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Investment Opportunities and Economic Outcomes: Who Benefits From College and the Stock Market?

Kartik Athreya, Felicia Ionescu, Ivan Vidangos and Urvi Neelakantan
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Kartik Athreya: Federal Reserve Bank of Richmond
Felicia Ionescu: Federal Reserve Board
Ivan Vidangos: Federal Reserve Board

No 1151, 2018 Meeting Papers from Society for Economic Dynamics

Abstract: Does the power of college to increase well-being exceed that of stocks, as subsidies to the former suggest? Perhaps not: we show that access to college increases well-being, but only for those whose preparedness and ability poise them for success. For some others, access to college affects well-being and mobility negligibly. This suggests that investments whose returns do not depend on individual characteristics may be more effective in improving the well-being of some individuals. The stock market, which offers comparably high returns, is a natural alternative. We find that a non-trivial fraction of high-school graduates would prefer a stock-index retirement fund to the subsidy currently flowing to college.

Date: 2018
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More papers in 2018 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
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