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Education and Individual Risk Behavior: A Quasi-Experimental Study

English title Education and Individual Risk Behavior: A Quasi-Experimental Study
Applicant Steenbergen Marco
Number 152798
Funding scheme Project funding (Div. I-III)
Research institution Institut für Politikwissenschaft Universität Zürich
Institution of higher education University of Zurich - ZH
Main discipline Economics
Start/End 01.04.2014 - 31.03.2015
Approved amount 108'830.00
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All Disciplines (2)

Discipline
Economics
Political science

Keywords (5)

Natural Experiment; Effects of Education; Causal Inference; Risk Preferences; Time Discounting

Lay Summary (German)

Lead
Ziel dieses Forschungsprojektes ist die Untersuchung von Kausaleffekten aufgrund von unterschiedlicher Schulbildung auf Risikopräferenz und zeitliche Diskontierung.
Lay summary

Ziel unseres Projektes ist die Untersuchung von Kausaleffekten aufgrund von unterschiedlicher Schulbildung auf Risikopräferenz und zeitliche Diskontierung (R&D). Meist wird in der Literatur davon ausgegangen, dass R&D entweder direkt auf Entscheide zur schulischen Laufbahn wirken oder letztere komplett unabhängig von ihnen sind. Wir überprüfen, ob die Wirkungskette in die angenommene Richtung verläuft oder sich auch ein umgekehrt gerichteter Kausaleffekt messen lässt. Dies würde bedeuten, dass beispielsweise Personen, welche der Zukunft einen vergleichsweise hohen Wert zusprechen, d.h. eine geringe zeitliche Diskontierungsrate annehmen, mit erhöhter Wahrscheinlichkeit in ihre eigene Bildung investieren, da sie in der Zukunft relativ hohe Erträge aus dieser Investition erwarten.

Ein 2012 lanciertes Forschungsprojekt befasste sich mit Kausaleffekten von Schulbildung auf politische Präferenzen, Gesundheit, Verdienst, u.a. Dafür nutzten wir das regression discontinuity design und konzentrierten uns auf Personen, welche Aufnahmeprüfungen an eine Kantonsschule ablegten und knapp bestanden oder knapp nicht bestanden hatten. Dies erlaubt uns, den Effekt partiell exogen bestimmter Bildungsniveaus auf R&D zu untersuchen.

R&D zählen zu den dominierenden Faktoren in von Unsicherheiten geprägten Entscheidungsprozessen. Damit spielen sie eine wichtige Rolle im Zustandekommen von pekuniären und nicht-pekuniären Bildungsrenten und sind damit sowohl für policy makers als auch die Wissenschaft relevante Untersuchungsgegenstände.

Direct link to Lay Summary Last update: 14.04.2014

Responsible applicant and co-applicants

Employees

Collaboration

Group / person Country
Types of collaboration
Prof Dr Stefan Wolter, Universität Bern Switzerland (Europe)
- in-depth/constructive exchanges on approaches, methods or results
- Industry/business/other use-inspired collaboration
Dr Andrew Eggers, London School of Economics Great Britain and Northern Ireland (Europe)
- in-depth/constructive exchanges on approaches, methods or results
- Publication
Prof Dr Joshua Angrist, Massachusetts Institute of Technology United States of America (North America)
- in-depth/constructive exchanges on approaches, methods or results
Prof Dr Jasjeet Sekhon, University of California, Berkeley United States of America (North America)
- in-depth/constructive exchanges on approaches, methods or results

Scientific events

Active participation

Title Type of contribution Title of article or contribution Date Place Persons involved
Research Seminar in Health Economics and Health Policy Individual talk Effects of Education on Health and Risk Preferences (presented by Stefan Boes) 26.01.2015 University of Lucerne, Switzerland Hangartner Dominik; Steenbergen Marco; Boes Stefan;
Causal Inference for Experimental and Observational Studies Talk given at a conference RDD Case Study: The Effects of Education on Earnings and Preferences (presented by Dominik Hangartner) 09.12.2014 University of Oslo, Norway Boes Stefan; Steenbergen Marco; Hangartner Dominik;
PSPE Workshop Individual talk The Effects of Education on Earnings and Preferences (presented by Dominik Hangartner) 27.10.2014 London School of Economics , Great Britain and Northern Ireland Steenbergen Marco; Boes Stefan; Hangartner Dominik;
Conference on Economic Inequality, Labor Markets and International Trade Talk given at a conference Education, Language, and Employment (presented by Lukas Schmid) 11.06.2014 Monte Verità, Ascona, Switzerland Hangartner Dominik; Boes Stefan; Steenbergen Marco;


Associated projects

Number Title Start Funding scheme
141333 Returns to Education: New Evidence From a Discontinuity in School Entry Tests 01.04.2012 Project funding (Div. I-III)

Abstract

In 2012, the University of Zurich in collaboration with the University of Bern launched a large-scale research project (SNSF grant #100013_141333) to estimate the causal effects of education on life outcomes in Switzerland. Identifying such effects is empirically challenging because simple comparisons of individuals with different educational levels do not account for the observed and unobserved differences in their socio-economic and cultural background. The novelty of the project was therefore to use a unique feature of the Swiss education system around the 1970s, namely secondary school entry tests, which were characterized by a local randomization around the passing threshold and which generated as-if-experimental variation in educational achievements.In an effort to provide a broad picture of the monetary and non-monetary returns to education, this follow-up project is concerned with the impact of education on individual risk behavior. Supported by the Jacobs Foundation, we are currently collecting measures of risk aversion and time discounting within our original study sample. Both, risk aversion and time discounting count among the most fundamental traits governing human behavior. They influence decision-making under uncertainty for simple, daily tasks as well as long-term and potentially life-changing commitments, e.g., financial investments, fertility choices, health behavior, and political elections. Theoretical models often presume a uni-directional effect of risk aversion, or impatience, on educational outcomes, or even assert their independence. We challenge this view by asking the question:Does education have a causal impact on risk aversion and time discounting?The empirical quantification of such an effect is again difficult because educational outcomes themselves are the result of individual decisions, abilities, and preferences. For example, it has been documented that people with a lower discount rate, i.e., the more future-oriented people, are more likely to invest in education because they expect to benefit from higher future earnings. However, it is also known that education in turn has an influence on behavior and attitudes in general, and through that will affect people's expectations for the future. Empirically, we separate the ex-ante differences in time preferences and risk aversion from the differences in risk behavior that result from different educational backgrounds using the local randomization of the secondary school entry tests. This allows us to causally compare risk behavior relative to exogenously altered education outcomes.Preliminary results suggest a positive effect of education on the willingness to take risks. To finalize the analyses and intended publication, we request funding for an additional year covering one PhD student and a research assistant. Overall, we expect our project to be of great interest to both scientists and policy-makers because it will contribute to a better understanding of the monetary and non-monetary returns to education. For example, if education affects time preferences in such a way that it increases the life savings of immigrants and socially disadvantaged people, or if it improves their labor market prospects due to more rational decision-making, then education might actually serve as a moderating force of economic and social inequality, and thus is a key policy parameter.
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