Practitioners and personal finance textbooks generally exclude human capital when constructing balance sheets although this asset represents an individual's earning power and is liquidated over time to meet financial needs. Representing human capital on the balance sheet recognizes its importance as a factor in financial decisions. For many investors, including the value of human capital justifies an increase in the level of risk in the portfolio. The returns from human capital are often hedged with life and disability insurance which can also be incorporated into the financial statement. The intent of this presentation is to initiate a discussion on the place of a contingent asset such as human capital in a household's balance sheet.
|Original language||English (US)|
|Number of pages||8|
|Journal||Journal of Financial Counseling and Planning|
|State||Published - Jan 1 2004|
All Science Journal Classification (ASJC) codes
- Economics and Econometrics