Consumer Risk Preferences and Higher Education Enrollment Decisions

Consumer Risk Preferences and Higher Education Enrollment Decisions Although there are widespread concerns that consumers are making poor choices regarding higher education, the fact that human capital investments are risky is often overlooked in the national conversation. Therefore, this research investigates the effect of risk preferences on higher education enrollment decisions. A sample from the 1997 cohort of the National Longitudinal Survey of Youth (NLSY97) was analyzed, and the results indicate that consumer risk preferences have a significant effect on the likelihood of enrollment. Specifically, there was a robust, positive relationship between risk tolerance and the likelihood of enrollment even after controlling for time preferences and risk perceptions. Consistent with previous findings, ability, parental education, family net worth and income, and being female were positively associated with the likelihood of enrollment. The results suggest that risk preferences may be an important source of omitted variable bias in previous studies of higher education investment choices. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Consumer Affairs Wiley

Consumer Risk Preferences and Higher Education Enrollment Decisions

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Publisher
Wiley
Copyright
Copyright 2018 by The American Council on Consumer Interests
ISSN
0022-0078
eISSN
1745-6606
D.O.I.
10.1111/joca.12139
Publisher site
See Article on Publisher Site

Abstract

Although there are widespread concerns that consumers are making poor choices regarding higher education, the fact that human capital investments are risky is often overlooked in the national conversation. Therefore, this research investigates the effect of risk preferences on higher education enrollment decisions. A sample from the 1997 cohort of the National Longitudinal Survey of Youth (NLSY97) was analyzed, and the results indicate that consumer risk preferences have a significant effect on the likelihood of enrollment. Specifically, there was a robust, positive relationship between risk tolerance and the likelihood of enrollment even after controlling for time preferences and risk perceptions. Consistent with previous findings, ability, parental education, family net worth and income, and being female were positively associated with the likelihood of enrollment. The results suggest that risk preferences may be an important source of omitted variable bias in previous studies of higher education investment choices.

Journal

Journal of Consumer AffairsWiley

Published: Jan 1, 2018

References

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