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Learning about Academic Ability and the College Drop-out Decision

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  • Todd R. Stinebrickner
  • Ralph Stinebrickner

Abstract

We use unique data to examine how college students from low income families form expectations about academic ability and to examine the role that learning about ability and a variety of other factors play in the college drop-out decision. From the standpoint of satisfying a central implication from the theory of drop-out, we find that self-reported expectations data perform well relative to standard assumptions employed in empirical work when it is necessary to explicitly characterize beliefs. At the time of entrance, students tend to substantially discount the possibility of bad grade performance, with this finding having implications for understanding the importance of the option value of schooling. After entrance, students update their beliefs in a manner which takes into account both initial beliefs and new information, with heterogeneity in weighting being broadly consistent with the spirit of Bayesian updating. Learning about ability plays a very prominent role in the drop-out decision. Among other possible factors of importance, while students who find school to be unenjoyable are unconditionally much more likely to leave school, this effect arises to a large extent because these students also tend to receive poor grades. We end by examining whether students whose grades are lower than expected understand the underlying reasons for their poor grade performance.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14810.

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Date of creation: Mar 2009
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Publication status: published as Todd Stinebrickner & Ralph Stinebrickner, 2012. "Learning about Academic Ability and the College Dropout Decision," Journal of Labor Economics, University of Chicago Press, vol. 30(4), pages 707 - 748.
Handle: RePEc:nbr:nberwo:14810

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  1. Jeff Dominitz & Charles F. Manski, 2004. "How Should We Measure Consumer Confidence?," Journal of Economic Perspectives, American Economic Association, vol. 18(2), pages 51-66, Spring.
  2. Jeff Dominitz & Charles F. Manski, 1994. "Eliciting Student Expectations Of The Returns To Schooling," Econometrics 9411002, EconWPA.
  3. Heckman, James J. & Navarro, Salvador, 2005. "Dynamic Discrete Choice and Dynamic Treatment Effects," IZA Discussion Papers 1790, Institute for the Study of Labor (IZA).
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  5. J. Dominitz & C. F. Manski, . "Using expectations data to study subjective income expectations," Institute for Research on Poverty Discussion Papers 1050-94, University of Wisconsin Institute for Research on Poverty.
  6. Carneiro, Pedro & Hansen, Karsten T. & Heckman, James J., 2003. "Estimating Distributions of Treatment Effects with an Application to the Returns to Schooling and Measurement of the Effects of Uncertainty on College Choice," IZA Discussion Papers 767, Institute for the Study of Labor (IZA).
  7. Todd Stinebrickner & Ralph Stinebrickner, 2001. "Understanding Educational Outcomes of Students from Low Income Families: Evidence from a Liberal Arts College with a Full Tuition Subsidy Program," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20014, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  8. Jeff Dominitz, 1998. "Earnings Expectations, Revisions, And Realizations," The Review of Economics and Statistics, MIT Press, vol. 80(3), pages 374-388, August.
  9. Ralph Stinebrickner & Todd Stinebrickner, 2008. "The Effect of Credit Constraints on the College Drop-Out Decision: A Direct Approach Using a New Panel Study," American Economic Review, American Economic Association, vol. 98(5), pages 2163-84, December.
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  12. Jeff Dominitz & Charles F. Manski, 2003. "How Should We Measure Consumer Confidence (Sentiment)? Evidence from the Michigan Survey of Consumers," NBER Working Papers 9926, National Bureau of Economic Research, Inc.
  13. Todd Stinebrickner & Ralph Stinebrickner, 2001. "Time Use and College Outcomes," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20012, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  14. F. Thomas Juster, 1966. "Consumer Buying Intentions and Purchase Probability: An Experiment in Survey Design," NBER Books, National Bureau of Economic Research, Inc, number just66-2, June.
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  19. Marcel Das & Arthur van Soest, 2000. "Expected Versus Realized Income Expectations: A Test of the Rational Expectations Hypothesis," Econometric Society World Congress 2000 Contributed Papers 1750, Econometric Society.
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