneous or policy-induced language dynamics
should be considered a priority, particularly in order to explore long-term
dynamics, whether in general terms or in relation to the macro-level process of
globalisation (Grin & Rossiaud, 1999; see also Bruthiaux, this issue).

Language and economic activity

This category contains extremely diverse, even heterogeneous, lines of work,
which focus on the processes of production, consumption and exchange and
examine the role of language in them. Production does, of course, address the
behaviour and inner workings of the firm, whether as a seller of final goods and
services, as a seller and buyer of semi-finished goods, as a buyer of production
factors, notably labour, and as a borrower of capital.19 Consumption harks back
to the behaviour of the household or individual person, both as a buyer of goods
and services and as a supplier of production factors, first and foremost labour but
also capital.20 Lastly, exchange takes place on markets for final goods and
services, for intermediate goods and services, and for production factors (labour
and capital). These markets are characterised not only by the interaction of
supply and demand and by the actual exchange, over a certain period of time, of
a certain quantity of a good at a certain price, but also by their structure. Each
market may be more or less competitive (which implies a large number of buyers
and sellers) or, on the contrary, monopolistic (single seller) or monopsonistic
(single buyer), with many gradations in between.
Despite the fact that research in this field could bank on a whole array of core
concepts in economic theory, it remains a relatively under-developed area of
language economics. This may be traced back to a point made above under ‘The
Need for an Economic Perspective on Language Issues’: economic analysis is
well-suited to the study of relationships between variables that have a clear
quantitative interpretation, which typically is not the case for language. Hence, it
should not come as a surprise that most of the work in this area proposes little in
the way of general theory, and not much more in the way of formal applications
of the standard economic theory of production, consumption and exchange.
Rather, most publications are organised around more inductive approaches
(offering a theoretically plausible explanation for an observed consumption,
production or exchange situation in which language appears to make a differ-
ence), or simply describe or document patterns of language use in those
economic activities. However, two important theoretical contributions focusing
on the production side are those by Hocevar (1975), who analyses changes in
production cost functions depending on the language characteristics of the
outputs, and Sabourin (1985) mentioned earlier, who examines the process of
‘matching’ between employees with given linguistic attributes and specific posi-
tions in a firm, which require a higher or lesser degree of language skills (practi-
cally, more or less bilingualism). The lines of inquiry opened up by these two
contributions remain in need of further work and empirical testing. It would also
be useful to gather and confront descriptive evidence on language use in the
workplace in different countries, since barring a few notable exceptions such as
Lambert and Moore (1990), it remains rather scattered and difficult to access.
Issues of consumption are difficult to separate from issues of exchange in the
Language Planning and Economics 23

language economics literature. Using data on the 22 Organisation for Economic

Cooperation and Development (OECD) member countries, Helliwell (1999)
finds that the existence of a common language between two trading partners
may have a positive effect on the volume of trade.21 Cremer and Willes (1991) use
small-scale survey data to analyse language use in trading activities in the Far
East, showing that such trade can take place with a remarkably low degree of
second language competence among the various trading partners. Some work
attempts to model language use in advertising and consumer relations (Grin,
1994b), but most of the few contributions on this topic22 are empirical or descrip-
tive, documenting a general preference by bilingual customers in Catalonia or
Québec (Vaillancourt, 1985b) for being offered goods and services in their own
language (even if they can perfectly well understand another – usually domi-
nant – language).
Separate mention should be made of some research grounded in ‘intercultural
management’, which is inspired less by the paradigm of economics than by
concepts from business administration and management, sometimes also by
economic geography. Connections with language economics arise, however,
from the fact that these contributions sometimes discuss the role of minority
language maintenance as a factor of regional economic vitality (e.g. Price, 1994;
Taddei & Antomarchi, 1997). Generally, the conceptual basis of this line of work
replicates that of research on immigration and ‘ethnic business’ (see e.g. Berset et
al., 2000) and does not single out analytically the role of language as an explana-
tory variable in a causal process. Instead, it points to the importance of culture
(which, ultimately, turns out to be in part defined by language) in given aspects
of production and exchange.
Progressively moving from micro-economic issues (to which most of language
economics belongs) to more macro-economic issues, some of the contributions in
this group try to quantify the impact, on the regional economy, of the presence of
language-specific activities (e.g. Ó Cinnéide & Keane, 1988; Sproull, 1996).
Others have attempted to relate the linguistic profile of workers in an economy to
the economy’s external trade patterns (Stanton & Lee, 1995); the implied theoreti-
cal links are, at this time, not elucidated, and no empirical results stand out.
Arcand’s work (1996), though primarily micro-economic in concepts and meth-
odology, also addresses macro-economic implications, revisiting economic
models of development and growth in Third World countries to discuss the
possibilities of integrating language as an explanatory factor in development
processes.23
Interestingly, the production, consumption and exchange of ‘language goods’
and ‘language services’ (such as courses, books or other cultural products in a
particular language, etc.) do not constitute a significant part of language econom-
ics. One may even argue that there would be no reason at all for such topics to be
included in language economics. This is because the production, consumption
and exchange of such commodities is not markedly different from the produc-
tion, consumption and exchange of other (i.e. non-linguistic) commodities, and
therefore does not justify specific analysis – other than, possibly, in the form of
case studies on a specific market. Generally, the analytical concepts of supply,
demand and market for any given good or service also apply to language goods.
The situation is different, of course, when talking about supply and demand for a
24 Current Issues in Language Planning

[particular] language (that is, when the commodity is a language taken as a

whole, not specific goods and services in this language) which are, of course,
perfectly relevant areas of research for language economics, but where it is
important to reconstruct the concepts of supply and demand carefully (we shall
return to this question later on in this section). However, one range of services
that do not merely have linguistic dimensions (like books in language X), but are
intrinsically linguistic have been inadequately studied in economic perspective
and deserve serious study – namely, the production, consumption and exchange
of translation and interpretation.24 In the same way, there is, to my knowledge,
hardly any theoretical or empirical work on the economics of terminological
development or, more generally, on the economics of language corpus.

The economics of language policy

Because a section below is devoted to the economic perspective on language
policy, I shall confine myself here to a brief account. Let us first recall the point
made earlier that if economics can make useful contributions to the analysis of
language policy, it is not so much because it brings linguistic and economic vari-
ables in relation with each other (with causal links flowing in either direction),
but rather because it helps to look at different choices about language in terms of
advantages and drawbacks. This does not imply looking at languages in a
narrowly materialistic perspective, or gauging them strictly in terms of the
monetary advantages or money costs associated with them. Nonetheless,
economics is particularly useful because it helps, if so desired, to re-express
advantages and drawbacks in monetary terms, thus facilitating comparison.
That economists should enter the fray of language policy is a logical consequence
of the fact that society is confronted with choices regarding language (or, more to
the point, languages) and has to make decisions in this area – just as it does regard-
ing transport, health, the environment, etc. Economics is relatively better
equipped than other social sciences, conceptually and perhaps methodologi-
cally, to process decision-making problems.
The whole endeavour, however, also raises the question of the nature of
language policy and what language policy is expected to modify. Most of the
economic work on language policy addresses the position of one language
vis-à-vis other languages, or the broader question of linguistic diversity. Status
issues (in a broad sense) are therefore central in the economic approach to
language policy, whereas corpus questions have practically never been studied;
the approach is mainly about how human action can affect our linguistic environ-
ment. The concept of linguistic environment used here as well as in some earlier
work (Grin, 1997a, 1999b) may differ from that encountered elsewhere, for exam-
ple in the literature on linguistic ecology (Mühlhäusler, 1996, 2000). I do not use it
to imply any biological parallel, but because it helps to formulate the links
between language policy on the one hand, and the field of policy analysis on the
other hand. The basic idea is that language policy aims to change the linguistic
dimensions of the surroundings (or of the environment) in which we live.
Clearly, much of the theoretical literature on the mutual influences between
linguistic and economic variables (in particular work quoted elsewhere in this
paper, e.g. Carr, 1985; Church & King, 1993; Hocevar, 1983; Pool, 1991b, 1991c)
has direct implications for language policy, and a concern for language policy
Language Planning and Economics 25

implications has been present in the literature for a long time. At the same time,
the connection to language policy, in most of the earlier language economics
literature, was somewhat derivative, because it responded to specific develop-
ments of which authors had personal experience. 25 This focus on policy issues
has become much more explicit in recent years. Possibly echoing calls to this
effect more than 30 years ago (Jernudd, 1971; Thorburn, 1971), much of the ongo-
ing economic work on language policies addresses the benefits and costs which
characterise policy options (Grin & Vaillancourt, 1999; Pool, 1996) or attempts to
transpose basic decision-making criteria in the context of language policy (Grin,
2003). The thrust of most recent research in this area is on the identification of the
main sources of benefits and costs, from the perspective of individuals and of
society, attaching to various policy alternatives, and to propose estimates of the
order of magnitude of such benefits and costs.
Most of the literature focuses on ‘allocative’ rather than ‘distributive’ issues,
and this important distinction requires a few words of commentary.
The allocative level focuses on efficient resource allocation, but not on who
gains and who loses as a result of a policy choice. It is merely concerned with
ensuring that a policy generates a gain in aggregate welfare, opening the possibility
for winners to compensate losers, so that no one is worse off at the end of the
process. By contrast, the distributive level of analysis does raise the issue of fair-
ness and focuses on the identification of winners and losers, as well as on the esti-
mation of respective gains and losses. This examination is a precondition for
proposing systems of compensation as well as for investigating ways of ensuring
compliance in the case of incentive-based policies.
Following pioneering work by Pool (1991c),26 there has been renewed interest
in distributive issues in recent years (Grin & Vaillancourt, 2000; Van Parijs, 2001),
and a closer analysis of distributive dimensions is undoubtedly among the most
challenging and useful lines of inquiry to pursue. In particular, it has direct rele-
vance to pressing problems such as the choice of official languages in multilin-
gual structures like the European Union.
The fundamental concepts of language policy evaluation in economic
perspective are presented in the sub-section on ‘Language policy: Diversity, and
the “fundamental rule”’ below. However, it is useful to point out at this stage that
education economics also provides relevant inputs, principally because education
tends to be the single most important channel of government intervention in the
sphere of language. Other channels of intervention do of course exist, such as the
regulation of language use in the administration or in the judicial system, state
financing or at least state support to audio-visual media, cultural policy in litera-
ture and the fine arts, etc. Still, education in general remains a major area of
competence of states, typically representing between 10% and 20% of aggregate27
government expenditure in developed countries. As such, it usually represents
the single largest budget item and is often the most important vehicle of language
policy. Accordingly, the benefits and costs associated with education-based
language policies also tend to be larger, in monetary terms, than those that
proceed from intervention in other domains. Given the importance of education,
the whole of the section below ‘An Application: Language Education Policy’ is
devoted to the principles guiding the evaluation of language education policy.
26 Current Issues in Language Planning

Other research directions

This brief overview does not exhaust the field of language economics. In addi-
tion to further detail and references which could be provided for each of the
above categories, other, most of the time analytically isolated, contributions on
other dimensions of the language experience also exist. Marschak’s (1965)
attempt to explain patterns of internal language change as a drive towards effi-
ciency in communication has been mentioned earlier.28 Colomer’s (1991) models
of the choice of language in conversations between people having different
linguistic attributes explains how the quest for effectiveness will, depending on
the numbers of those present, favour the use of one or another language. Using a
similar type of model, Colomer (1996a) argues that under very general assump-
tions, generalised foreign (or second) language learning, which generates wide-
spread individual multilingualism, is likely to be a more cost-effective solution to
the problem of communication in plural societies than systematic resort to trans-
lation and interpretation facilities; these approaches are combined in Colomer
(1996b).
A word also needs to be said of the language-as-currency analogy, because the
metaphor is proving to be a very tempting (usually for non-economists more
than for economists), but also, potentially, a very misleading one. From the
non-economic side, this analogy was put forward by Rossi-Landi well over 30
years ago, when he compared a linguistic community to ‘a sort of huge market in
which words, expressions and messages circulate as commodities’ (Rossi-Landi,
1968: 49). Seductive as it may appear, the metaphor is not sound. A market in the
economic sense emerges from the existence of supply and demand functions.
Supply is defined as the willingness by producers to offer a certain quantity of a
certain good or service at a certain unit price over a certain period. Demand is
defined as the willingness by consumers to buy a certain quantity of that good or
service at a certain unit price over a certain period. Normally, supply is an
increasing function of price, while demand is a decreasing function of price.
Hence, the supply curve and the demand curve will intersect in a
two-dimensional {price-quantity} space, determining an equilibrium level both
for quantity (q*) and price (p*), as shown in Figure 1.

