Life-cycle valuation of different university majors. Case study of Chile

The aim of this paper is to calculate the rate of return and the net present value for several fields of university studies in Chile. The methodology employed involves the use of earnings over the life cycle for individuals after graduation. Our results indicate that there are large differences in the economic return to different majors. However, we find clear incentives for studying and financing all of them. The implication here is that higher education in Chile, at least for now, is an attractive investment and should be encouraged. In addition, the results obtained suggest that students tend to choose a university major based on the net present value and not on the internal rate of return.