University of Virginia

Teenagers and Human Capital

Interesting piece in the Wall Street Journal about personal risk management, and how you need to evaluate not only the risk in your investment capital but also in your human capital – your measure of your future earnings based on where you are in life.  As a student, your human capital far exceeds your investment capital – your portfolio.  The author, a college professor, has some concluding advice for students:  “…too many students (and some parents) view education as a consumption good.  They immerse…without any regard for how this might influence the future dividends of their human capital.  It’s time to wake up and measure the internal rates of return from your undergraduate major…Do not let your kids leave college without a hedge for the human capital.”  It’s worth some thought.