Working Paper: NBER ID: w26335
Authors: Yifan Gong; Lance Lochner; Ralph Stinebrickner; Todd R. Stinebrickner
Abstract: 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 $15,110 with considerable heterogeneity across students. Accounting for these benefits raises the average expected return to college by as much as 18% and substantially lowers the estimated willingness-to-pay for higher student loan limits.
Keywords: college attendance; consumption value; student loans; post-college earnings; psychic utility
JEL Codes: I20; I21; I23; I26; I28
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| consumption value of college (D29) | effective consumption (D12) |
| consumption value of college (D29) | average expected return to college (D29) |
| college attendance (I23) | consumption expenditures (E20) |
| borrowing constraints (F34) | consumption patterns (D10) |
| college amenities (I23) | consumption (E21) |