By Kazuhiro Arai
The goal of this ebook is to reply to from an economics perspective such questions as why a few humans visit university whereas others don't, and why the odds of other kinds of scholars going to varsity have replaced so dramatically during the international during the last few many years. the data contained is updated, however the contents should be obtainable even to these with out a significant in economics. the writer makes many unique contributions to the sector of economics of schooling, particularly through giving critical attention to instances of capital industry imperfection. The e-book is written in order that the reader can achieve a multi-dimensional and finished realizing of significant concerns with regards to college-going habit. whereas experts of this box will locate it critical, economics scholars as much as postgraduate point can use this quantity as a textbook at the economics of schooling or on utilized microeconomics.
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Extra info for The Economics of Education: An Analysis of College-Going Behavior
What it really claims is that individuals make investment decisions by comparing the investment costs and benefits sufficiently carefully and that the internal-rate-of-return method is a close approximation to real decision making. Yet, this method is not always a close approximation, as will be shown in Chap. 5. For example, real decision makers may place more weight on investment costs than on benefits when comparing them. They may also put more weight on costs of tuition and fees than on forgone earnings.
In these rules it is immaterial whether or not a decision maker has his/her own funds for investment. An individual who does not have such funds is implicitly assumed to be able to borrow freely in the capital market at a constant interest rate which is equal to the lending interest rate. On the other hand, even if an individual has a sufficient amount of his/her own funds, he/she will not invest in higher education but will invest in the capital market when the former investment has a low internal rate of return.
2 imply that the smaller the costs, the larger the benefits, and/or the longer the harvest period, the higher the position of V in Fig. 2. This means that the investment is more likely to be undertaken according to the above two methods of investment decision. The fourth factor is the market rate of interest, where the lower the rate, the more likely it is that the individual will go to college. n There are three reasons for this. First, because investors do not bear all the costs of higher education (some of which are publicly borne), private costs do not coincide with social costs.
The Economics of Education: An Analysis of College-Going Behavior by Kazuhiro Arai