A Model of Educational Investment Decisions

George Catsiapis

The Review of Economics and Statistics, 1987, vol. 69, issue 1, 33-41

Abstract: From a probit model of enrollments, estimates of the expected net present value of post secondary education are developed for a sample of high school graduates, based e xclusively on individual expectations of the relevant costs and benefits at the time of the enrollment decision. The results are very plausible and consistent w ith rate-of-return estimates from studies which rely on ex post income data. Thi s suggests that students have rational expectationsand relatively good informat ion about future employment opportunities and other factors which determine the returns to educational investment. Copyright 1987 by MIT Press.

Date: 1987
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