An Empirical Investigation of the Option Value of College Enrollment
AbstractThis paper quantifies the option value arising from sequential schooling decisions made in the presence of uncertainty and learning about academic ability. College attendance has option value since enrolled students have the option, but not obligation, to continue in school after learning their aptitude and tastes. I estimate that option value accounts for 14 percent of the total value of the opportunity to attend college for the average high school graduate and is greatest for moderate-aptitude students. Students' ability to make decisions sequentially in response to new information increases welfare and also makes educational outcomes less polarized by background. (JEL D83, I23)
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Journal: Applied Economics.
Volume (Year): 4 (2012)
Issue (Month): 1 (January)
Find related papers by JEL classification:
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- I23 - Health, Education, and Welfare - - Education - - - Higher Education and Research Institutions
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- Christopher Jepsen & Kenneth Troske & Paul Coomes, 2012.
"The Labor-Market Returns to Community College Degrees, Diplomas, and Certificates,"
201223, School Of Economics, University College Dublin.
- Jepsen, Christopher & Troske, Kenneth & Coomes, Paul A., 2012. "The Labor-Market Returns to Community College Degrees, Diplomas, and Certificates," IZA Discussion Papers 6902, Institute for the Study of Labor (IZA).
- Christopher Jepsen & Kenneth Troske & Paul Coomes, 2012. "The labor-market returns to community college degrees, diplomas and certificates," Working Papers 201221 Classification-JEL, Geary Institute, University College Dublin.
- Andrew T. Ching & Tülin Erdem & Michael P. Keane, 2013. "Learning Models: An Assessment of Progress, Challenges and New Developments," Economics Papers 2013-W07, Economics Group, Nuffield College, University of Oxford.
- Sarena F. Goodman, 2013. "Learning from the test: raising selective college enrollment by providing information," Finance and Economics Discussion Series 2013-69, Board of Governors of the Federal Reserve System (U.S.).
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