Dr. James Ramsey President, University of Louisville
Consumer Behavior: The Case of Higher Education
Economists distinguish between consumption goods and investment goods. A lay
definition of a consumption good is a good that is "used up" when it has been
consumed -- the hamburger we buy and eat at McDonald's; the gas we put in our
car. When it's gone, it's gone.
In contrast, an investment good is a good that we consume and derive "utility" from
on multiple occasions over time; i.e., our home, our automobiles, even the latest
laptop or iPhone -- we purchase the good today but it has a useful life of a few or
even many years.
Education, and specifically higher education, has characteristics of being a
consumption good and an investment good. When I decide to attend the local
university, I am purchasing an investment good -- I am spending a lot of money.
The education I receive over time will pay dividends and provide financial benefits
to me for many years into the future.
Dr. James Ramsey President, University of Louisville
Consumer Behavior: The Case of Higher Education
Economists distinguish between consumption goods and investment goods. A lay
definition of a consumption good is a good that is "used up" when it has been
consumed -- the hamburger we buy and eat at McDonald's; the gas we put in our
car. When it's gone, it's gone.
In contrast, an investment good is a good that we consume and derive "utility" from
on multiple occasions over time; i.e., our home, our automobiles, even the latest
laptop or iPhone -- we purchase the good today but it has a useful life of a few or
even many years.
Education, and specifically higher education, has characteristics of being a
consumption good and an investment good. When I decide to attend the local
university, I am purchasing an investment good -- I am spending a lot of money.
The education I receive over time will pay dividends and provide financial benefits
to me for many years into the future.