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The Consumption Value of College

Yifan Gong, Lance Lochner, Ralph Stinebrickner, Todd R. Stinebrickner

NBER Working Paper No. 26335
Issued in October 2019
NBER Program(s):The Education Program, The Labor Studies Program

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 $11,600, with considerable heterogeneity across students. Incorporating these benefits raises the average expected return to college by as much as 14%.

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Document Object Identifier (DOI): 10.3386/w26335

 
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