Figure 1 The market diagram

Language Planning and Economics 27

Each of these elements is missing from Rossi-Landi’s account, making the

reference to a ‘market’ a purely metaphorical one with little heuristic pertinence.
To some extent, the same can be said of Bourdieu’s (1982) often-quoted essay on
‘linguistic exchange’. Bourdieu’s text makes constant reference to ‘markets’,
‘profit’ and ‘capital’, thereby creating with some readers the impression that his
is an economic theory of language use. It would be more appropriate to describe
his contribution as a sociological one in which standard economic terms are
given another, somewhat idiosyncratic interpretation. Bourdieu’s analysis
certainly amounts to excellent sociology of language – but from an economic stand-
point, his use of economic terminology is no less metaphorical than Rossi
Landi’s,29 and does not amount to ‘economics of language’.
The true meaning of a possible parallel between language and currency has
been developed by Carr (1985). Carr shows that the parallel to be drawn is not
between language on the one hand and currency on the other hand, but between
the fact that there exist different languages and the fact that there exist different
currencies. In the same way as the use of a common currency facilitates exchange
by reducing trading costs, so does the use of a common language. The actual
extent of cost reduction, incidentally, is an empirical question that crucially
depends on the trading partners’ reliance on linguistic communication. As noted
before, the evidence is patchy, and more detailed examination remains neces-
sary.30
Another oft-repeated (and sometimes hasty) analogy is that of language as a
form of ‘wealth’. Since this question is crucial to the whole language policy
endeavour, its treatment is deferred until the next section.
Finally, the reader should be aware that there exists a strand of literature on the
language of economics. However, it largely consists in an analysis of economics
discourse, from an economic (McCloskey, 1990) or linguistic perspective
(Henderson et al., 1993). As such, it clearly falls outside the definition of language
economics proposed earlier and will not be discussed in this paper.

The Economics of Language Policy

A working definition of language policy
Language planning and language policy are fast developing as major areas
of analytical and practical work in the language disciplines, particularly
sociolinguistics and applied linguistics. The same is true in language economics,
and the more valuable contributions that an economic analysis can make to
language issues are those that directly or indirectly help to make informed
choices about language issues – and ultimately, making informed choices is
precisely what language planning or policy (as distinct from language politics;
see below) are about.
This section does not attempt to discuss language policy and planning in
sociolinguistic perspective, instead referring the reader to the growing literature
in this field (e.g. Calvet, 1996; Cooper, 1989; Fishman, 1991; Kaplan & Baldauf,
1997; Labrie, 1993; Maurais, 1987; Schiffman, 1996; various contributions
published by the Generalitat de Catalunya, 1997, 1999; or in European Cultural Foun-
dation, 1998; etc.).
No distinction is made here (nor is it made in the economics literature)
28 Current Issues in Language Planning

between ‘language policy’ and ‘language planning’. In this paper, both expres-
sions refer to:
a systematic, rational, theory-based effort at the societal level to modify the
linguistic environment with a view to increasing aggregate welfare. It is
typically conducted by official bodies or their surrogates and aimed at part
or all of the population living under their jurisdiction. (Grin, 1999a: 18,
adapted from Cooper, 1989, Chap. 2)
A few comments about this definition are in order.
‘Systematic’
The use of this adjective means that language policy is assumed to be (even if
informally) organised according to a certain method and aims at certain goals,
which may be overt or covert. The assumption of rationality follows logically: to
the extent that a certain method is applied to reach certain goals with certain
means, rationality implies that the latter are judiciously applied to achieve the
former. Of course, this does in no way imply that no improvements could be
made. Rationality is a process, not an achieved state of affairs. It only implies that
actors involved in the selection, design and implementation of language policy
are using certain means towards certain ends in a way that is, to the best of their
(necessarily incomplete) knowledge, rational.
‘Linguistic environment’
The concept of linguistic environment has been introduced in the preceding
section. ‘Linguistic environment’ must be understood as the object of language
policy. Whether it aims to increase the visibility of an autochthonous minority
language in cultural life, to develop foreign language skills among the school-age
population, or even to suppress the use of certain languages,31 language policy is
intended to modify the linguistic features of our environment.32
‘Welfare’
Whether this is explicitly stated or not, the goal of all language policy is to
increase ‘welfare’ – and this, of course, opens the Pandora’s box of the question of
what welfare is or, more precisely, what contributes to make welfare higher.
Obviously, there need not be agreement on this matter, but fundamental
economic analysis normally eschews this issue and adopts a deeply liberal
stance: welfare is seen as something that only individuals can define for them-
selves, and it is not up to the economist (or, for that matter, the sociologist, the
politician, the priest or the guru) to decide what will make someone else, or soci-
ety as a whole, happier. One can only assume, in an analytically distinct step, that
most individuals will generally feel happier (that is, their level of welfare will be
higher) if they are healthier, if they are more socially integrated, if they enjoy
higher levels of consumption of goods and services, if the air they breathe is
cleaner, their roads safer, and so on. Dismissing this analytical approach as ‘utili-
tarianism’, as noted in ‘The Need for an Economic Perspective on Language
Issues’ above, would be either absurd or perfectly trite. One may of course reject
the notion that individuals enjoying all the above will be genuinely happier, but
then one will be hard put to come up with a better, more credible assumption
about human preferences.
Language Planning and Economics 29

At this point, it is important to note once more that no restrictions apply

regarding the sources of the ‘welfare’ referred to in economics in general or in the
definition of language economics just proposed. In line with fundamental
economic theory, welfare is not just a matter of material consumption or
well-being. It can also include any non-material elements, including a feeling of
safety in one’s identity or the preservation of markers of cultural heritage. This,
of course, establishes links with other branches of economics in which
non-material or symbolic values are taken into account, such as ‘cultural
economics’. However, contrary to a frequently encountered belief, the closest
relative of language economics is not cultural economics, but environmental
economics. There are two main reasons for this. The first is that environmental
economics is largely concerned with weighing the advantages and drawbacks of
different policy options, and that the conceptual and methodological problems
that arise in this endeavour are strikingly similar to those encountered in
language policy evaluation. The second is that language, just like the biophysical
environment, is much more pervasive in human experience than the type of
goods and services on which most of ‘cultural economics’ concentrates.
Welfare becomes more problematic once we move from the individual to the
collective level. Because policies affect societies as a whole, the problem is
whether society’s welfare as a whole will be higher as a result of the policy; this is
why the definition indicates that language policy takes place ‘at the societal
level’.33 Apart from the fact, discussed below, that this gives a key role to the state,
it raises the question of the criteria according to which the authorities conclude
that a policy will indeed increase aggregate welfare, given that policies typically
create winners and losers – or at least drive a wedge between big winners and
small winners. Economists will, however, readily concede that welfare analysis
takes place within a political and moral framework reflected in institutional
arrangements, and agree that policy choice must abide by a democratic process
based on majority rule with appropriate safeguards for the interests of the minor-
ity – or, most probably, minorities.

‘The state and its surrogates’

Anyone, down to the individual, can have a language policy.34 A multina-
tional company can have a language policy. However, using the notion of policy
for such a broad range of situations would expose us to the risk of stripping the
concept of much of its meaning, which is why, in line with most of the literature, I
stick to the notion of a society taking steps to influence its linguistic environment,
just as it may develop an environmental policy affecting land use, waste disposal
or gas emissions. In other words, what I mean here is actual or potential public
policy.
Typically, the organ through which society takes such action is the state, and
we shall see below that there are intrinsic reasons linked to the nature of linguistic
environments which require the state itself to act, because in the absence of state
intervention, the private (market) sector would give rise to behaviour which
would not result in the linguistic environment desired. This does not imply,
however, that the state cannot delegate the implementation of some parts of
language policy to other bodies. For example, private operators can run minority-
language television channels. The point here is that in the absence of state
30 Current Issues in Language Planning

intervention through deliberate language policy, private operators may not

provide the service.

Policy v. politics
Finally, readers will observe that ‘policy’ is understood here not in terms of
political power play between actors holding opposing views, but in terms of a
comparison between different solutions, each of which has a priori advantages
and drawbacks, which can usually be expressed as ‘benefits’ and ‘costs’. This
emphasis harks back to a definition in policy analysis discussed for example by
Scharpf (1997) between ‘interaction-oriented’ and ‘results-oriented’ policy anal-
ysis. The definition used here clearly focuses on results-oriented analysis, while
interaction-oriented analysis would be considered closer to the politics of
language, on which a substantial literature exists,35 and which in general does not
translate into economic questions as defined at the beginning of this paper.
This distinction between what is part of ‘politics’ and what is part of ‘policy’
directly ties into the question of involvement by the state and the reasons for the
latter.

Language policy and state involvement

It is generally accepted that in modern democratic societies, a certain range of
duties is among the responsibilities of the state. Why this should be so is an issue
that has occupied political philosophers since antiquity. From the standpoint of
mainstream (neoclassical) economics, however, the question may be approached
without resorting to moral or philosophical considerations, referring instead,
just like the rest of fundamental theory, to the problem of scarce resources that
have alternative use. This is not to say that economic analysis necessarily rejects
moral or philosophical considerations. These may offer the most convenient way
to provide a logical basis to some forms of state intervention – for example, in
distributive issues. However, it is technical, rather than moral or philosophical,
arguments that establish, within the systemic rationality of economic analysis,
the necessity of state involvement in certain cases.
We have seen that language policy aims at modifying a linguistic environment
in order to increase welfare. The question then arises of why the linguistic envi-
ronment that exists independently of deliberate state intervention in language is
not the best, and on what grounds we can presume to improve it through deliber-
ate intervention. One could indeed have argued, following a standard lais-
sez-faire ideology, that government should not intervene, and that maximum
welfare will automatically flow from the decentralised actions of people (indi-
viduals, firms, third-sector organisations36), allowing market mechanisms to
regulate the linguistic environment. This will be expected to produce, as it were,
the right amount of each of the features of this environment, such as levels of
skills in different languages, patterns of use of different languages, types of atti-
tudes towards different languages, extent of visibility of different languages, etc.
If the free market could be seen as an appropriate mechanism whereby all of
society’s goals can always be reached and maximum aggregate welfare deliv-
ered, there would be no grounds, in mainstream economic theory, for state inter-
vention, and everything should be left to private initiative. The underlying
adjustment mechanism goes as follows: if not enough of something is produced,
Language Planning and Economics 31

its price rises, and producers will respond by increasing output to the desired
level (while the rise in price simultaneously discourages some consumers); and if
too much of something is being produced, its price will drop, meaning that more
of the good will be absorbed by consumers, while some producers will simply
turn away from a production line that no longer generates sufficient profits. Let
me repeat that there is no exogenous notion of ‘too much’ or ‘too little’. ‘Too
much’ is revealed by the presence of excess supply, and ‘too little’ by the presence
of excess demand.
While all this constitutes a fairly credible line of argument for simple goods
such as tomatoes, television sets or car tyres, it becomes more difficult to accept in
the case of complex commodities such as education, health, or the environment –
and, of course, language. Even from the standpoint of mainstream economics,
there are strong analytical reasons for state intervention.
According to economic theory, there are some cases where the market is not
enough. These cases are known as ‘market failure’. When there is ‘market fail-
ure’, the unregulated interplay of supply and demand results in an inappropriate
level of production of some commodity, where ‘inappropriate’ can mean ‘too
little’ or ‘too much’. If the market does not work, the state has to step in.37 In
theory, there are essentially six sources of market failure:38
(1) insufficient information, which prevents economic agents (producers and
consumers) from making the right decisions in terms of output, purchases,
lending and borrowing;
(2) high transaction costs, which move agents not to do something that would
eventually have been economically beneficial;
(3) the fact that some markets cannot exist (for example, yet-unborn generations
cannot be present on today’s oil market to express their valuation of this
non-renewable resource);
(4) the existence of ‘market structure imperfections’ such as monopolies and
oligopolies;
(5) the presence of ‘externalities’, that is, of a situation where the behaviour of one
agent affects (positively or negatively) the position of another agent, without
the gain or loss so created giving rise to a corresponding compensation;
(6) the existence of so-called ‘public goods’, which in the ‘pure’ textbook case
display two main characteristics described below: ‘non-rival consumption’
and ‘impossibility of exclusion’.
If some linguistic environments are socially preferable to other linguistic envi-
ronments, and if at least one form of market failure occurs in the production of at
least one feature of linguistic environments, then state intervention is justified
from the standpoint of economic welfare theory.
Simple as at is, this result is far from innocent. Contrary to a widely held belief,
language policy is not an ‘un-economic’ endeavour; quite the contrary, it may be
the economic thing to do, if it promises to deliver an increase in welfare. Different
reasons can be invoked to explain resistance to this interpretation. Experience
suggests that one sometimes encounters, among non-economists, an automatic
assumption that economic analysis necessarily views language policy as a costly
indulgence. This perception may, of course, have been encouraged by the very
narrow vision of benefits and costs adopted by some economists themselves (see
32 Current Issues in Language Planning

e.g. Jones, 2000) not to mention omission by the same of the distributive (as
distinct from allocative) dimensions of linguistic environments; many economists
instinctively view all language policy as ill-advised tampering with the free
interplay of market forces. From an analytical standpoint, however, all this is
plain wrong, and language policy can be justified economically for reasons very
similar to those brought to bear on environmental policy.
This point, however, deserves a closer look. In the case of linguistic diversity,
market failure certainly emerges through more than one of the six channels just
mentioned. In fact, a strong case could be made that all six sources of market fail-
ure are present, providing as many economic reasons to engage in language
policy. Furthermore, these manifestations of market failure are often inter-
connected. Let us briefly consider them in turn:

