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Author: Sievertsen, Hans Henrik
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1. Sievertsen, Hans Henrik
The Consumption Value of Higher Education
M.Sc. Dissertation, Economics, University of Warwick, September 19, 2009
Cohort(s): NLSY79
Publisher: ProQuest Dissertations & Theses (PQDT)
Keyword(s): Armed Forces Qualifications Test (AFQT); Armed Services Vocational Aptitude Battery (ASVAB); College Education; Earnings; Educational Costs; Higher Education; Modeling; Occupational Choice; Taxes

Permission to reprint the abstract has not been received from the publisher.

If the choice of higher education is affected by non-pecuniary components, progressive tax systems can be introduced for efficiency reasons. Very few studies have analysed these non-pecuniary components of higher education. With a dataset on American college students we show that controlling for selectivity, actual earnings differ from potential earnings. Counterfactual earnings are predicted by means of a polychotomous choice selection model. It is found that education and nursing and liberal arts graduates sacrifice up to 46 pct. of their potential earnings. Assuming that these students maximised expected utility when choosing education, their choice indicates that their education must have a consumption component, which should not be ignored in policy design.

The aim of this study is to measure whether there is any consumption value of college education. This is done by combining previous approaches and applying them on a detailed dataset of American college students. By means of the theory of compensating values we provide a measurement of the lower bound for the individual valuation of the consumption component of college education.

Bibliography Citation
Sievertsen, Hans Henrik. The Consumption Value of Higher Education. M.Sc. Dissertation, Economics, University of Warwick, September 19, 2009.