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

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  • Anders Holm

    (Department of Sociology, University of Copenhagen)

  • Mads Meier Jæger

    (The Danish National Institute of Social Research)

Abstract

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
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    File URL: http://www.econ.ku.dk/cam/wp0910/wp0406/2006-04.pdf/
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    References listed on IDEAS

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