(1) The presence of insufficient information can be invoked, but it may prove a
weak argument. Such a claim would imply, for example, that actors do not
realise how dependent the quality of their linguistic environment is on
linguistic diversity. Consequently, out of their ignorance, they fail to allo-
cate by themselves sufficient resources to the maintenance of linguistic
diversity, with the result that minority languages (whether these are seen
as ‘indigenous languages’ spoken by ‘indigenous peoples’ or as
‘autochthonous languages’ spoken by ‘linguistic minorities’39) suffer attri-
tion and decline. To use another example, some commentators claim that
social actors in non-anglophone countries fail to realise that their linguistic
environment will not just be affected, but adversely affected, by encroach-
ments of English, and therefore fail to behave in a way that would secure a
certain quality of their linguistic environment.40 This line of argument,
however, suffers from one major flaw, namely, the implication that people
don’t know what they are doing and what is good for them – and its corol-
lary that the enlightened academic or politician knows better. Outside of
addictive goods (which may therefore be seen not as ‘goods’, but as ‘bads’),
this line is unconvincing (at least in democratic societies), and economists
will usually defer to people’s expression of preferences as revealed by their
behaviour, whatever these preferences may be.
(2) The case of high transaction costs is more interesting, though paradoxically
little-explored in the case of language policy. The issue is analytically not
quite the same as that mentioned in the preceding section, namely, that
transaction costs may be lower when people adopt a common language. The
issue here is that owing to the existence of costs attaching to the practical
conditions needed to make exchange possible, people may abstain from a
potentially profitable exchange. Transposing this problem to our case
means that people must be shown to behave in a way that results in the
emergence of a sub-optimal linguistic environment. If the notion of trans-
action costs is broadened to include the costs of transition from one type
of linguistic environment to another, this line of argument can certainly
hold. For example, one might argue that the interests a supra-national
organisation such as the European Union, which currently uses 11 official
languages,41 would be better served if internal communication took place in
Esperanto, without translation and interpretation (Grin, 1997c; Pool, 1996).
Language Planning and Economics 33

This would require civil servants and elected parliamentarians to learn the
language. Until the time when all participants have adequate command of
the language, extra costs will emerge (for example, language-learning
costs), and these will only be worth shouldering if all participants adopt the
same strategy; until they commit themselves to it, transaction costs will be
deemed excessive and the status quo (or some alternative, non-optimal solu-
tion) will prevail.
(3) Non-existent markets represent a perfectly relevant concern in the case of
language. If languages are allowed to die out now or in the near future, they
will no longer be available in the more distant future for yet-unborn genera-
tions to express, even through market mechanisms, their preference for having
these languages around. Sticking to a pure market rationality at a given
point in time is tantamount to assuming that future (market) demand for
various threatened languages will be zero, and nothing bears out this
assumption (or, more precisely, nothing bears it out more than it bears out
the reverse assumption, namely, that future generations will highly value
linguistic diversity). Furthermore, linguistic environments do not lend
themselves to a popular logical fallacy regarding non-renewable resources,
according to which reserves of non-renewable resources increase (despite
the burning of fossil fuels) because new reserves are regularly discovered, or
because rising energy prices would make known resources, previously
considered too costly to exploit, suddenly economical. First, despite the
re-creation of expressions of diversity through the process of globalisation,
it is unlikely that yet untapped repositories of linguistic diversity will
replace languages now on the verge of extinction; second, even if this were
the case, one ton of crude oil may be a perfect substitute for any other,
whereas a manifestation of diversity, once lost, cannot be simply replaced
by another. Hence, the ‘non-existent markets’ source of market failure is
arguably present in the case of linguistic environments. However, it is
exceedingly difficult to move from this general observation to any kind of
policy implications. It is not possible to claim that future generations do not
care about the characteristics of their linguistic environment(s); but it is no
more possible that they do, thereby considerably lessening the strength of
the missing markets argument as a basis for state intervention.
(4) The issue of market imperfections needs to be understood against the back-
ground of competition as a ‘perfect’ market. ‘Perfection’ involves no moral
judgement – rather, it refers to the idea that owing to its specific characteris-
tics,42 a competitive market is one where the uncoordinated behaviour of
actors will result in an optimal level of production of various commodities,
from foodstuffs and energy to live arts performances, all of this at the lowest
possible price that covers production costs. To the extent that the ‘good’
which language policy may help to ‘produce’ is a certain linguistic environ-
ment, it should be clear that the exceedingly complex nature of the latter
resists analogy with the more simple goods that may be traded on a neatly
demarcated market. Nonetheless, addressing the issue at a highly aggregate
level, one may argue that linguistic environments are the result of behav-
iour by innumerable actors in highly contrasted positions of power, which
violates the ‘freedom of entry’ condition.43 In a related manner, one may
34 Current Issues in Language Planning

claim that when the behaviour of actors is analysed not in individual, but in
group terms, some groups of actors (for example users of some major
language LY) can influence the relative ‘value’ of different linguistic environ-
ments, thereby artificially lowering the ‘price’ of some linguistic environ-
ments while ‘pricing’ others out of the market. This violates the ‘atomicity’
condition, with the result that actors will be tempted to demand the
‘lower-price’ (and presumably less diverse) linguistic environment, whereas
their choices would have been different in the absence of undue influence by
speakers of LY. The current vogue of English in advertising and youth
culture provides an example. This line of inquiry, however, still awaits
closer examination than the literature now has to offer. In particular, it is
important to note that it is predicated on a fairly direct application of the
standard market model to linguistic environments, and considerable
conceptual clarification is still necessary for such applications to come to
fruition. Hence, it remains difficult, at this time, to give precise policy
substance to the a priori defensible idea, on the analytical plane, that linguis-
tic environments should be ‘produced’ in ‘more competitive’ conditions.
(5) Externalities are a crucially important dimension of linguistic environments,
and also one where promising avenues for research have been opened in
recent years by Church and King (1993); (see also Dalmazzone, 1999, for an
accessible introduction). A positive externality arises when the behaviour of
some actor h gives rise not only to the result that she anticipated (and which
initially moved her to action), but also to positive effects accruing to other
actors. Such positive effects can be seen as pure windfall profits, because
these lucky ‘other actors’ do not have to compensate actor h. Consider the
case of a language community comprising N individuals speaking language
LX. Suppose now that the outsider h, who speaks language LY, decides to
learn their language, and that none of the N members of the LX language
community speaks LY. Actor h therefore stands to gain the possibility of
communicating with N persons, and will be ready to invest time and money
in language learning as long as the value of her communicative gain exceeds
the value of her investment. At the same time, she provides to N individuals,
at no cost to them, the possibility of interacting directly with one more
person – herself. All externalities are not positive, however, and language
learning can give rise to negative externalities too: suppose now that some
members of the LX language community do speak LY, and make a living as
interpreters between LX and LY, charging a certain rate for their services. The
fact that h learns LX amounts to new competition, which will tend to push
downwards the rate they can charge. This is a negative externality, for
which they are not compensated, because actor h will have no reason to give
them a subsidy that would leave their income unchanged.
The key point is that because of the presence of positive and negative
externalities, decentralised decisions made by actors are unlikely to result in
the best possible linguistic environment. State intervention is required to
modify behaviour through policy, which may rely on incentives or on
mandatory regulation. Typically, the externality argument is used in the
literature to justify support for the learning of a common language – in prac-
tice, to push for more learning of English. This recommendation, of course,
Language Planning and Economics 35

is predicated on analytical decisions made regarding what counts as a bene-

fit or as a cost. More precisely, one needs to assume jointly: (a) that language
learning is justified by communication needs, and that the learning of a
common language will consequently be beneficial because it will make
communication easier, and will in particular reduce trading costs; (b) that
the generalised learning of a common language does not harm linguistic
diversity or that diversity counts for nothing. Remove either of these two
assumptions, and the externality argument, while still analytically relevant,
may be used in support of rather different recommendations, such as
massive investment in the learning of Esperanto, or even, in given areas, of
regional or minority languages.
(6) Market failure related to the public good nature of language may be the most
fundamental way to justify state intervention. Linguistic environments
have some features in common with biodiversity, which is generally recog-
nised as a type of public good. Without engaging in debatable biological
metaphors, it is useful to observe that the same analytical reasons that justify
intervention to preserve and maintain our natural environment (which, for
the analytical reasons already explained, simply cannot be left over to
market forces) also apply to linguistic environments.
Just like other amenities that surround us, such as street lighting or the
quality of air and water, languages, as well as the greater or lesser diversity
of these languages, constitute an environment which presents the core char-
acteristics of ‘public goods’. To explain this point, it is useful to define the
concepts of ‘non-rival consumption’ and ‘impossibility of exclusion’.
Apples provide an example of ‘rival consumption’, because the fact that I eat
an apple means that no one else can eat it. Languages are cases of ‘non-rival
consumption’ because the use of a language by one person does not reduce
the ‘amount’ of language available for use by another person – quite the
contrary, as has just been shown. Returning to the case of apples, there is a
‘possibility of exclusion’ (from consumption) because whoever does not
pay for the apple (or does not make the effort to grow it) will not be able to
eat it. In the case of language, by contrast, there is ‘impossibility of exclu-
sion’ since there is no practical mechanism (particularly a price-based one)
for keeping a person from experiencing a particular linguistic environment.
Hence, there is absolutely no guarantee that the free market (that is, decen-
tralised decisions made by social actors) generates the behaviour that will
result in the establishment and maintenance of the socially optimal linguis-
tic environment. Decentralised behaviour may fail, for example, to guaran-
tee an adequate degree of overall linguistic diversity or an appropriate
presence, use, learning, etc. of minority languages in our environment.
Nevertheless, some dimensions of the linguistic environment can in prin-
ciple be left to private initiative. This may be the case, for example, when one
considers only the acquisition of languages of wider communication,
because private actors can be directly rewarded for learning or teaching
them. Hence, people will normally invest in language learning (demand)
in proportion to the benefits they derive from it; and the language teach-
ing (supply) required can be provided and paid for as a result of this
demand. This, however, does not hold for several dimensions of our
36 Current Issues in Language Planning

linguistic environment, such as the visibility or presence of regional or

minority languages. To the extent that the preservation of those languages
has been, at the outset, recognised as a ‘good’, it follows that only the state or
its surrogates can be counted on to take the measures that will result in an
appropriate presence and visibility of regional or minority languages in our
linguistic environment.

Let us repeat what may be the most important point in this discussion,
namely, that the case for state support may very well be made not on the basis of
political arguments or of an appeal to human rights or minority rights, but on the
basis of economic welfare theory, and taking account of some specific features of
diverse linguistic environments as a valuable commodity. All this raises the
question of the value of language, to which I now turn.

