Course Overview

  • Is college a good investment?
  • Should you take the job with the highest salary?
  • Should you get your own place after college, or move in with your parents?

Each of these financial, human capital, and demographic choices entails benefits and costs, and your decisions will affect your lifetime standard of living. The life-cycle model provides a framework for making financial decisions along one's life path, and recognizing and valuing the financial aspects of seemingly non-financial decisions. The framework is standard microeconomic theory of household behavior, extended to deal with decision making that occurs over time as well as across times -- good times and bad times.

EC171 is an introduction to applied economics, which applies the life cycle model to personal economic decisions including: spending, saving, borrowing, insuring; matriculation; choosing careers, jobs, and locations; marrying, having children, divorcing; retiring, retirement accounts, taking Social Security; buying insurance; and investing in stocks and bonds.


  • What is your human capital worth? How can you maximize and protect your human capital investment?
  • How much of your income should you consume versus save?
  • Smoothing your living standard through time and across good times and bad.
  • The time value of money and the effects of inflation.
  • Taxes and the impact of taxes on consumption decisions.
  • Should you go to college? What should you study? How to pay for college?
  • Which job to take? Is grad school worth it?
  • Where should you live? Should you buy or rent your housing?
  • Should you get married? have kids? get divorced?
  • Why buy insurance, and how much do you need?
  • How much should you save for retirement? How should that money be invested?
  • What are risk-free and risky investments? Which should you choose?
  • When should you start taking social security?
  • How to draw down your assets in retirement.

Want more information?

Contact the instructor, Aaron Stevens [].
Updated 3/4/2010