English or languish - Probing the ramifications
of Hong Kong's language policy
Variable Description,
Assumptions, and Special Topics
economic modelling (index) | project index

Variable Description


Da   Actual industry, government, and public demand for high-level English language competence


Sh   Industry supply curve for high-level English language competence - the high-level competence premium.
S   Government supply curve for low-level English language competence
Se   Joint supply curve -- effective social cost curve for high-level English language competence.



Market price for high-level English language competence with government subsidization of low-level competence.

Alternatively, the cost of supplying one additional individual with high-level language competence when the total number of individuals with high-level competence supplied to the market is equal to Qh.


Adjusted market price when government, industry, and the general public pay the full-cost of high-level English language competence.

Alternatively, the effective social cost of supplying one additional individual with high-level language competence when the total number of individuals supplied is equal to Qh.

Effective social cost is the cost of providing both low-level and high-level language competence to the same individual, when the market price covers only the high-level component of the individual's language training.



Quantity supplied when government, industry, and the general public pay the full-cost of high-level English language competence.

Alternatively, the number of individuals supplied to the market at Pe.

Qh   Quantity of high-level competent individuals supplied under current market condtions.

Quantity of all individuals with at least low-level competence in the English language.

Alternatively, the number of high-level competent individuals when the market price for their competence is equal to zero. This condition could only arise, if the government were able to supply high-level competence to all citizens.



The Assumptions

  1. As the industry for English language competence is probably one of the most competitive industries in the world standard assumptions for a perfectly competitive market are permitted.

  2. Though there is obviously demand for low-level competence, it is assumed that high-level competence is always preferred. Ceteris paribus for the same price the high-level language competent individual is always preferred to the low-level competent individual when it comes to hiring.

  3. The public and private sectors are able to provide low-level and high-level competence with equally good efficiency. This is a simplifying assumption that is at least plausible, when low-level and high-level language competence are supplied in the absence of the universal language requirement.

  4. Under the myth that the English language is necessary for all Hong Kong residents, it is assumed that the market for high-level competence only stops when all Hong Kong citizens have high-level competence -- in other words, the Hong Kong public school system endows all Hong Kong children with near-native ability free of charge.

    Though this assumption is not crucial, it is convenient, because it allows us to draw the demand curve for high level competence in such a way that it crosses the X-axis at that point where the number of high-competent individuals includes the entire population.

Special Topics

Foregone opportunity and variable rewards - Measuring the cost of acquisition

English language competence is a skill acquired through many hours of training and practice. For the individual who acquires this skill the cost of his training and practice is equal to the opportunity he foregoes when he trains and practices.

One measure of foregone opportunity is the individual's market wage. For example, the value of one hour's worth of English language practice to an individual who earns HK$ 60,00 per hour would be HK$ 60.00. Someone who typically earns $4000.00 hour would sacrifice far more money for the same hour's worth of practice. For one hour's worth of training with a teacher each would suffer not only the market worth of his own time but also the cost of his lesson. Thus, if the teacher charged HK$ 500.00 per lesson, the individual who earns HK$ 60,00 per hour would sacrifice HK$ 560.00 for the lesson, and the individual who earns HK$4000.00 per hour would suffer an opportunity loss equal to HK$4500.00 dollars for the same time spent with the same teacher.

Young students, who are not permitted to enter the work force, do not receive wages. As a result their foregone opportunity must be measured in other ways. For example, how might a student otherwise spend his time, if he were not studying English? Or, under the assumption that the student might someday be paid for his language competence, what is the discounted present value of the incremental difference in wage that he might someday earn for having studied one more hour than did his classmates while he was still in school.

For employers the situation is similar. When the firm hires an individual with English language competence, he expects the individual's competence to add value to his firm. Although the cost of language competence is likely to be the same for all firms, the additional value that each firm receives for the same expenditure will vary from firm to firm.

Firms that require English language competence on a daily basis are likely to profit far more for the same wage expense than those that require it only on occasion. Firms with little need for English language competence are likely to secure a far better return for the same level of expenditure by hiring more costly translation agencies. The language competent employee must be paid once a month for his competence. The outside translation agency is paid only once for each task it performs.



Unit of measurement - Quantity

There are many ways to measure how much language competence is demanded and supplied in the market place. In so far as the low- and high-level competence supply curves already take into account differences in linguistic ability, a simple head count of those whose linguistic talent is purchased and supplied is sufficient to measure the relative amounts of competence required under different market conditions. Thus, the unit of measure here is the number of people with either a high- or low-level of language competence.

Language competence

Among the general public there are many levels of language competence -- even among native speakers.

Highly quantitative people often have a bad reputation for written, and sometimes even oral competence. Many business people who conduct their lives almost entirely in speech often find it difficult to write. Hand-laborers and clerical workers, who have little occasion to write, are often faced with similar difficulty.Finally, there are those who write well, but find it difficult to speak. Thus, finding people with good language competence is not just a problem of finding those with good ability in a second language, it is also a problem of finding people with good oral and written skills in their own native tongue.

begin analysis...