 MODERN RISK MEASURES FOR INDIVIDUAL HIGHER EDUCATION INVESTMENT RISK EVALUATIONVona Mate ()
Annals of Faculty of Economics, 2014, vol. 1, issue 1, 773-780 Abstract: One of the reasons why people get degree and participate in organized education is that they want to raise their human capital or signal their inner abilities to future employers by sorting themselves out. In both cases they can expect return to their investment, because they can expect higher life-time earnings than those who do not have degree. In this paper we will refer this activity as higher education investment or education investment. In this paper the investment of the state into educating their citizens will not be considered. The question of this paper will develop the findings of Vona (2014). I suggested to introduce modern risk measures because individual risk-taking became a serious question. It was considered that modern risk measures can help to solve some issues with the relation of investment and risk. However before applying some measures from a different field of science, namely investment finance and financial mathematics, to another, economics of education, there must be a very careful consideration, because there are debate over these measures applicability even on their field of science. Value at Risk is not coherent and Expected Shortfall is only one of a great deal of possible tail loss measures. For this reason it will be discussed in detail how should we should adopt the measures, what kind of data is necessary for calculating this risk measures and what kind of new insight they can bring. With the aid of a numerical example it will be shown that with expected shortfall measure we can reflect some large losses, and potential high value of diversification. We show the value at risk based measure is not coherent and this means it points out something different in this environment. It is can be an indicator of loss in opportunities for high end returns. Keywords: Value at Risk; Expected Shortfall; Education Investment; Higher Education; Risk Measurement (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ora:journl:v:1:y:2014:i:1:p:773-780 Access Statistics for this article More articles in Annals of Faculty of Economics from University of Oradea, Faculty of Economics Contact information at EDIRC. |
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