Opportunity Unraveled: Private Information and the Missing Markets for Financing Human Capital

• 成果类型: Article
• 署名作者: Herbst, Daniel; Hendren, Nathaniel
• 署名单位: University of Arizona; Massachusetts Institute of Technology (MIT)
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20211653
• 发表日期: 2024
• 页码: 2024-2072
• 关键词: Adverse selection; credit constraints; insurance markets; student loans; risk-aversion; moral hazard; income; college; expectations; LIFE

摘要

We examine whether adverse selection has unraveled private markets for equity and state-contingent debt contracts for financing higher education. Using survey data on beliefs , we show a typical college-goer would have to repay $1.64 in present value for every $1 of financing to overcome adverse selection in an equity market. We find that riskaverse college-goers are not willing to accept these terms , so markets unravel. We discuss why moral hazard , biased beliefs , and outside credit options are less likely to explain the absence of these markets. We quantify the welfare gains for subsidizing equity-like contracts that mitigate college-going risks. ( JEL D82, D83, G51, I22, I23, I26, J24)