The Rate of Return to University Education for Males in the Australian Public Service

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Abstract
So often individuals make decisions crucial to their lives which are based on scanty information of the consequences. Until recently, ignorance pervaded one particular area of individual decision-making, that of the economic returns to education. With the use of extensive income data, and armed with age-earnings profiles and internal rate of return formulae, the economist has attacked the lack of knowledge with varying degrees of success. This paper presents the results of one such investigation; that of the economic returns to university education for males in the Second and Third Divisions of the Australian Public Service. The pecuniary advantage of holding a degree is estimated under various assumptions of student earnings and time rates of preference for consumption and income. In addition, the economic return to a strategy of part-time univer sity study is compared with the paths of no study and full-time study. The data does not support the human capital hypothesis that individuals attempt to maxi mize the net present value of lifetime income but instead they maximize the sum of pecuniary and psychic incomes.

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