IDEAS home Printed from
   My bibliography  Save this paper

Relative Risk Aversion and Social Reproduction in Intergenerational Educational Attainment: Application of a Dynamic Discrete Choice Mode


  • Anders Holm

    (Department of Sociology, University of Copenhagen)

  • Mads Meier Jæger

    (The Danish National Institute of Social Research)


The theory of Relative Risk Aversion (RRA) claims that educational decision-making is ultimately motivated by the individual’s desire to avoid downward social class mobility, and that this desire is stronger than the desire to pursue upward mobility. This paper implements a dynamic programming model which tests the central behavioral assumption in the RRA theory stating that (1) individuals are forward-looking when choosing education and (2) that the RRA mechanism comprises an important component in the educational decision-making process. Using data from the Danish Youth Longitudinal Study, we find strong evidence of RRA in educational decision-making over and above the effect of traditional social background variables.

Suggested Citation

  • Anders Holm & Mads Meier Jæger, 2005. "Relative Risk Aversion and Social Reproduction in Intergenerational Educational Attainment: Application of a Dynamic Discrete Choice Mode," CAM Working Papers 2006-04, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
  • Handle: RePEc:kud:kuieca:2006_04

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Taber, Christopher R., 2000. "Semiparametric identification and heterogeneity in discrete choice dynamic programming models," Journal of Econometrics, Elsevier, vol. 96(2), pages 201-229, June.
    2. Daniel Houser & Michael Keane & Kevin McCabe, 2004. "Behavior in a Dynamic Decision Problem: An Analysis of Experimental Evidence Using a Bayesian Type Classification Algorithm," Econometrica, Econometric Society, vol. 72(3), pages 781-822, May.
    3. Charles T. Clotfelter & Michael Rothschild, 1993. "Studies of Supply and Demand in Higher Education," NBER Books, National Bureau of Economic Research, Inc, number clot93-1, January.
    4. Eskil Heinesen & Richard Davies & Anders Holm, 2002. "The relative risk aversion hypothesis of educational choice," Journal of Population Economics, Springer;European Society for Population Economics, vol. 15(4), pages 683-713.
    5. Thomas Bauer & Ira Gang, 2001. "Sibling Rivalry in Educational Attainment: The German Case," LABOUR, CEIS, vol. 15(2), pages 237-255, June.
    6. Arcidiacono, Peter, 2004. "Ability sorting and the returns to college major," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 343-375.
    7. Emer Smyth, 1999. "Educational Inequalities Among School Leavers in Ireland 1979-1994," The Economic and Social Review, Economic and Social Studies, vol. 30(3), pages 267-284.
    Full references (including those not matched with items on IDEAS)

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kud:kuieca:2006_04. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Hoffmann). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.