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Integrating Consumption and Investment Motives in a Neoclassical Model of Demand for Education
Author(s) -
Kodde David A.,
Ritzen Jozef M. M.
Publication year - 1984
Publication title -
kyklos
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.766
H-Index - 58
eISSN - 1467-6435
pISSN - 0023-5962
DOI - 10.1111/j.1467-6435.1984.tb00760.x
Subject(s) - economics , earnings , investment (military) , consumption (sociology) , rate of return , marginal utility , microeconomics , finance , politics , political science , law , social science , sociology
SUMMARY Empirical evidence does not agree with the investment‐model of the demand for education: out of pocket costs have another impact than earnings foregone. This difference can be explained by consumption motives. The demand for education is then greater, the full price of education exceeds discounted future incremental earnings, net discounted wealth is not maximum and the rate of return to marginal investments in education is smaller than the interest rate.