The Consumption Value of College
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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