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Educational loans and attitudes towards risk

Brown, S., Ortiz-Núñez, A. and Taylor, K. (2011) Educational loans and attitudes towards risk. Working Paper. Department of Economics, University of Sheffield ISSN 1749-8368

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Abstract

We explore the relationship between willingness to take financial risk and the probability of taking out a loan for educational purposes as well as the influence of risk attitudes on the size of the loan using data drawn from the U.S. Survey of Consumer Finances. The findings suggest a positive relationship between individuals’ willingness to take financial risk and the probability of taking out a loan for educational purposes. Similarly, individuals’ willingness to take financial risk appears to be an important determinant of the size of the educational loan. The findings suggest that non-white individuals and individuals from less wealthy backgrounds are less likely to finance education through loans which could potentially increase inequalities in education and income if such individuals are deterred from investing in human capital.

Item Type: Monograph (Working Paper)
Copyright, Publisher and Additional Information: The Sheffield Economics Research Paper (SERP) series offers a forum for the research output of the academic staff and research students of the Department of Economics, University of Sheffield. Papers are reviewed for quality and presentation by a departmental editor. However, the contents and opinions expressed remain the responsibility of the authors. All papers may be downloaded free on the understanding that the contents are preliminary and therefore permission from the author(s) should be sought before they are referenced.
Keywords: educational loans, risk aversion
Institution: The University of Sheffield
Academic Units: The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) > Sheffield Economics Research Papers Series
Depositing User: Repository Officer
Date Deposited: 13 Jun 2011 16:08
Last Modified: 07 Jun 2014 18:14
Published Version: http://www.shef.ac.uk/economics/research/serps/yea...
Status: Published
Publisher: Department of Economics, University of Sheffield
Identification Number: Sheffield Economic Research Paper Series 2011010
URI: http://eprints.whiterose.ac.uk/id/eprint/43084

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