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How large is the stock component of human capital? - ScienceDirect
Source: sciencedirect.com
Article summary:
1. The value of human capital is far below the value implied by discounting earnings at the risk-free rate due to large amounts of idiosyncratic earnings risk.
2. The stock component of the value of human capital is typically less than 35% of the total value.
3. The paper examines implications for life-cycle portfolio decisions and suggests that there is ample scope for alternative financial arrangements to share some of this idiosyncratic risk.
Article analysis:
The article provides a detailed characterization of the value and return to human capital, and their implications for portfolio choice over the lifecycle. It draws on U.S. data on male earnings and financial asset returns to measure the size of the stock component of human capital and assess its implications for life-cycle portfolio decisions.
The article appears to be reliable in terms of its sources, as it draws on U.S. data on male earnings and financial asset returns, which are likely to be accurate representations of reality given their official status as government statistics. Furthermore, it does not appear to contain any promotional content or partiality towards any particular viewpoint or opinion, instead presenting a balanced view with both sides being equally explored and discussed throughout the text.
However, there are some potential biases present in the article which could affect its trustworthiness and reliability. For example, it only focuses on male earnings rather than female earnings, which could lead to an incomplete picture being presented if female earnings differ significantly from male ones in terms of their stock component size or other factors discussed in the article. Additionally, while it does explore counterarguments where appropriate, it does not go into great detail about them or provide evidence for why they may be incorrect or inaccurate; this could lead readers to draw incorrect conclusions based on these arguments without having all available information at hand.
In conclusion, while this article appears to be reliable overall due to its use of official government statistics as sources and lack of promotional content or partiality towards any particular viewpoint or opinion, there are some potential biases present which could affect its trustworthiness and reliability such as its focus solely on male earnings rather than female ones and lack of exploration into counterarguments beyond simply mentioning them briefly without providing evidence for why they may be incorrect or inaccurate.