The ‘value’ of language

As we have seen in the preceding paragraphs, the rationale for policy inter-
vention hinges crucially on the identification and measurement of advantages
and drawbacks, which it is often convenient to translate into ‘benefits’ and ‘costs’.
However, these terms have no meaning unless they are underpinned by a clear
concept of ‘value’. It is therefore unsurprising that at some stage or other, much
of the political debate about language raises the question of the ‘value of
language’, with some participants in this debate referring to language as a ‘trea-
sure’, a form of wealth, etc. It is easy to forget that most of the time, such state-
ments amount to little more than metaphor; some seem to consider the notion
that language is ‘valuable’ as a foregone conclusion, and go on to assume that as a
consequence, languages are obviously valuable in an economic sense. This is not
necessarily so. Limitations of time and space prevent us from entering a full
discussion of economic concepts of value and their implications for language
(Grin, 1997a). Let us simply observe that when something is valuable in the eyes
of social actors, this is usually reflected in their behaviour. For example, if learn-
ing Sámi were obviously valuable, people would take notice without being told,
they would learn and use it, the language probably would not be in such dire
straits, and would not be, as it is, in need of strong support measures. This is not
to say that Sámi (or any other minority language) is not valuable. However, to
make this point clear, it is important to consider different forms of value.
Let us first consider the question of value from the standpoint of the individ-
ual actor, who experiences what I shall call ‘private value’. Within it, a distinction
must be made between ‘market’ and ‘non-market’ values. Market values are
reflected in prices or some such indicator. Suppose for example that speaking
language LX makes it easier to sell goods to the LX-speaking public and thereby
gives rise to higher profits, or that an LX-speaking employee earns more, all other
things being equal, because he knows language LX: in this case, LX has market
value.
However, non-market value also exists. For example, knowing language LX
gives access to the associated cultural sphere, facilitates social contact with
members of the LX-speaking community, etc. Such value is typically not reflected
in market prices, but it will be experienced by individual actors if their tastes, or
preferences, include contact with LX-ish culture and communities. The argument
Language Planning and Economics 37

may be extended from the case of one specific language (LX) to the diversity of
languages; non-market value attaches to linguistic diversity for people who
value diversity in their linguistic environment, in the same way as they may value
a certain (natural) environmental quality. Advocates of diversity must not
forget, however, that some people may simply not care.
The market and non-market value that attaches to language LX for a given
individual can serve to explain his choice to learn or not to learn language LX, and
to agree or not to agree to the spending of tax resources for programmes in favour
of language LX. Yet an additional step is required to analyse choices at a social
level – and hence to tackle policy questions.
So far, market and non-market value have been described at the private level.
At the social level, which refers to value for society as a whole, the distinction
between ‘market’ and ‘non-market’ is still relevant, but social value is different
from private value and has to be computed somehow. Most economists would
agree that social values should be seen as the aggregate of private values. As a first
approximation, aggregation amounts to a simple sum; this means that the sum of
private market valuations, over all individuals in a given society, yields social
market value, while the sum of private non-market valuations yields social
non-market value. In our example, the value of language LX or of a particular
linguistic environment defined, among other traits, by the status of language LX
in it, is therefore the sum of social market value and social non-market value. This
is summarised in Table 1.

Table 1 Elements of value

Private Social
Market A C
Non-market B D

A represents private market value, B private non-market value, C social

market value, and D social non-market value. Total social value SV is therefore
equal to C+D. How should this be computed? Generally, for a society with N
persons (1,2, . . . ,i, . . . ,N) whose individual market valuation of language LX or of
a given linguistic environment is mvi, and non-market valuation is nmvi, total
social value SV is given by:
N
SV = å mv i + nmv i
i =1

A simple yet general decision rule can be derived from this way of formulating
language policy choices: the policy that ought to be selected and implemented,
all other things being equal, is the one which maximises SV, minus the corre-
sponding costs of the policy, because this means adopting the policy from which
maximum net welfare can be expected. This may sound like stating the obvious;
unfortunately, macro-level language policy recommendations are routinely
made with only the most tenuous attempt at checking that welfare would indeed
38 Current Issues in Language Planning

be increased. However, while this provides a general structure for estimating

value, several conceptual and empirical questions arise:

(1) First, simple summation can be an inappropriate mode of aggregation, because

of the possibility of externalities, as discussed earlier. If person h (a native
speaker of language LY) learns language LX, anticipating a money return on
this investment, she increases the pool of speakers who know LX. This will
affect the situation of another person, say j, in different ways. Suppose that j
already knows language LX. On the one hand, the fact that h has learned LX
increases the relevance of language LX and hence the value of j’s language
skills. At the same time, one more LX-speaking person on the labour market
may erode the wage premiums accruing to LX speakers, and j may see his
wage situation deteriorate. The social market value of teaching language LX
to those who do not speak it therefore cannot be computed as the sum of the
gains that each non-speaker stands to make by learning LX, if only because,
among other reasons, (a) existing speakers may gain or lose; (b) the potential
gains to non-speakers of LX who decide to learn it will be affected by the
numbers of other non-speakers who subsequently decide to learn it once
they observe that some fellow LY-speakers have gained from this move. At
this time, the problem of aggregation (which is typically a network
externality one) does not seem to have found a satisfactory solution in the
theoretical literature.
(2) The components of non-market value are very difficult to identify theoretically,
and no less difficult to measure empirically; furthermore, they are likely also to
be subject to the network externality problem just described in the case of
market value.
(3) Policy is about moving from an existing linguistic environment to another
linguistic environment giving rise to higher welfare. This move entails benefits,
but also costs.While some elements of cost have been mentioned (in the form of
losses for some members of society), the precise amount of presumably
straightforward direct costs, based on the expenditure required to achieve the
benefits expected from a policy, is often very difficult to evaluate.

It is therefore not possible, at this time, to really compute the ‘value’ of a

language, and this expression must be handled with caution; unfortunately, not
all commentators do. It is equally delicate to estimate the ‘value’ of a linguistic
environment as compared to another.44 A considerable investment in research on
the identification and measurement of the benefits (market and non-market) that
can be expected from a particular policy and of most of the costs, direct and indi-
rect, associated with such a policy move, now needs to be made. This means that
in practice, analysts need to settle for more modest goals, and to concentrate on
parts of the problem of value. Evaluation work usually proceeds as follows:
· network or externality effects are ignored, largely on the grounds that some
are positive while others are negative, and are thus likely to cancel each
other out to a significant extent;
· the emphasis is placed on private market value, mainly by estimating its
most important component, namely, the statistical relationship between
language skills and wage rates;
Language Planning and Economics 39

· these estimates of (average) private market benefits associated with

language skills can then be combined with average (per person) public
spending for imparting those skills in order to compute social market
value;
· non-market values are kept out of the calculation, largely on the grounds that
for lack of data, there is practically no alternative (although some useful eval-
uation methods could be imported from environmental economics).
In practice, therefore, the question of value is reduced to a subset which essen-
tially coincides with cell A in Table 1. In the section of this paper on language
education policy, we shall therefore mostly focus on this subset of the general
problem of the value of language.

Language policy, diversity, and the ‘fundamental rule’

If one wishes to inform policy choices about language with reference to the
concept of ‘value’, it is important to steer clear of metaphors, and to parse the
problem in order to identify and measure components of value; yet we have just
seen that conceptual and empirical difficulties are such that a full estimation of
the respective social value of alternative linguistic environments remains largely
out of reach, forcing us to concentrate on the evaluation of private market values.
The general inference is that an economic approach cannot provide readily appli-
cable recipes for solving language policy problems.
Nonetheless, it offers the advantage of providing a structure which is often
lacking from many policy discussions, and one general theoretical result can be
ventured regarding the relative value of different linguistic environments. In
order to present this point, let us assume that these linguistic environments are
differentiated from one another by the extent of diversity they accommodate. The
application of basic economic concepts then suggests that society is likely to be
best off not when it tries to eliminate diversity, nor when it attempts to embrace
limitless diversity.
The argument rests on a ‘fundamental rule’ of policy choice (Stokey &
Zeckhauser, 1978), which requires selecting that option which promises to
deliver the highest net benefit – that is, ‘benefit minus cost’. As a general starting
point, it is probably easy to agree that diversity, like most things, carries both
advantages and drawbacks, which for simplicity we may call benefits and costs.
It is understood that these are not confined to monetary ones and that
non-market elements, as a matter of sound principle, must be taken into consid-
eration. More diversity will entail more benefits and more costs. However, bene-
fits tend to rise at a decreasing rate, while costs tend to rise at an increasing rate.45
This implies that benefit and cost curves will generally behave as in Figure 2. This
means, in turn, that there is a point where the difference between benefits and
costs is largest, indicating the maximum level of net benefit. This corresponds to
an optimal level of diversity at d*, which is neither zero nor infinite.
Though apparently innocuous, the result that socially optimal diversity is
likely to be positive and finite has major political implications, because it indicates
that from an economic standpoint, policies striving to preserve or impose
linguistic homogeneity – or, in other words, ‘zero diversity’ – are ill-advised,
since they underestimate the benefits and overestimate the costs of diversity.
40 Current Issues in Language Planning

Figure 2 Optimal diversity

Conversely, generous calls (often motivated by human rights concerns) to

embrace boundless linguistic diversity and to set up policies for the integral
recognition of all languages in society, including those of immigrant groups,
however small, tend to make the symmetrical mistake. These basic principles of
scale and optimisation are surprisingly under-used in economic analysis, as
pointed out some 20 years ago by Gilman (1983: 40).46 It is also worth noting that
on the basis of the very general assumptions adopted here, one would be led to
question the widely held belief that diversity is negatively correlated with
macro-economic welfare (for a considered discussion, see Nettle, 2000).
As a shortcut to the estimation of benefits and costs, three strategies can be
adopted. The first is simply to leave the comparison procedure to the political
debate, possibly after presenting, to the extent possible, detailed information to
voters about the practical consequences of the various options considered. In
theory, preferences expressed through the vote will embody voters’ valuation of
market and non-market benefits and costs, and even if majority voting offers no
solution to the problem of externalities, particularly network externalities as
discussed above, the procedure at least presents commendable democratic
credentials.47
Another strategy, which yields a clearer picture of the non-market compo-
nents of value involved, is theoretically possible, though, to my knowledge,
untried as yet. Evaluation methods derived from environmental economics can
be applied to language choices (Grin, 1994c): a representative sample of residents
can be asked in a survey how much they would be willing to pay (for example
through extra taxes, or as a percentage of their total tax burden) for society to
move from the current linguistic environment to another, presumably more
desirable, linguistic environment which a proposed policy would aim at achiev-
ing. Conversely, respondents may be asked how much they would be willing to
pay towards a policy whose aim would be to prevent a presumably undesirable
change in their linguistic environment from happening. An example of the first
situation is people’s willingness to pay to achieve a substantial increase in aver-
age second language skills in the population – implicitly defined as a benefit –
perhaps through a generalisation of bilingual classes in the education system. An
example of the second situation is people’s willingness to pay to stop the decline
Language Planning and Economics 41

of threatened language – whose final demise, implicitly defined as a loss, would

become unavoidable in the absence of such a policy.
Thirdly, estimates of the aggregate cost of a given language policy can be
presented to survey respondents, who are then asked if they consider this cost
acceptable or not. This implies that costs have first been estimated, which, most
of the time, is not done. It is important to point out that in cases where such calcu-
lations have been carried out, the costs entailed by language policy often turn out
to be much lower than is commonly assumed (see ‘From unilingual to bilingual
education’ below) and fall within a range that a majority of voters are probably
quite willing to pay in order to secure the linguistic environment they desire.

