Perceived Rates of Return to Higher Education: an international review and comparison

The present paper attempts to assess the link between economic factors and the private demand for higher education through an investigation of the findings of relevant studies. After an examination of the various methodologies adopted by different authors in the estimation of the perceived rate of return to higher education, the main findings of available studies conducted in several countries (UK, the Philippines, Egypt, Hong Kong, and Cyprus) are discussed and compared. The main conclusions drawn from this comparison are the following: First, the perceived rates of return to higher education are, for the most part, very realistic, indicating an accurate perception of the economic benefits of higher education on the part of students. Second, non‐economic factors, such as gender, ability and socio‐economic background, appear to constitute strong influences on the private demand for higher education, which educational policy makers should take into account, along with the economic variables. Finally, it is suggested that the methodology discussed in the present paper can be used in the future to estimate the perceived profitability of higher studies at different institutions and countries offering higher education.