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Working Papers

February 2019, No. 19-05R

Who Values Access to College? (Revised November 2019)

Kartik B. Athreya, Felicia Ionescu, Urvi Neelakantan and Ivan Vidangos

Through an empirically-disciplined human capital model, we demonstrate that the value of college varies dramatically across US high school completers. Roughly 40 percent place no value on the option to attend--despite the large public tuition subsidy. By contrast, a fourth of all attendees would enroll even absent the subsidy. The magnitude and pattern of variation suggests substantial potential for policy improvement: We show that simply redirecting the subsidy from individuals who always enroll towards a stock index fund for those who never enroll increases ex-ante welfare by 1 percent while preserving both enrollment and budget neutrality.


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