The Money Value of a Man

56 Pages Posted: 9 Apr 2012

See all articles by Mark Huggett

Mark Huggett

Georgetown University - Department of Economics

Greg Kaplan

University of Pennsylvania

Multiple version iconThere are 2 versions of this paper

Date Written: April 3, 2012


This paper posits a notion of the value of an individual’s human capital and the associated return on human capital. These concepts are examined using U.S. data on male earnings and financial asset returns. We decompose the value of human capital into a bond, a stock and a residual value component. We find that (1) the bond component of human capital is larger than the stock component at all ages, (2) the value of human capital is far below the value implied by discounting earnings at the risk-free rate, (3) mean human capital returns exceed stock returns early in life and decline with age and (4) human capital returns and stock returns have a small positive correlation over the working lifetime.

Keywords: Value of Human Capital, Return on Human Capital, Asset Pricing, Idiosyncratic and Aggregate Risk

JEL Classification: D91, E21, G12, J24

Suggested Citation

Huggett, Mark and Kaplan, Greg, The Money Value of a Man (April 3, 2012). PIER Working Paper No. 12-014, Available at SSRN: or

Mark Huggett

Georgetown University - Department of Economics ( email )

Washington, DC 20057
United States
202-687-6683 (Phone)

Greg Kaplan (Contact Author)

University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

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