On cost-effectiveness evaluation
The relevance of economics to language planning lies chiefly in its capacity to
draw on a robust conceptual framework that helps guarantee logical consis-
tency, as well as the general character of analytical work. The latter proceeds
from a constant effort to use as few explanatory variables as possible in order to
explain a given phenomenon. This guards against the temptation to explain a
situation by case-specific, ad hoc reasons – which would of course strip the expla-
nation of any relevance as a (general) theory or as an illustration of a theory; it is
no accident that ‘adhockery’ is one of the most scathing insults that economists
can hurl at one another. The downside of the approach is that the application of
tools such as ‘benefits’ and ‘costs’ quickly runs into daunting conceptual and
methodological problems – unless one is prepared to use these terms in a much
looser sense, with the unsurprising result that propositions formulated on their
basis may not hold up to closer scrutiny. Hence, economics can be of service in
language policy work and offer insights and information that other approaches
usually do not provide, but only within limits. Accordingly, economic contribu-
tions over recent years have tended to emphasise various forms of policy evalua-
tion using a limited range of well-established concepts, such as ‘effectiveness’
and ‘cost-effectiveness’.
Policy evaluation is a field of specialisation in its own right. It has its basis in
political science but it usually displays an essentially economic concern for the
effective use of scarce resources (Dunn, 1994; Stokey & Zeckhauser, 1978). In this
framework, policy goals are exogenously set, and will normally have been
adopted as a result of political debate. The role of the policy analyst will then be to
compare possible courses of action for the transposition of political choices into a
set of policy options. The comparison must be based on information regarding
the relative advantages and drawbacks of each policy option, and recommenda-
tions regarding implementation. This focus on the selection, design and evalua-
tion of policy options cannot be exclusive, nor can it be completely insulated
from political debate; moreover, it is not intended to replace it.48
Despite these limitations, this type of exercise will require a logically rigorous
analysis, possibly referring to a policy-to-outcome path linking the policy deci-
sion at one end with its expected outcomes at the other end, parsing the way in
between into successive cause-and-effect steps (Grin, 2003; Grin & Vaillancourt,
1999). This type of policy evaluation exercise entails the following stages, which
can best be explained with the use of an example. Let us therefore consider the
case of a policy whose goal is to ensure the long-term maintenance of a minority
42 Current Issues in Language Planning

language LX, and work backwards from the ultimate policy outcome to the policy
measure:
· First, policy outcomes must be expressed in terms of the ultimate goals of a
policy. In our example, one would use some indicator of language use or
language vitality. This is obviously more relevant to evaluating success
than information about the direct outputs of specific measures, such as the
number of teachers undergoing training in order to be able to teach the
minority language in schools. While an increase in the number of qualified
teachers should per se be conducive to the success of the policy, it is only an
intermediate goal, and merely a means to an end.
· Second, the desired policy outcome must be modelled, even if informally,
as part of a set of causal relationships. The policy outcome will be cast as a
dependent or ‘explained’ variable, while the policy measure will be cast as an
independent or ‘explanatory’ variable. Any contextual elements deemed
relevant by the analyst may of course be included in the model, as long as
such inclusion is not confined to vague statements to the effect that ‘the
success of the measure will also depend on factors x, y, and z’, but formu-
lates an explicit directionality about this dependence. No major insight is
gained by simply mentioning the fairly obvious fact that reality is complex
and that the density of interconnections between processes is boundless
(Pool, 1991a).
· Third (assuming that the policy being evaluated is concerned with
language maintenance as reflected in the extent of its use), these cause-
and-effect relationships must be grounded in a relevant representation of
language use which should, explicitly or not, be anchored in a theory of
behaviour. This will make it possible to assess the difference that a policy
has made, and ensure that certain policy measures are not credited, say, for
increases in language use that might have occurred anyway, even in the
absence of those measures.
· Fourth, once this general framework is in place, the workings of a policy
measure can be followed in proper sequence all the way from its adoption
by the authorities through its direct effects and ultimately to its more
distant effects on relevant indicators of language maintenance.
Effectiveness can be defined in different ways. Unfortunately, some of them
obliterate the crucial distinction between ‘effectiveness’ and ‘cost-effectiveness’.
Let us therefore adopt the following convention: ‘effectiveness’ will simply mean
‘having an effect’ or ‘making a difference’, while ‘cost-effectiveness’ will imply
that a given effect is achieved with the lowest possible use of resources or, alterna-
tively, that given a certain use of resources, the best (highest) possible effect is
achieved. In this sense, assessing effectiveness will require analysts to establish
whether the implementation of a particular policy measure should be expected
to have (or has had, in the case of ex-post evaluations) an effect on the indicator of
language maintenance chosen at the outset.
In order to evaluate cost-effectiveness, it is of course necessary to evaluate
costs. The question of cost evaluation would require a full-fledged paper of its
own, and the reader is referred to materials quoted in this section for details. Let
us simply point out two essential principles.
Language Planning and Economics 43

· First, cost must not be confused with expenditure. Expenditure is an

accounting concept that attaches to the resources invested in a policy (for
example, the salaries of the teachers hired to teach the minority language).
Cost, by contrast, attaches to the outcomes of a policy (for example: ‘how
much does it cost to increase by 5% the percentage of their leisure time that
school-age children spend using the minority language instead of the major-
ity language?’). Moving from expenditure to cost figures requires approxi-
mations (sometimes rough ones) in order to apportion items of expenditure
to units of outcome. Though often intellectually frustrating, this exercise
cannot be side-stepped, given, precisely, the very complexity of the causal
relationships involved.
· Second, what matters is not total cost, but the difference between the cost
society incurs if a given policy is implemented, and the cost it would have
incurred if the policy had not been implemented. One classical example is
that of potentially damaging tensions or even conflict that may arise
between a majority and a minority if the latter is denied recognition – possi-
bly through negation of its language. Granting official status to the minor-
ity language may be costly, but these costs should be weighed against those
that would have occurred in case of worsening inter-group conflict. This
problem can be defined as that of identifying the proper ‘counterfactual’.49
Once an evaluation of cost has been produced, it becomes possible to estimate,
for each proposed policy, an indicator of cost-effectiveness. This can be done
either by dividing total outcome by total cost (which yields an index of what can
be achieved per euro, mark, franc or dollar spent) or by dividing total cost by total
outcome (which yields an index of the cost to be faced in order to obtain one unit
of output).
The procedure can, in theory, be applied across completely different policy
areas, as long as they have a common goal that can be expressed in terms of a
common unit of measurement (Grin & Vaillancourt, 1999). Such generalised
comparisons, however, may be replaced by more circumscribed procedures
within policy domains, such as education or the media, thereby reducing the
need to resort to a string of assumptions in order to express the outcomes of very
different types of intervention along the same scale.
Before closing this section, it seems necessary to stress once more that the
instruments that economic analysis can provide are just that – instruments – and
that they cannot serve as a substitute to the inputs and insights offered by other
approaches. The specific contribution of economics often operates by recasting
language problems in a new light, and redefining them in terms of alternatives
whose implications must be spelled out, and between which choices have to be
made. The making of such choices, however, must remain a political process,
which policy analysis is not intended to replace.50

An Application: Language Education Policy

Education plays a key part in language policies, because it is the single most
important vehicle of language policy. This is why this closing section, devoted to
an empirical application of some of the tools presented earlier, focuses on educa-
tional issues. The following points will be examined: the estimation of private
44 Current Issues in Language Planning

returns on investment in second (or foreign) language learning; the estimation of

social rates of return on language teaching; and the bilingualisation of education
systems.

The market value of language skills

Private benefits
For the sake of brevity, this example focuses on second or foreign language
skills (two notions between which no major distinction needs to be made from
the standpoint of economic analysis). Ultimately, the analytical principles are the
same for all language skills, including proficiency in one’s first or main language
(usually the mother tongue), but in the course of an account concerning first
languages as well, interpretation and commentary would need to be expanded
accordingly and considerably lengthen the discussion.
Let us therefore consider the common situation where the level of language
skills acquired by actors is, to a large extent, the outcome of language education
policy. This requires a brief excursus in the field of education economics, which will
be confined to some essentials; for a textbook treatment, see e.g. Lemelin (1998),
and for an extensive survey of its subfields, Psacharopoulos (1987).
Education economics as a recognised field of specialisation in economics
emerged in the early 1960s. One of its main pillars is human capital theory, whose
thrust is as follows. An actor with specific skills will tend to be more productive
than another without those skills. Since wage rates generally reflect productivity,
a more skilled person will tend to earn more. If skills are acquired through the
education process, education yields benefits represented by wage premiums.
Even if education is costly, both for individuals and for society, it may therefore
be seen as an investment whose rate of return can be estimated. Typically, most
of the investment takes place in the early years, while the returns on the invest-
ment appear during working life. Let us compare two education scenarios: the
‘long’ (A) and ‘short’ (B) ones, which are associated with different earnings
levels. These scenarios, which start diverging for individuals reaching the age of
15, are represented with age-earnings profiles as shown in Figure 3.
Area FE stands for ‘forgone earnings’, while area SE stands for ‘schooling
expenditure’ (by the individual or the parents), and surface GH represents the
gains resulting from longer education. At first sight, the investment is profitable
if GH > FE + SE. However, time must be taken into account. Let us assume, for
simplicity, that we are considering the choices of a young person contemplating
either scenario, and that all the extra expenditure entailed by choosing long stud-
ies would take place in the current period; the current values of FE and SE there-
fore represent costs reasonably accurately. However, the gains will only appear
over successive years in that person’s working life. This means that the present
value of future earnings needs to be compared with the sum of FE and SE.
Assume that working life stretches over 40 years, from 25 to 65. Let us define
the earnings profiles as A and B respectively, stretching over those 40 successive
years (1,2, . . . ,j, . . . 40). The rate of return on the investment is the value i which
verifies the equation:
Language Planning and Economics 45

Figure 3 Age earnings profiles

40 A j - Bj
å (1 + r)
j =1
j
- FE - SE = 0

Hence, calculating private market value comes down to estimating the value
of r in the above equation, using appropriate data and standard econometric
tools. A similar logic can be applied when comparing the profiles of actors with or
without second language skills, yielding estimates of benefits (which take the
form of language-based earnings differentials), usually in percentage terms.
Private investment costs
Evaluating the costs of investment in second languages raises a number of
difficulties.
Costs borne by the individual acquiring an education include two parts: direct
expenditure on books, tuition, etc., and forgone earnings. For our purposes,
these costs can be omitted for the following reasons. In most countries where
education is publicly provided and languages taught as part of this education,
students’ direct expenditure on school materials, though not nil, is relatively
minor and can be assumed away (if it were taken into account, it would not result
in a major difference in the estimated rates of return). As regards forgone earn-
ings, they tend towards zero for learners under legal working age, because they
would not be allowed to sell, on the labour market, time not spent at school.
Furthermore, even beyond the legal minimum working age, it would be imprac-
tical to trade for a wage the amount of time specifically taken away from
language classes scattered over the weekly schedule. Hence, FE and SE can be
46 Current Issues in Language Planning

assumed to tend towards zero. Finally, there are also other elements of private
expenditure, such as fees paid for evening classes as part of adult education.
Usually, however, adult or continuing education is a privately made decision,
not a state-imposed policy, and hence not part of the costs of a public education
policy.
The main component of expenditure is therefore made up of state spending on
language teaching. These costs, however, are borne indirectly through taxation,
which means that they are unrelated to a young learner’s actual consumption of
language education. They are therefore not relevant elements of private invest-
ment cost, and treatment of this part of cost is postponed to the examination of
social rates of return below.
Private earnings differentials
One of the most strongly established models for the selection and design of
language education policies is derived from the combination of the language
economics perspective with human capital theory developed in education
economics. The fundamental set of concepts used in this combination has been
described in the preceding paragraphs. I now turn to the application of this
model to the statistical estimation of what is often referred to as the ‘private rates
of return’ on second language skills.
The term ‘rate of return’, in this context, is not fully appropriate. As
explained above, the concept of rate of return presupposes that human capital
is treated as an investment entailing (mostly) current expenditure in order to
generate future benefits. In other words, the passage of time should be explic-
itly taken into account. However, the overwhelming majority of existing statis-
tical work on the private value of second language skills eschews the question of
time. Typically, information will be gathered on the current value of a range of
variables for individual observations, and these values related to one another
through multivariate analysis; hence, it is more appropriate to speak about ‘earn-
ings differentials’. Hence, most of the literature in this area therefore presents
differentials, not rates of return.
The example used below is that of English as a foreign language in the case
of Switzerland. The reason for this choice is that it is, at this time, the only one
for which data make it possible to assess the value of English as an
international language, that is, in a country where it is neither an official nor a
demolinguistically dominant language. At the same time, the data set used
includes unusually detailed information about the levels and types of language
skills. The data cover a representative sample of 2400 observations over three of
Switzerland’s four language regions. A specific methodology was developed in
this survey for the collection of language competence variables through tele-
phone interviews, in order to ensure the stability and comparability of the infor-
mation gathered. All this probably makes this data base one of the richest
internationally in this field. It contains questions on the following items:
· respondents’ L2 skills, differentiating between the ‘four skills’ (under-
standing, speaking, reading and writing) and within each skill, four skill
levels (fluent, good, basic, none);
· non-school channels of L2 acquisition;
· L2 use on the workplace;
Language Planning and Economics 47

· standard socio-economic characteristics (education, etc.), including labour

income.
The computation of average labour income by level of English language skills
reveals a strong positive correlation. However, English-language skills are also
correlated to other determinants of income, particularly education, and higher
earnings accruing to those who speak English may simply reflect the fact that,
having a higher education, they can hold better-paying jobs. Hence, wage premi-
ums may have nothing to do with competence in English. The same problem can
be illustrated by the following example: better-educated people who earn more
are more likely to have had more Latin at school than others, but one would not
necessarily conclude that they are rewarded for some (residual) ability to trans-
late Cicero.
In order to circumvent this problem, the classical solution is to use a statistical
instrument called ‘ordinary least squares regression’ (OLS for short). OLS meth-
odology will not be presented here, and readers interested in explanations on
technical treatment are referred to successive studies on Quebec and Canada by
Vaillancourt (in particular 1988, 1991) and, as regards the data used here, to Grin
(1999c). OLS are particularly useful to separate the effect of various determinants
of income. Typically, an equation with the following form will be estimated:

ln Y = a + b 1 E + b 2 X + b 3 X 2 + b 4 L + b 5 F + e

where lnY stands for the logarithm of labour income, E for educational level
(measured in years), X for experience (also measured in years), L for some indi-
cator of language skills, and F (depending on the data available) for other
factors considered relevant in the determination of labour income (for example,
a respondent’s type of employment). Finally, e is a random term whose
expected value is zero. Using, in the example below, not just English language
skills, but also education and experience as regressors, we obtain the set of
results presented in Table 2. In this table, the coefficient for each level of compe-
tence in English reports, in percentage points, by how much the earnings of an
individual displaying that level of competence will exceed those of someone
who has no competence in English, but has equivalent education and work
experience. 51
The results in Table 2 indicate that English language skills are highly
rewarded on the Swiss labour market. Even controlling for education and experi-

