That sure does depend on some very dubious choices. Human capital is rarely valued at all in standard accounting, it’s the sort of thing I’ve mostly only heard priced in academic papers.
Isn’t it not valued in standard accounting because it’s not an asset that’s owned by the company in question; its owned by employees of the company? The company is ~ leasing the human capital by paying a salary.
I admit that it makes the analysis more abstract, and therefore more suspect, but we can totally compare the financial ROI of say Union Pacific buying a marginal train engine to Joe Shmoe getting a master’s degree in engineering.
Does it seem crazy that most of human wealth is actually in the form of knowledge and expertise instead of in “stuff”?[1]
To the extent that a master’s degree’s primary mechanism of action is just signaling conscientiousness, intelligence, and conformity, then it does seem pretty crazy. It can’t be the case that most of our real wealth is signaling, for reasons related to why all the financial capital nets out to 0.
But I think that Master’s in engineering is a combination of teaching skills and certification of mostly innate properties.
Labour income is the single largest component of GDP for many countries. And if capital is what generates cash flows, would this not be evidence for a larger human than physical capital component? My prior is with Eli’s comment, and not trying to estimate human capital will distort the analysis imo.
That sure does depend on some very dubious choices. Human capital is rarely valued at all in standard accounting, it’s the sort of thing I’ve mostly only heard priced in academic papers.
Isn’t it not valued in standard accounting because it’s not an asset that’s owned by the company in question; its owned by employees of the company? The company is ~ leasing the human capital by paying a salary.
I admit that it makes the analysis more abstract, and therefore more suspect, but we can totally compare the financial ROI of say Union Pacific buying a marginal train engine to Joe Shmoe getting a master’s degree in engineering.
Does it seem crazy that most of human wealth is actually in the form of knowledge and expertise instead of in “stuff”?[1]
To the extent that a master’s degree’s primary mechanism of action is just signaling conscientiousness, intelligence, and conformity, then it does seem pretty crazy. It can’t be the case that most of our real wealth is signaling, for reasons related to why all the financial capital nets out to 0.
But I think that Master’s in engineering is a combination of teaching skills and certification of mostly innate properties.
Labour income is the single largest component of GDP for many countries. And if capital is what generates cash flows, would this not be evidence for a larger human than physical capital component? My prior is with Eli’s comment, and not trying to estimate human capital will distort the analysis imo.