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The Consumption Value of Higher Education

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  • Annette Alstadsæter
  • Hans Henrik Sievertsen

Abstract

The consumption value of higher education is an important factor behind the individual’s educational choice. We provide a comprehensive literature survey, and define the consumption value as the private, intended, non-pecuniary return to higher education. We provide new empirical evidence for the willingness to pay for the consumption value of a particular type of higher education. Even when controlling for ability selection, we find on US data that Liberal Arts graduates were willing to forego 46 pct. of their potential income in order to enjoy the consumption value of this educational type.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2009/wp-cesifo-2009-12/cesifo1_wp2871.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2871.

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Date of creation: 2009
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Handle: RePEc:ces:ceswps:_2871

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Keywords: educational choice; type of education; non-pecuniary return; willingness to pay; consumption value of education;

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References

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  1. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
  2. Christiansen, Charlotte & Joensen, Juanna Schrøter & Nielsen, Helena Skyt, 2006. "The Risk-Return Trade-Off in Human Capital Investment," IZA Discussion Papers 1962, Institute for the Study of Labor (IZA).
  3. Annette Alstadsæter, 2009. "Measuring the Consumption Value of Higher Education," CESifo Working Paper Series 2799, CESifo Group Munich.
  4. Erling Barth & Karl O. Moene, 2009. "The Equality Multiplier," NBER Working Papers 15076, National Bureau of Economic Research, Inc.
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  6. Schwartz, Aba, 1976. "Migration, Age, and Education," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 701-19, August.
  7. Robert T. Michael, 1972. "The Effect of Education on Efficiency in Consumption," NBER Books, National Bureau of Economic Research, Inc, number mich72-1, June.
  8. Cunha, Flavio & Heckman, James J., 2007. "Identifying and Estimating the Distributions of Ex Post and Ex Ante Returns to Schooling," Labour Economics, Elsevier, vol. 14(6), pages 870-893, December.
  9. George A. Akerlof & Rachel E. Kranton, 2002. "Identity and Schooling: Some Lessons for the Economics of Education," Journal of Economic Literature, American Economic Association, vol. 40(4), pages 1167-1201, December.
  10. Alfonso Miranda & Massimiliano Bratti, 2006. "Non-pecuniary returns to higher education: The effect on smoking intensity in the UK," Keele Economics Research Papers KERP 2006/04, Centre for Economic Research, Keele University.
  11. Kodde, David A & Ritzen, Jozef M M, 1984. "Integrating Consumption and Investment Motives in a Neoclassical Model of Demand for Education," Kyklos, Wiley Blackwell, vol. 37(4), pages 598-608.
  12. Edward T. Gullason, 1989. "The Consumption Value of Schooling: An Empirical Estimate of One Aspect," Journal of Human Resources, University of Wisconsin Press, vol. 24(2), pages 287-298.
  13. Becker, Gary S, 1993. "Nobel Lecture: The Economic Way of Looking at Behavior," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 385-409, June.
  14. André Grimaud & Frederic Tournemaine, 2007. "Why can an environmental policy tax promote growth through the channel of education?," Working Papers 22635, Institut National de la Recherche Agronomique, France.
  15. Trostel, Philip & Walker, Ian & Woolley, Paul, 2002. "Estimates of the economic return to schooling for 28 countries," Labour Economics, Elsevier, vol. 9(1), pages 1-16, February.
  16. Joshua D. Angrist & Victor Lavy, 1996. "The Effect of Teen Childbearing and Single Parenthood on Childhood Disabilities and Progress in School," NBER Working Papers 5807, National Bureau of Economic Research, Inc.
  17. Kevin Milligan & Enrico Moretti & Philip Oreopoulos, 2003. "Does Education Improve Citizenship? Evidence from the U.S. and the U.K," NBER Working Papers 9584, National Bureau of Economic Research, Inc.
  18. Burton A. Weisbrod, 1962. "Education and Investment in Human Capital," Journal of Political Economy, University of Chicago Press, vol. 70, pages 106.
  19. Edward P. Lazear, 1975. "Education: Consumption or Production," NBER Working Papers 0104, National Bureau of Economic Research, Inc.
  20. Arcidiacono, Peter, 2002. "Ability Sorting and the Returns to College Major," Working Papers 02-26, Duke University, Department of Economics.
  21. Dolton, P J & Makepeace, G H & Van Der Klaauw, W, 1989. "Occupational Choice and Earnings Determination: The Role of Sample Selection and Non-pecuniary Factors," Oxford Economic Papers, Oxford University Press, vol. 41(3), pages 573-94, July.
  22. Theodore W. Schultz, 1960. "Capital Formation by Education," Journal of Political Economy, University of Chicago Press, vol. 68, pages 571.
  23. Alstadsæter, Annette & Kolm, Anne-Sofie & Larsen, Birthe, 2005. "Money or Joy," Working Papers 23-2005, Copenhagen Business School, Department of Economics.
  24. Nielsen, Soren Bo & Sorensen, Peter Birch, 1997. "On the optimality of the Nordic system of dual income taxation," Journal of Public Economics, Elsevier, vol. 63(3), pages 311-329, February.
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