Table 2 Net earnings differentials (%) for English language skills Switzerland 1994/
95 (language coefficients only)

Men (n = 1141) Women (n = 803)

Fluent 24.09 25.19
Good 18.03 39.52
Basic 8.93 18.09

Adj. R2 0.360 0.095

Source: Grin (1999c: 164). All reported coefficients are significant at the 99% level
48 Current Issues in Language Planning

ence as is done here, the premiums clearly rise along with the level of competence
in English. Extended analysis with additional control variables confirms the
econometric robustness of the results; it also shows, however, that reality is more
complex than these simple figures suggest. First, there are significant differences
between Switzerland’s language regions. When the analysis is carried out for the
three regions separately (German, French and Italian-speaking) much higher
rates of return for competence in English appear in German-speaking Switzer-
land. In French-speaking Switzerland, by contrast, knowledge of German as a
second language is more highly rewarded than knowledge of English. Second,
returns are sector-dependent: in some economic sectors (typically, those that
display a strong orientation towards international trade), English is highly
rewarded; in other sectors, the earnings differentials are low.
Estimations of earnings differentials according to foreign or second language
skills constitute relevant information for individuals who contemplate learning
another language, but from a language policy perspective, social rates of return
(see below) would in principle matter more. However, social rates of return on
language teaching are usually not available, and private earnings differentials
already provide ample material for public debate. The type of use to which these
figures can be put will, however, be case-specific. In the Swiss context discussed
here, these figures are quoted in the ongoing debate on the relative relevance of
teaching national languages (as opposed to English) as part of the curriculum
(see e.g. Lüdi, 1998; Watts & Murray, 2001), because they show that the return on
teaching them is high (and, in the case of French- and Italian-speaking Switzer-
land, that knowledge of another national language, German, is more financially
profitable than knowledge of English).
If comparable data were available for other European countries, it would be
possible to carry out similar calculations and to assess whether the current trend
towards increased investment in the teaching of English and the concomitant
neglect of other languages amounts to a financially well-advised attitude or not.
Such results would be particularly interesting for Britain and Ireland, where
investment in foreign language learning is reputedly very low (Graddol, 1997),
and where foreign languages are no longer part of the subjects required for ‘A
levels’ at the end of secondary education. In the case of Québec, estimates of
(private) language-based earnings differentials confirm the value of English as a
second language, and have major political significance as tools for monitoring
over time the evolution of the respective socio-economic status of anglophones
and francophones – with or without knowledge of the other language
(Vaillancourt, 1996). If figures on provincial spending for the teaching of English
were combined with this information, in order to yield estimates of social rates of
return, it would become possible to address the issue of social over- or
under-investment in the teaching of English – or, for that matter, of other
languages like German and Spanish.

Social rates of return on foreign language teaching

The estimation of social rates of return tends to be technically more demand-
ing, because it does take the time dimension into account through actualisation,
and estimates therefore do deserve the label of ‘rate of return’. Furthermore, data
Language Planning and Economics 49

on government expenditure for language teaching also need to be gathered and

processed.
However, data on this component of education spending are practically
non-existent, or at least extremely rare, because current education accounting
practices generally fall short of ‘analytical accounting’, and hence do not yield
figures on expenditure by subject (OECD, 1998). The costs of specific school
programmes offered through the medium of a specific language have occasion-
ally been estimated (e.g. Patrinos & Velez, 1996); to my knowledge, however, the
only example of such cost figures having been systematically derived from
aggregate spending figures is a study on language teaching in Switzerland (Grin
& Sfreddo, 1997). They suggest a total spending of CHF1500 (approximately
1000 or US$ 1000) per student and per year for the teaching of all second
languages. On average, 10% of total education spending is devoted to second-
language teaching. This figure excludes post-secondary education. It can never-
theless be used as a reference point, taking account of the fact that it reflects an
education system in which learners in short streams typically learn one foreign
language for three years, while learners in long streams learn one foreign
language for seven years and another for four years.52 This figure of 10% is proba-
bly not markedly different from shares observable in other Western European
countries, so that a range of 5% to 15% of total education spending can be seen as
an acceptable a priori approximation of public spending on second language
teaching for those countries.
The estimation procedure is the following (for a detailed explanation, see
Grin, 1999b, Chapter 9):
· two distinct age-earnings profiles are estimated, for unilinguals and bilinguals
respectively – or for some similar alternative;
· respective figures for labour income in each period are estimated;
· the difference between both profiles at each period is obtained by subtract-
ing the lower from the higher profile;
· if resulting figures reflect (as may be the case depending on the nature of the
data used) underlying monthly earnings, they will be multiplied by 12 to
obtain yearly amounts;
· an assumption is made regarding the period of time for which estimations
are carried out – usually, the outset of the typical agent’s working life;
· future earnings differentials, estimated for one typical agent, are discounted
over the time horizon from the starting point of the period of time consid-
ered;
· figures on per-capita spending on the teaching of the language concerned
are then brought into the calculation;
· earnings differentials on the one hand, and per-capita spending on the
other hand, are entered into a rate-of-return equation as presented above in
the sub-section on ‘Private benefits’;
· the discount rate which annuls the left-hand term of the equation repre-
sents the social rate of return on the teaching of the language concerned,
given estimated earnings differentials and teaching expenditure.
A selection of social rates of return on foreign language teaching in Switzerland is
50 Current Issues in Language Planning

Table 3 Social rates of return on foreign language teaching (%), men, Switzerland
1994 a

L2 Language region
French German Italian
German 6.5 n.a. 21.5
French n.a. 10.0 11.7
English 4.7 12.6 n.s.

Source: Grin (1999c: 194)

a: Expenditure figures for 1993–94 school year. Earnings information from late 1994 (96%
of weighted sample) or early 1995 (remaining 4%). Control variables in underlying earn-
ings equations: age, age squared, education (years). n.a.: not applicable. n.s.: not signifi-
cant. Reported values are based on coefficients significant at the 99% level

a
Table 4 Social rates of return on foreign language teaching (%) Switzerland 1994

L2 Language region
French German Italian
German 7.4 n.a. n.s.
French n.a. 7.8 n.s.
English 6.4 13.1 n.s.

Source: Grin (1999c: 194)

a: Expenditure figures for 1993/94 school year. Earnings information from late 1994 (96%
of weighted sample) or early 1995 (remaining 4%). Control variables in underlying earn-
ings equations: age, age squared, education (years). n.a.: not applicable. n.s.: not signifi-
cant

provided in Table 3. Only results for the male part of the sample, which are all
statistically robust, are reported in the table, because results for women do not
display the same degree of statistical reliability.53
If one is willing to admit results for women, where one of the underlying coeffi-
cients is not statistically significant at the 99% (but where significance, for the coef-
ficients concerned, is usually in the 80% to 95% range, making them worthy of
attention), it becomes possible to combine rates for men and for women and to
compute a weighted average of social rates of return for the entire sample. The
corresponding figures are reported in Table 4.
Social rates of return for the teaching of foreign languages therefore vary,
according to L2 and to language region, from 6% to 13%. Clearly, the most profit-
able of the social investments is for English in German-speaking Switzerland.
However, the teaching of English in French-speaking Switzerland is a valuable
investment as well. All these figures compare favourably with the average rate of
return on financial capital, since real rates of return (net of inflation) on riskless
assets normally lie in the 3–5% range, while the opportunity cost of capital conven-
tionally used in cost-benefit analyses is 10%. In the Swiss case at least, therefore, the
teaching of foreign languages is a very valuable investment, even on the basis of
Language Planning and Economics 51

strict market value. If non-market value were also taken into account (to reflect in
particular the political and cultural reasons that may be called upon for teaching
foreign languages), the social rates of return would, of course, be higher.
Figures are unlikely to be markedly different in other Western European
countries. However, it would be hazardous to attempt to generalise directly from
the Swiss case. In order to gain knowledge about the rates of return on public
investment in language teaching in other countries, it is essential to gather appro-
priate data.
Two limitations of the social rate-of-return approach must be recalled here.
The first one is that it combines information on benefits currently observed with
information on current cost. In reality, however, current cost is incurred in order
to generate future benefits. Even if the estimation procedure implies a projection
of benefits into future periods (and then the actualisation of benefits), the causal
relationship between cost and benefit that the calculation implicitly assumes
amounts to an act of faith in the fact that benefits will remain in the same range in
the future. This assumption is acceptable for planning over relatively short hori-
zons (certainly up to five years, possibly a little more), since the market value of
foreign language skills is unlikely to change markedly over a relatively short
period. However, longer-term assumptions about the value of specific skills
(from foreign languages to mathematics or computer literacy) can only be tenta-
tive.
Similar acts of faith are routinely made in the well-established field of
education economics for the estimations of returns on education as a whole; unfor-
tunately, it is far from certain that significantly better-performing strategies exist.
First, analytical refinements aiming to replace current figures by hypothetical future
figures may entail considerable effort for precious little gain in reliability. Second,
incomplete as it is, the type of knowledge provided by rate-of-return calculations
remains better than total ignorance – or than the purely arbitrary pronouncements
that may otherwise replace them in the media and political space.
The second limitation has already been mentioned, but it bears repeating.
Even if the problem of time discrepancy were magically solved thanks to perfect
foresight, social rates of return, based as they are on private market benefits, can
only give part of the picture. The information they provide must be seen in the
broader context of political debate of language policies, in which non-market
values (usually under the label of ‘culture’, ‘history’ or ‘identity’) have a leading
role to play.

From unilingual to bilingual education

The issue of minority language revitalisation has in recent years been receiv-
ing increasing attention in sociolinguistic debate, largely as a result of a growing
concern for minority rights, language rights and linguistic human rights (Kontra
et al., 1999; May, 2001; Phillipson, 2000; Skutnabb-Kangas & Phillipson, 1994).
The literature extends to law (e.g. de Varennes, 1996;Henrard, 2000) and political
philosophy (e.g. Kymlicka, 1995). Beyond the considerable variety of more or
less successful experiences to date with revitalisation efforts, specialists’ assess-
ment of their feasibility ranges from the reserved (e.g. Edwards, 1994) to the
cautiously optimistic (e.g. Fishman, 1991).
Generally, whether based on linguistics, sociology, law or political philoso-
52 Current Issues in Language Planning

phy, the literature stresses either practical feasibility or desirability in terms of

certain legal, moral or political standards. Economic analysis shifts attention to
another plane.
As regards (legal) ‘standards’ (e.g., for minority protection), economists tend
to look at them as a fundamentally extra-economic concern, because they are, in
essence, normative. Economists generally view norms as a context within which
agents’ behaviour may be studied, but the study of norms themselves would
then fall within the purview of other social scientists, or of lawyers. The economic
approach to ‘rights’ as a reflection of norms, however, starts out by noting that
rights are social and political constructs. Hence, there is no such thing as an abso-
lute right. Putting it differently, the weak may avail themselves of a ‘right’ only to
the extent that the strong have an interest in granting and upholding this right
(Simonnot, 1998).
As regards feasibility, economists will usually contend that it cannot be the
issue: provided enough resources are invested into it, there is no reason why
language revitalisation should be radically impossible. The problem is that it
may be an extraordinarily expensive goal to achieve. Hence, the real question,
from an economic standpoint, is whether the outcome is worth the resources
devoted to achieving it. This, of course, brings us back to the problem of advan-
tages and drawbacks, their identification, and their measurement. It is no
surprise that in political debate, attacks on revitalisation policies often criticise
them as an egregious waste of resources (on Welsh, see e.g. Davies, quoted by
May, 2001: 266; on Scottish Gaelic, see McLeod, 2001).
Hence, an allocative argument (that is, a case made in terms of efficient alloca-
tion of resources) in favour of minority languages must logically offer proof that
resources spent on minority languages – or on ‘diversity’, which is a consequence
of minority language preservation – are well-spent. This means, as a minimum,
that the benefits must be higher than the costs; applying a more demanding stan-
dard of proof, the net difference between benefits and costs must be higher under
the policy pursued (which aims at revitalisation through a given set of measures)
than under any alternative policy.
As shown in the sections of this paper on ‘The Economics of Language Policy’
and ‘An Application: Language Education Policy’, difficulties of identification
and measurement make benefit evaluation particularly speculative: benefits
ultimately rest on individual valuations of different linguistic environments, and
these valuations may be extremely different; and the presence of network
externality effects can turn the aggregation of individual valuations into an
intractable problem. Generally, however, it stands to reason that a positive
difference between benefits and costs is more likely to arise if benefits are high, or
if costs are low. In this case, economic analysis can be used to devise a shortcut
towards informed decision making, which will again be illustrated by the case of
language revitalisation policy.
Let us start out from a current linguistic environment in which the survival of
minority language LX is seriously impaired. Suppose now that the authorities are
contemplating a policy for the long-term maintenance of LX. If successfully
implemented, this policy would yield another, presumably more diverse,
linguistic environment characterised by the continuing presence of LX. For social
actors, both linguistic environments have a certain value, made up of the usual
Language Planning and Economics 53

