Schooling investment in Mexico: Returns and risk
DOI:
https://doi.org/10.4067/S0718-88702020000100001Keywords:
Schooling investment returns, real option value, choice under uncertaintyAbstract
To determine the convenience of investing in more years of education after graduating from high school, the aim is to analyze a scenario under uncertainty as well as the household valuation of risk given the US subprime bubble. By using real option value and expected utility the main results are: 1) The optimal choice is to invest in more years of education immediately after graduating from high school; 2) The expected utility of investing is higher for risk-averse households and 3) No important differences were found in the observed periods, except with the reduction in wages between 2009 and 2013.
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Copyright (c) 2020 Nadyra Rodriguez Arias, Julia Hirsch, Humberto Banda Ortiz
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