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Why does the rate of return from education in surveys tend to lean bias upwards or downwards?

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter13: Earnings, Productivity, And The Job Market

Section: Chapter Questions

Problem 5CQ

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Question

Why does the rate of return from education in surveys tend to lean bias upwards or downwards?

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

Expert Solution

Step 1

Education investments can be measured in terms of their rate of returns. To set policy guidelines and evaluate particular initiatives, the estimation of rates of return to education is important. The figures serve as a valuable measure of educational productivity and provide an opportunity for people to invest in their human resources.

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