market and non-market components. Even if this value cannot be expressed in

euros, rupees or dollars, actors will generally be able to say if they prefer one or
the other, or if they are absolutely indifferent between them. Against this back-
ground, however, actors can be asked how much they would be willing to pay to
move from the current to the more diverse linguistic environment. Alternatively,
an estimation of the cost of doing so can be computed, and people (the general
public, or voters in a referendum, or parliamentarians, as the case may be) can be
asked if they consider the amount justified or not. In this case, the whole problem
of benefit evaluation is simply sidestepped, and costs alone move to the fore-
ground, giving cost evaluation a major strategic importance in policy debates. As
it turns out, estimates of language policy costs are quite low – much lower, at any
rate, than many commentators appear to assume, usually on the basis of little
evidence. To clinch this point, I shall confine myself to one example, namely, that
of moving from a unilingual education system (dominant language only: LY) to a
bilingual education system (LX+LY) in which both languages are used as a
medium of instruction.
As a general starting point, let us remember that states have a general respon-
sibility to provide and finance compulsory education. Given this responsibility,
there is a certain cost attaching to it. Hence, the real cost of bilingual education is
the cost it entails over and above the counterfactual – that is, a unilingual education
system. What deserves inclusion as a relevant cost figure constitutes a potentially
complex and still little-explored domain of inquiry, and for the sake of brevity, I
shall move on directly to some simple figures.
Calculations have been made in the case of the teaching through Basque in the
Basque country in Spain (Grin & Vaillancourt, 1999), or through indigenous
languages (particularly Maya) in Guatemala (Patrinos & Velez, 1996). These
independently produced studies arrive at very close estimates, all in the 4% to 5%
range. Such figures probably represent upper-bound estimates, because of the
evolution, in the long run, of some cost components, which have mainly transi-
tory relevance. In the case of the Basque country, the figures for 1997 (later
converted into euros) are as follows:

Training for Basque-medium teachers: 20.947m

Production of Basque teaching materials: 0.950m
Institutional overhead: 1.160m
Total 23.0570m

Given that in the same year, some 180,000 pupils were schooled in wholly or
partly Basque-medium streams, this amounts to approximately 133 per pupil
and per year.54 This is an amount that a majority of residents of the Basque coun-
try are presumably quite willing to pay through their taxes – with many residents
possibly prepared to pay more. One should also point out that the largest item in
the above sum (training for Basque-medium teachers) is one that should be
considered a temporary cost. The reason is that in the long run, there is no reason
why it should cost significantly more to train teachers to teach through the
medium of Basque rather than Spanish. Therefore, such costs cease to be relevant
54 Current Issues in Language Planning

elements in the calculation, and the long-term cost of bilingualisation, conse-

quently, is even lower than the figure just estimated.
Further developments on such questions are possible, but they largely
remain at the theoretical stage (Vaillancourt & Grin, 2000). For example, in
certain contexts, moving from a unilingual to a bilingual school system means
that pupils will be able to get education in a language that they understand
well, instead of a language that they understand poorly. This has the following
effects:
· a decline in the repetition rate (children taking the same class twice because
of failing grades), which entails a reduction in costs;
· a decline in the dropout rate (children leaving the system because of failing
grades), which entails an increase in costs;
· better results in terms of cognitive acquisition, entailing higher productiv-
ity and ultimately a more prosperous economy and higher tax revenue.
For lack of data, it is not possible, at this time, to estimate these effects.
However, simulations can be carried out. They consistently suggest, even with
conservative assumptions, that the benefits (lower costs and higher productiv-
ity) largely offset the costs of lower dropout rates plus the extra expenditure. In
other words, the decision to move from a unilingual to a bilingual education
system very probably pays for itself, even when non-market benefits are not
brought into the calculation.
More generally, available evidence indicates that the costs of language policy,
across policy domains, are quite modest. The cost of Québec’s language policy
over the 1974–1984 period, using minimum and maximum estimates and includ-
ing not only direct expenditure but also the value of output loss, ranges from
C$2.770m to C$4.785m. This is from 0.28% to 0.48% of provincial GDP, that is,
less than half a percentage point (Vaillancourt, 1992: 212). As to the cost of
Canada’s federal policy of official bilingualism, an estimate by the Office of the
Commissioner of Official Languages (1991: 23) stands at C$25.8 per resident per
year.
This conclusion can only be a temporary one, since a considerable amount of
theoretical and empirical work remains to be done in order to increase our
knowledge of the costs of minority language promotion; even more work
remains to evaluate benefits. Yet on the basis of available evidence, policies
aiming at the protection and promotion of threatened languages appear to be
well worth their cost.

Concluding Remarks
In this essay, I have attempted to provide a complete overview of economic
approaches to language and language planning. Following the introduction and
a discussion in the second section of the reasons that make the endeavour useful,
I have examined some epistemological and methodological issues in the third
section, ‘Language: Too Much Alive for the Dismal Science?’. ‘In The Economics
of Language: History and Main Strands of Research’, an extensive review of the
literature has been presented. The fifth section, ‘The Economics of Language
Policy’, has focused on the way in which language policy issues can be handled in
economic perspective. ‘An Application: Language Education Policy’ has presented
Language Planning and Economics 55

in more detail one of the most important areas of study in language economics,
namely, the returns on investment in language learning, and linked this up with
language policy questions.
This panorama highlights the strengths and limitations of economics as an
analytical vehicle to approach language matters. The strengths lie in economics’
capacity to apply a robust analytical methodology to the questions at hand,
stressing logical consistency and anchoring language processes (particularly at
the ‘status’ rather than ‘corpus’ level) in well-structured theories of agency and
public policy. These aspects, as well as economists’ relative familiarity with
problems of evaluation, make economics a very useful tool in language policy
analysis. The limitations, largely derived from the methodology itself, have to do
with the fact that many qualitative aspects, which are highly relevant to the study
of language issues, are difficult to combine with the fundamentally quantitative
orientation that underpins most economic analysis, in particular its chief tool,
modelling. In other words, it is not easy to make the subject matter (namely, the
reciprocal links between language and economics) amenable to economic analy-
sis.
The general conclusion, therefore, should be a nuanced one: the economics of
language can provide useful insights on certain language-related issues (in
particular, it can shed light on processes that other analytical approaches would
largely leave unexplored), but it certainly does not replace them. Clearly, there is
complementarity between the contributions that various disciplines can make in
the study of language processes, including those in which the latter influence, or
are influenced by, economic processes.
The economic approach to language is also useful in that it helps us consider
critically several hasty analogies. We have seen, for example, that the rhetoric of
‘language as a treasure’, just like its converse, ‘linguistic diversity as a burden’,
generally do not hold up to closer scrutiny. The fallacy of the former analogy can
be shown by recalling that when something is indeed a treasure, social actors
usually know this, and do not need to be told. At the same time, it would be
wrong to conclude that actors’ apparent disregard for diversity, as reflected in
non-diversity-maintaining patterns of behaviour, proves that diversity is not
valuable in an economic sense. Given the ‘public good’ character of language,
decentralised choices by social actors may fail to ensure the socially most desir-
able level of linguistic diversity. Moreover, language does not serve a simple
communication function, and non-market values, even in an essentially ortho-
dox economic analytical framework, must be taken into account.
The study of the links between language and economics is, at times, danger-
ously exposed to oversimplifications. Some seem reasonable enough at first
sight, but closer examination reveals our ignorance of the specific processes at
play. Consider for example the widespread notion that the fact that the United
States (with all its economic weight), is English-speaking ‘explains’ the current
dominance of English. Economic weight certainly plays a major role, but our
understanding of the implied cause-and-effect relationships remains incom-
plete. Such relationships certainly bring into play a plurality of factors, which are
also logically interconnected; and these interconnections are not, at this time,
fully identified, let alone explained, whether by economists of language, socio-
linguists, or other specialists. This is but one example, but it helps to illustrate the
56 Current Issues in Language Planning

need for a significant research effort to develop our understanding of issues

about which Pool (1991a) once observed that people often hold ‘extraordinarily
stubborn beliefs’.
As noted in ‘The Economics of Language: History and Main Strands of
Research’ section of this paper, as well as in other papers included in this issue,
many topics deserve closer scrutiny. They range from the role of language in
trade to the economic dimensions of translation and interpretation or the proper
identification of network externalities. One of the most pressing issues, however,
is that of the distributive impacts of language policies, which are only beginning
to be explored (Durand, 2001; Pool, 1991c; Vaillancourt & Grin, 2000; Van Parijs,
2001). Yet it is one with growing political relevance – to wit, discontent over the
treatment of different languages in multilingual structures such as the European
Union.55
Generally, there is a rising need for economic expertise in policy evaluation,
whether on the plane of allocative or on that of distributive issues, as evidenced,
for example, by requests from international organisations and governments.
This raises the question of whether academic institutions provide the context
within which this necessary research can be developed. On this count, there are a
few promising signs, marginal as they may be. For example, the economics
profession is beginning to notice the relevance of language matters as an object of
study. This is evidenced by the recent publication of a reader in language
economics, in a series devoted to emerging areas of economics (Lamberton,
2002). More importantly, the intellectual climate is progressively becoming more
favourable to taking interdisciplinarity seriously, also (modestly) in economics
departments.
We can therefore close this paper on a note of cautious optimism. There is
socially useful and intellectually challenging work to be done, and the frame-
work conditions for embarking on further work on the manifold links between
economic and linguistic processes are progressively improving. It is important,
however, not to lose sight of one absolute necessity of the endeavour: its spirit
must remain truly interdisciplinary, and strive for the combination of tools,
concepts and methods from a broad range of disciplines.

Correspondence
Any correspondence should be directed to François Grin ETI, University of
Geneva and Education Research Unit, 40, bd. du Pont.d’avre, CH-1211 Geneva,
Switzerland.

Notes
1. The first version of this text was written in early 2001, and the author expresses thanks
to François Vaillancourt, Jean-Jacques Ducret and Monica Heller for helpful sugges-
tions and comments. This revised version (2003) has also benefited from the papers
written in the meantime by Bruthiaux and Ozolins, which offer comment on the origi-
nal version and are included in this issue of CILP. The usual disclaimer applies.
2. The Commonwealth of Independent States comprises the former Soviet Union minus
the three Baltic Republics.
3. The adjective ‘classical’ is used, by and large, for most economists from the time of
Adam Smith (whose Wealth of Nations was published in 1776) to the time of Léon
Walras, best known for his ‘Principes d’économie politique’ published in 1874. This
Language Planning and Economics 57

includes Marx, who is generally regarded as a non-mainstream classical economist.

