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The role of low expectations in health and education investment and hazardous consumption

Author

Listed:
  • Jeremy Clark
  • Bonggeun Kim
  • Richie Poulton
  • Barry Milne

Abstract

Young people with little `social or health capital' may be more likely to take up hazardous consumption and shun investments in human capital, raising their likelihood of a `rags to rags' sequence. First, diminishing marginal utility could raise the marginal benefit of hazardous consumption and the cost of investment. But poor youths may also have lower expectations of future success, independent of the choices they make. Lower expectations of success could reduce the future cost of hazardous consumption and benefit of investment. We test the effect of expectations on decisions to smoke, drink hazardously, exercise, and complete high school, using a longitudinal study of youth in New Zealand. We find that 15-year-olds' expectations of success predict the subsequent onset of smoking, lack of exercise, and failure to complete high school, but not hazardous drinking. While some of the influence of expectations can be explained by low social and health capital, IQ, and other factors, expectations retain a direct effect on smoking and exercise once these other factors are controlled for.

Suggested Citation

  • Jeremy Clark & Bonggeun Kim & Richie Poulton & Barry Milne, 2006. "The role of low expectations in health and education investment and hazardous consumption," Canadian Journal of Economics, Canadian Economics Association, vol. 39(4), pages 1151-1172, November.
  • Handle: RePEc:cje:issued:v:39:y:2006:i:4:p:1151-1172
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    Citations

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    Cited by:

    1. Cowan, Benjamin W., 2011. "Forward-thinking teens: The effects of college costs on adolescent risky behavior," Economics of Education Review, Elsevier, vol. 30(5), pages 813-825, October.
    2. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 443-478.
    3. Alexander S. Skorobogatov, 2012. "The value of human capital and health behavior," Economics Bulletin, AccessEcon, vol. 32(2), pages 1785-1796.
    4. Dickinson, David L. & Oxoby, Robert J., 2011. "Cognitive dissonance, pessimism, and behavioral spillover effects," Journal of Economic Psychology, Elsevier, vol. 32(3), pages 295-306, June.
    5. Simon Burgess & Marcela UmaƱa-Aponte, 2011. "Raising your sights: the impact of friendship networks on educational aspirations," The Centre for Market and Public Organisation 11/271, Department of Economics, University of Bristol, UK.
    6. Frank Sloan & Alyssa Platt, 2011. "Information, risk perceptions, and smoking choices of youth," Journal of Risk and Uncertainty, Springer, vol. 42(2), pages 161-193, April.

    More about this item

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I2 - Health, Education, and Welfare - - Education
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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