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Investment Opportunities and Economic Outcomes: Who Benefits From College and the Stock Market?

Author

Listed:
  • Kartik Athreya

    (Federal Reserve Bank of Richmond)

  • Felicia Ionescu

    (Federal Reserve Board)

  • Ivan Vidangos

    (Federal Reserve Board)

  • Urvi Neelakantan

    (Federal Reserve Bank of Richmond)

Abstract

Does the power of college to increase well-being exceed that of stocks, as subsidies to the former suggest? Perhaps not: we show that access to college increases well-being, but only for those whose preparedness and ability poise them for success. For some others, access to college affects well-being and mobility negligibly. This suggests that investments whose returns do not depend on individual characteristics may be more effective in improving the well-being of some individuals. The stock market, which offers comparably high returns, is a natural alternative. We find that a non-trivial fraction of high-school graduates would prefer a stock-index retirement fund to the subsidy currently flowing to college.

Suggested Citation

  • Kartik Athreya & Felicia Ionescu & Ivan Vidangos & Urvi Neelakantan, 2018. "Investment Opportunities and Economic Outcomes: Who Benefits From College and the Stock Market?," 2018 Meeting Papers 1151, Society for Economic Dynamics.
  • Handle: RePEc:red:sed018:1151
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