Walras’s writings, which mark the ‘marginalist revolution’ and the overwhelming
adoption of the ‘utility theory of value’, open the era of mainstream, also called ‘neo-
classical’ economics. Modern mainstream economics remains steeped in neo-classical
orthodoxy, but it has regularly been expanded to accommodate more complex aspects
of human behaviour while retaining the core tenets of the theory, such as the notion
that social actors act rationally in order to maximise their satisfaction. For an overview
of the development of economic thought, the reader is referred to Blaug (1985), or
more succinct treatments in Wolff (1993) or Simonnot (1998).
4. Interestingly, an on-line provider of free economic data calls itself ‘the dismal scien-
tist’ (see http://www.dismal.com).
5. This assumption does not imply a wholesale rejection of alternative philosophical
principles, in particular those that would inspire one to live a life of renunciation.
However, economists consider this philosophy to be non-representative of the major-
ity of humankind.
6. The term ‘agency’ is used here in its standard sociological meaning to refer to the
behaviour of actors enjoying a certain degree of autonomy in their action. Interest-
ingly, economists routinely use the term ‘agent’ where sociologists talk of ‘actor’.
However, in some specialist subfields of economic theory, the ‘agent’ acts on behalf of
a ‘principal’, and his autonomy tends to be constrained as a result.
7. In later writings (e.g. Becker, 1981), Becker insisted that the relevance of economics is
not limited to human choices, but that it applies to any type of choice. I shall not enter
this debate, which is beyond the scope of this paper.
8. Assigning behavioural patterns to social ‘norms’, for example, may involve rather
reductionist assumptions about the contents of these norms, the way in which they are
perceived and possibly internalised by social actors, and the latters’ reaction to these
norms; ultimately, the analyst will end up not with a theory of agency, but with a
collection of ad hoc accounts of behaviour for different specific cases.
9. This characterisation of economic modelling, which applies almost systematically in
micro-economics, may be qualified in the case of macro-economics. For example, a
national economy may be represented by a set of equations (which constitute the
formal expression of relationships between variables), and this set of equations will be
regarded as a model even if each of them represents an accounting identity rather than
a causal link.
10. A particularly good example, in the field of language economics, is Lang’s elegant
analysis (1986) of the effect of communication costs on wage rate differentials between
speakers of different languages.
11. For example, his reference (2000: 140) to an earlier finding (Lazear, 1999) that immi-
grants who live in ‘ghettos with many others from their native land are much less
likely to be fluent in English than those who live in communities in which they are a
smaller minority’ is, at best, unsurprising. Basic sociolinguistic research yields the
same result, along with considerably more phenomenological substance.
12. For general introductions to the economics of language, see e.g. Grin (1994a, 1996a,
1996b, 1999a); Vaillancourt (1985a); Grin and Vaillancourt (1997).
13. The first paper that specifically focuses on this question, however, is an earlier one by
Vaillancourt (1978).
14. Some commentators use, somewhat loosely, the term ‘ethnicity’ as a quasi-synonym
for a person’s linguistic ‘belongingness’ . In such cases, it is not clear if language is ipso
facto seen as a proxy for ethnicity, or the other way around.
15. Statistical work typically resorts to multivariate analysis using ordinary least squares
(OLS) regressions. The application of this instrument is discussed under ‘An Applica-
tion: Language Education Policy’ in this paper.
16. See information on the ELP on the Council of Europe web site (http://
culture2.coe.int/portfolio/).
17. I am referring here to external language dynamics, that is, the position of languages
vis-à-vis each other, not to patterns of internal language change.
18. Unless, of course, the apple is cut up in smaller pieces; but then different consumers
58 Current Issues in Language Planning
will not get the apple, but a small part of it; furthermore, it is difficult to see how a
language could be cut up into small bits, for different bits to be used by different
people. The reader should note, however, that the network effect is not unambigu-
ously positive; see the sub-section on ‘A working definition of language policy’ in this
paper.
19. Alternatively, firms may be said to buy the flow of services from capital.
20. Although the ownership of capital, as a production factor, is much more concentrated
than the ownership of labour, households remain, ultimately, the owners of capital.
21. However, this effect is strong in the case of English, noticeable in the case of German,
and non-significant in the case of French (the same result holds for Spanish when the
sample is broadened to include developing countries, a sufficient number of which
are Spanish-speaking). There seems to be no clear interpretation of these findings,
other than the obvious conclusion that it is not the commonality of language per se that
matters, but other variables which may be correlated with language – or which may
also, considering the relatively small number of countries considered, be purely idio-
syncratic. Helliwell (1999: 16) also points out that in the specific case of Canada,
language commonality through French does have a positive and significant impact on
foreign trade patterns.
22. On the relative lack of attention to language matters in the advertising literature, see
Holden (1987) or Grin (1995).
23. On the relevance of development as an area in which economics and language disci-
plines could fruitfully cooperate, see Bruthiaux (2000).
24. However, the question of economies of scale in the translation and distribution of
books is currently being investigated by Mélitz (2000); the issue of the value of
language services is addressed by Ozolins (this issue).
25. Often in the case of Quebec; see e.g. Breton (1964, 1978); Breton and Mieszkowski
(1977); Vaillancourt (1978).
26. Some economists might object that Pool’s work is less part of ‘economics’ than of
‘rational choice’, a field of specialisation in political science. However, this objection
cannot be sustained, since the boundaries between ‘rational choice’ (particularly
applications of it) and parts of ‘public economics’ are not very meaningful.
27. ‘Aggregate’ in that it sums up the public expenditure of local, regional and national
authorities.
28. Recent work by Rubinstein (1999) is probably the first instance of the same issue to be
taken up by an economist, and one of the very few economic contributions that can be
seen as addressing language corpus. Rubinstein proposes a mathematical analysis of
language seen as the product of an ‘optimiser’ developing a communication code.
29. Some commentators have noted that much of Rossi-Landi’s earlier exposé can be
found, in remarkably similar wording, in Bourdieu, without any credit being given by
the latter to the former.
30. The importance of language skills may be a positive, but probably not a linear, func-
tion of the monetary value of exchange. While language plays a major part in negotiat-
ing a first deal between buyer and seller, renewals of a similar deal afterwards may
require nothing but the most elementary foreign language skills. Furthermore,
language is likely to have relatively greater importance when market exchange
concerns goods and services whose abstract components are more important–and
need to be formulated linguistically. Yet it is often scientifically perilous to venture
generalisations about this type of goods. All this suggests that a much closer analysis
of the language of various types of market exchange should be undertaken, from busi-
ness deals between companies to retail trade on the internet.
31. For example, Singapore’s ‘Speak Mandarin’ campaign which aimed at replacing
southern Chinese dialects by Mandarin (Chee, 1990; Gopinathan & Pakir, 1994).
32. A collection of case studies recently edited by Mackey (2000) provides a good descrip-
tion of linguistic environments in multilingual urban settings, where these environ-
ments are jointly characterised by ‘source factors’ grounded in history, politics,
demolinguistics, and reflected in indicators of language visibility, patterns of
language use, etc.
Language Planning and Economics 59

33. In this perspective, the resistance of the Macedonian government (summer 2001) to
granting co-official status to Albania illustrates its opinion that the nation’s welfare is
higher if Macedonian is its sole official language. Most Albanian-speaking citizens of
Macedonia hold the opposite view. In policy analysis terms, it could be reformulated
as a claim that aggregate welfare will be higher if both languages are official.
34. For example, one may have a personal policy, for ideological reasons, to deliberately
go against convention and not to use certain dominant languages in certain contexts.
35. The conceptual distinction between ‘politics’ and ‘policy’ is not always clearly made,
with the result that the literature pays much more attention to matters that should be
considered part of ‘political’, not ‘policy’ analysis. On recent developments bridging
language politics and language policy, see e.g. Ricento (2000). On the cultural embed-
ding of language policies, see Schiffman (1996).
36. Third-sector organisations are not-for-profit and non-government suppliers of vari-
ous kinds of services, and can include volunteering activities organised by civil soci-
ety associations.
37. Readers will observe that the autonomy of actors operating on free markets is there-
fore viewed as a starting point and implicitly ‘normal’ state of affairs, and that state
intervention needs to be justified because it consecrates a departure from it. A reverse
stand could be adopted, rejecting the liberal position from the outset, in line for example
with Marxian theory.
38. For a detailed treatment, see Cornes and Sandler (1996).
39. Many commentators would mention ‘ethnic minorities’ at this stage. For reasons
explained in the concluding section, references to ethnicity are deliberately avoided in
this paper.
40. At the time of writing, this debate is gaining momentum in Germany and is no longer
confined to narrow academic circles, with public calls to protect the German language
from anglicisims (see Welt Am Sonntag, 11 February 2001). France has adopted legisla-
tion on this some time ago (the well-known ‘Loi Toubon’ of 4 August 1994) which
regulates language use in the public sphere (for regular updates on the debate in
France, see http://www.langue-francaise.org). There is broad consensus among
professionals to the effect that English is particularly likely to (adversely) affect
linguistic environments, not so much through any kind of deleterious influence on
major languages like German and French, but mainly because it displaces small
languages, even in contexts where English is not, a priori, the most directly threaten-
ing language (The Economist, 6 June 1998, quoting the founder of the Foundation for
Endangered Languages).
41. Danish, Dutch, English, Finnish, French, German, Greek, Italian, Portuguese, Span-
ish, and Swedish. This total is due to increase to 20 with the current round of EU
enlargement.
42. Competitive markets require four conditions: ‘atomicity’ (meaning that there is such a
high number of buyers and sellers that no buyer or seller can influence the price at
which the good or service is traded); freedom of entry and exit (anyone can buy or sell
on the market, which implies, in the case of high fixed production costs, that anyone
will have access to enough capital to finance the necessary investment); transparency
(buyers and sellers are in a position to know – or infer – other participants’ willingness
to buy or sell); and homogeneity (the good or service exchanged is fully defined, and
each unit of a good or service, on its market, is identical with any other unit).
43. This interpretation is borne out by the observation that processes of language spread
can usually be traced back to a typically non-market relationship between groups of
actors, such as military conquest; this point is acknowledged even by authors most
hostile to language policy intervention (e.g. Jones, 2000).
44. Although one might argue that if the same errors and omissions are made in the evalu-
ation of two linguistic environments, these errors and omissions on both sides of the
ledger will cancel each other out, making comparison paradoxically safer than
isolated evaluation.
45. The economically minded reader will recognise the concepts of decreasing marginal
utility (from consumption theory) and rising marginal cost (from production theory).
60 Current Issues in Language Planning
46. Of course, the benefit and cost curves do not necessarily behave as shown in Figure 2.
Even under the assumption of rising marginal cost and decreasing marginal benefits,
it is possible to map a case where d* is zero or very close to zero; alternatively, very
high estimates of benefits together with very low estimates of costs will generally
push d* ever further to the right. Such extreme representations, however, are much
less plausible.
47. However, the results of majority voting cannot be interpreted as necessarily yielding
the best solution in the sense of economic theory, as suggested by Arrow’s ‘impossibil-
ity theorem’.
48. Policy is not the work of ‘a single rational and disinterested mind [who] analyses the
situation, develops . . . optimal policy options, chooses between them, embodies parts
of them in the law, embodies others in administrative mechanisms, and closes the
cycle by monitoring results. [Rather,] the political function of policy analysis is to
contribute to the continuous debate between coalitions . . . ’ (Wimberley, 2000).
49. The costs that do not arise thanks to the adoption of a policy, instead of being
computed as elements of the cost of the counterfactual, may be computed as benefits
of the policy. The net value of the policy remains unchanged.
50. It is often difficult for this simple message to be heard, despite detailed explanation
(also in this paper) and constant epistemological precautions; to wit, the disagreement
by one author in this issue with my reference (in the section on ‘The Economics of
Language Policy’ in this paper) to the Macedonian situation. My experience of various
instances of ethnic or linguistic conflict (particularly over three years spent at the
European Centre for Minority Issues) suggests that the assessment of this type of
conflict situation can benefit from a conceptual recasting of the issue, including in
policy analysis terms. Such conceptual recasting, however, is merely an instrument to
help us think about the issue in a fresh way, not a ready-made recipe.
51. Technically, this estimation procedure yields results in log points; these have,
however, been converted to percentage points in Table 2 for easier interpretation.
52. These figures do not include hours of second language instruction at primary level
(usually in grades 4 to 6), since instruction starts afresh at secondary school (which
usually means grade 7), without formally banking on skills that learners have presum-
ably had the opportunity to acquire in the preceding years.
53. Each figure is based on a combination of two rates of return estimated with two differ-
ent earnings equations (one for men who ‘know’ and one for men who ‘don’t know’
the foreign language considered, taking as a cut-off point knowledge at the ‘fluent’ or
‘good’ level on the one hand, at the ‘basic’ or ‘nil’ level on the other hand). The rates
reported in Table 3 are based on coefficients that are all significant at the 99% level.
54. Given an average expenditure in Spain of 2800 per pupil per year, the extra cost of
having a bilingual education system can be estimated at approximately 4.75%.
55. A written question by European MP B. Staes (10 January 2001) raises the question of
linguistic discrimination in European institutions following a spate of job advertise-
ments looking for native speakers of English (http://europa.eu.int/eur-lex/pri/en/
oj/dat/2001/ce174/ce17420010619en02330233.pdf).

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