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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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  1. Charlotte Christiansen & Juanna Schröter Joensen, 2006. "The Risk-Return Trade-Off in Human Capital Investment," Economics Working Papers, School of Economics and Management, University of Aarhus 2006-02, School of Economics and Management, University of Aarhus.
  2. Alstadsæter, Annette & Kolm, Anne-Sofie & Larsen, Birthe, 2005. "Money or Joy," Working Papers, Copenhagen Business School, Department of Economics 23-2005, Copenhagen Business School, Department of Economics.
  3. Annette Alstadsæter, 2009. "Measuring the Consumption Value of Higher Education," CESifo Working Paper Series 2799, CESifo Group Munich.
  4. David Card, 2000. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," NBER Working Papers 7769, National Bureau of Economic Research, Inc.
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  6. Grimaud, Andre & Tournemaine, Frederic, 2007. "Why can an environmental policy tax promote growth through the channel of education?," Ecological Economics, Elsevier, Elsevier, vol. 62(1), pages 27-36, April.
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  16. 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.
  17. 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.
  18. Theodore W. Schultz, 1960. "Capital Formation by Education," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 68, pages 571.
  19. Robert T. Michael, 1972. "The Effect of Education on Efficiency in Consumption," NBER Books, National Bureau of Economic Research, Inc, National Bureau of Economic Research, Inc, number mich72-1.
  20. Nielsen, Soren Bo & Sorensen, Peter Birch, 1997. "On the optimality of the Nordic system of dual income taxation," Journal of Public Economics, Elsevier, Elsevier, vol. 63(3), pages 311-329, February.
  21. Kodde, David A & Ritzen, Jozef M M, 1984. "Integrating Consumption and Investment Motives in a Neoclassical Model of Demand for Education," Kyklos, Wiley Blackwell, Wiley Blackwell, vol. 37(4), pages 598-608.
  22. Cunha, Flavio & Heckman, James J., 2007. "Identifying and Estimating the Distributions of Ex Post and Ex Ante Returns to Schooling," Labour Economics, Elsevier, Elsevier, vol. 14(6), pages 870-893, December.
  23. Schwartz, Aba, 1976. "Migration, Age, and Education," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 84(4), pages 701-19, August.
  24. Trostel, Philip & Walker, Ian & Woolley, Paul, 2002. "Estimates of the economic return to schooling for 28 countries," Labour Economics, Elsevier, Elsevier, vol. 9(1), pages 1-16, February.
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