Search Results

Author: White, Halbert
Resulting in 1 citation.
1. Olson, Lawrence Smedley
White, Halbert
Shefrin, H.M.
Optimal Investment in Schooling When Incomes are Risky
Journal of Political Economy 87,3 (June 1979): 522-539.
Also: http://www.jstor.org/stable/1832021
Cohort(s): Young Men
Publisher: University of Chicago Press
Keyword(s): College Education; Earnings; Educational Returns; Schooling; Time Preference

This study demonstrates a tractable method for analyzing schooling investment with risky incomes. Constant relative risk aversion is assumed, and borrowing in a rudimentary capital market is allowed. A linear, variance- components model on log (real income) is estimated. Only unexplained variation is treated as a source of risk. Illustrative empirical results indicate that students should take either four years of college or none at all, depending on time preference, loan availability, and degree of risk aversion. Estimated risk-adjusted rates of return to college exceed 10 percent for some parameter values. Risk adjustments for college rates are small but positive.
Bibliography Citation
Olson, Lawrence Smedley, Halbert White and H.M. Shefrin. "Optimal Investment in Schooling When Incomes are Risky." Journal of Political Economy 87,3 (June 1979): 522-539.