The correct option is 1 and 3 only.
Explanation
Human capital refers to the stock of skill, ability, expertise, education, and health embodied in the people of a nation. A key distinction in development economics is that while physical capital primarily generates private benefits, human capital generates both private and social benefits (externalities).
Statement-wise Analysis:
- Statement 1 is Correct: A healthy person creates a positive externality (social benefit). By maintaining good health or acquiring immunity, an individual prevents the spread of contagious diseases to others, thereby benefiting society beyond just their own personal well-being.
- Statement 2 is Incorrect: Education is a critical driver of socio-economic progress. An educated person contributes to economic growth through higher productivity and innovation, and to social progress through informed participation in democratic processes and societal reforms.
- Statement 3 is Correct: According to standard economic definitions used in human capital formation, physical capital creates only private benefits. The benefits from a capital good (like machinery or a factory) flow specifically to those who pay the price for the product and services produced by it. In contrast, human capital benefits not just the owner but the society at large.
Key Takeaway:
The defining characteristic of Human Capital is the generation of external benefits (such as herd immunity and social stability), whereas Physical Capital is characterized by private benefits accruing strictly to the owner.