3.a.[6] For US residents aged 16 to 21 , each additional year of formal education is estimated to raise their lifetime earnings, with an annual real (inflation adjusted) rate of return between 8 and 12%, taking into account all costs, including foregone income (which the student could eam if s/ he did not spend the time in school). Explain why this high rate of return, on its own, is not a reason to subsidize formal education if the goal is social efficiency. b.[8] Describe two important reasons for subsidizing formal education. You get more credit if you pick reasons that seem to have the strongest economic evidence supporting them. 4.a.[4] Explain what makes a US Social Security (SS) pension a form of insurance (an annuity). What does it insure against? The answer should be the situation under which the insurer has to pay the recipient more. b.[8] Describe and explain the main advantages and disadvantages for social efficiency from having this type of insurance provided as it is in US SS instead of being provided only by private insurers