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The Consumption Value of College

Author

Listed:
  • Yifan Gong
  • Lance Lochner
  • Ralph Stinebrickner
  • Todd R. Stinebrickner

Abstract

This paper uses the Euler equation and novel data from Berea College students on their consumption expenditures during and after college, desired borrowing amounts, beliefs about post-college earnings, and elicited risk-aversion and time preference parameters to determine their consumption value of college attendance. Estimates suggest an average annual consumption value of college as high as $15,110 with considerable heterogeneity across students. Accounting for these benefits raises the average expected return to college by as much as 18% and substantially lowers the estimated willingness-to-pay for higher student loan limits.

Suggested Citation

  • Yifan Gong & Lance Lochner & Ralph Stinebrickner & Todd R. Stinebrickner, 2019. "The Consumption Value of College," NBER Working Papers 26335, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26335
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    References listed on IDEAS

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    Cited by:

    1. Romuald Meango & Esther Mirjam Girsberger, 2023. "Just Ask Them Twice: Choice Probabilities and Identification of Ex ante returns and Willingness-To-Pay," Papers 2303.03009, arXiv.org, revised Feb 2025.
    2. Gizem Koşar & Cormac O'Dea, 2022. "Expectations Data in Structural Microeconomic Models," NBER Working Papers 30094, National Bureau of Economic Research, Inc.
    3. Belzil, Christian & Pernaudet, Julie & Poinas, François, 2021. "Estimating Coherency between Survey Data and Incentivized Experimental Data," IZA Discussion Papers 14594, Institute of Labor Economics (IZA).
    4. Christian Belzil & Jörgen Hansen, 2020. "The evolution of the US family income–schooling relationship and educational selectivity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 35(7), pages 841-859, November.
    5. Christian Belzil & Jörgen Hansen, 2020. "Reconciling Changes in Wage Inequality With Changes in College Selectivity Using a Behavioral Model," CIRANO Working Papers 2020s-36, CIRANO.
    6. Romuald Méango & François Poinas, 2023. "The (Option-) Value of Overstaying," CESifo Working Paper Series 10536, CESifo.
    7. Romauld Méango, 2023. "Identification of ex ante returns using elicited choice probabilities," Economics Series Working Papers 1007, University of Oxford, Department of Economics.
    8. Yifan Gong & Todd Stinebrickner & Ralph Stinebrickner & Yuxi Yao, 2022. "The Role of Non-Pecuniary Considerations: Locations Decisions of College Graduates from Low Income Backgrounds," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 20221, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
    9. Gale, William G., 2020. "Raising Revenue with a Progressive Value-Added Tax," MPRA Paper 99197, University Library of Munich, Germany.
    10. Aucejo, Esteban M. & French, Jacob & Zafar, Basit, 2023. "Estimating students’ valuation for college experiences," Journal of Public Economics, Elsevier, vol. 224(C).
    11. Firoozi, Daniel, 2022. "The impact of post-admission merit scholarships on enrollment decisions and degree attainment: Evidence from randomization," Economics of Education Review, Elsevier, vol. 86(C).
    12. Yifan Gong & Todd Stinebrickner & Ralph Stinebrickner, 2020. "Perceived and actual option values of college enrollment," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 35(7), pages 940-959, November.

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    More about this item

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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