What is the social rate of return in a college education

Reference no: EM132028114

Question: Part 1: Consider the imaginary country of Studentaria, where people live for four "years" and everyone must make decisions regarding their education. During age 1, everyone goes to primary school. At age 2, they can decide whether to go to secondary school or go to work. At age 3, if they went to secondary school they can decide whether to go to college or go to work. At age 4 everybody works. This translates into three alternative lifetime earnings options, summarized in the table below:

Lifetime Earning Options (Studentaria $)

Options	Age 1	Age 2	Age 3	Age 4
A. Primary school	0	600	800	1000
B. Secondary School	0	0	1200	1500
C. College	0	0	0	4000

a. Consider Susan, a secondary school graduate who must decide whether to invest in a college education or enter the job market. College costs $1000, but the government pays for half of it, so the cost to Susan is only $500. What is the private rate of return to investing in a college education for Susan? (Remember that Susan makes her decision at age 3)

b. What is the social rate of return to investing in a college education?

c. This analysis does not take into account the social benefits of educating women. If we were to include these, how would we expect the social rate of return to change (increase, decrease, stay the same)? Name the social benefits that have been associating with educating women in developing countries.

Reference no: EM132028114

Questions Cloud

Establish a fund for grandson college education : What lump sum must they deposit at a 10.7?% annual interest? rate, compounded quarterly?, in order to have ?$30,000 in the fund at the end of 15 ?years?

What bond payable amount will park report : Park Corporation is planning to issue bonds with a face value of $720,000 and a coupon rate of 7.5 percent. The bonds mature in 4 years and pay interest.

Analyze value of the howard stern show to sirius xm radio : Describe the key benefits of the acquisition to Sirius and XM. Analyze the value of the Howard Stern's show to Sirius XM Radio

What is the yield-to-maturity of a zero : What is the yield-to-maturity of a zero which has 15 years until the maturity and which is sold for $367.21?

What is the social rate of return in a college education : Consider the imaginary country of Studentaria, where people live for four "years" and everyone must make decisions regarding their education.

Evaluate different types of employment relationships : Evaluate different types of employment relationships and potential discriminatory employment policies from an ethical standpoint.

What is the price or dcf value of bond : Based on this information, what is the "price" (or DCF value) of this bond?

Examine the relationship between acquisition costs of entity : Examine the relationship between acquisition costs of the entity that you researched and the goodwill impairment charges related to the acquired entity

What is the amdr for fat in the diet : What is the AMDR for fat in the diet? What was your perception of dietary fat before reading this week's resources?

User Account

All Pages