Question

1. Suppose that Congress changes the retirement age (the age at which a worker qualifies to receive Social Security benefits) from 65 to 70. Carefully explain how this situation would affect the cost-benefit calculation of going to college, and illustrate your answer using a graph. Would this change the level of educational attainment of the population? Explain.

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Answer 1

If the age of retirement is extended to 70 years from 65 years, it will be an indication of a prolonged opportunity to earn a steady income for those who are on the verge of deciding whether to go to college or start earning after the high school. A college degree always fetches better job prospects with improved wages. With an extended retirement age, many students will prefer to spend those years for acquiring a higher degree so that they can reach out for more lucrative jobs and continue earning more for a long time.

However, higher studies involve higher costs, which often prevent many students from opting for them. With this decision, students will consider that the cost of a college degree will be covered with their higher potential for earning for a longer period due to the extended retirement age. Thus, the cost-benefit analysis will indicate that the benefits of higher education outweigh the costs associated with it. This will encourage more students to go for college degrees and attain higher levels of eductaion.