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Is College a Worthwhile Investment?

Lisa Barrow () and Ofer Malamud

Annual Review of Economics, 2015, vol. 7, issue 1, 519-555

Abstract: This article surveys the existing evidence on the return to a college education and offers new calculations based on recent data. We focus on an individual's decision and outline the standard conceptual framework used by economists to analyze investments in education. We then compare alternative estimates of the value of a college education in the literature and reconcile them with our own preferred estimates. We also conduct a selective review of the literature seeking to estimate the causal effects of college on pecuniary and nonpecuniary outcomes. Finally, we provide additional calculations showing the heterogeneity in returns to college across certain institutional and demographic characteristics, review the related academic literature, and discuss the risk associated with a college investment. We conclude that college is certainly a worthwhile investment on average and likely worthwhile for many subgroups, although not necessarily for everyone.

Keywords: human capital; rate of return; postsecondary schooling (search for similar items in EconPapers)
JEL-codes: I21 J24 J31 (search for similar items in EconPapers)
Date: 2015
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