Deciding under Doubt:: A Theory of Risk Aversion, Time Discounting Preferences and Educational Decision Making

Breen Richard; Herman van de Werfhorst; Mads Meier Jæger

doi:10.1093/esr/jcu039

Deciding under Doubt: A Theory of Risk Aversion, Time Discounting Preferences and Educational Decision Making

Breen Richard, Herman van de Werfhorst, Mads Meier Jæger

Department of Sociology

53 Citations (Scopus)

Abstract

We develop a rational choice model of educational decision-making in which the utility of educational choices depends on students' risk aversion and their time discounting preferences. We argue for the role of risk aversion and time discounting preferences in the choice of different tracks in secondary education and in mediating the impact of socioeconomic background on such choices. Enrolment decisions in Danish secondary education provide our empirical example, and the results are generally in line with the proposed theory in that (i) risk aversion deters students from choosing the academically challenging but economically rewarding academic track in secondary education, (ii) students with a low time discount rate are particularly likely to enter the academic track, and (iii) students from advantaged socioeconomic backgrounds are not affected by risk aversion when making educational decisions.

Original language	English
Journal	European Sociological Review
Volume	30
Issue number	2
Pages (from-to)	258-270
Number of pages	22
ISSN	0266-7215
DOIs	https://doi.org/10.1093/esr/jcu039
Publication status	Published - 1 Apr 2014

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title = "Deciding under Doubt:: A Theory of Risk Aversion, Time Discounting Preferences and Educational Decision Making",

abstract = "We develop a rational choice model of educational decision-making in which the utility of educational choices depends on students' risk aversion and their time discounting preferences. We argue for the role of risk aversion and time discounting preferences in the choice of different tracks in secondary education and in mediating the impact of socioeconomic background on such choices. Enrolment decisions in Danish secondary education provide our empirical example, and the results are generally in line with the proposed theory in that (i) risk aversion deters students from choosing the academically challenging but economically rewarding academic track in secondary education, (ii) students with a low time discount rate are particularly likely to enter the academic track, and (iii) students from advantaged socioeconomic backgrounds are not affected by risk aversion when making educational decisions.",

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AU - van de Werfhorst, Herman

AU - Jæger, Mads Meier

PY - 2014/4/1

Y1 - 2014/4/1

N2 - We develop a rational choice model of educational decision-making in which the utility of educational choices depends on students' risk aversion and their time discounting preferences. We argue for the role of risk aversion and time discounting preferences in the choice of different tracks in secondary education and in mediating the impact of socioeconomic background on such choices. Enrolment decisions in Danish secondary education provide our empirical example, and the results are generally in line with the proposed theory in that (i) risk aversion deters students from choosing the academically challenging but economically rewarding academic track in secondary education, (ii) students with a low time discount rate are particularly likely to enter the academic track, and (iii) students from advantaged socioeconomic backgrounds are not affected by risk aversion when making educational decisions.

AB - We develop a rational choice model of educational decision-making in which the utility of educational choices depends on students' risk aversion and their time discounting preferences. We argue for the role of risk aversion and time discounting preferences in the choice of different tracks in secondary education and in mediating the impact of socioeconomic background on such choices. Enrolment decisions in Danish secondary education provide our empirical example, and the results are generally in line with the proposed theory in that (i) risk aversion deters students from choosing the academically challenging but economically rewarding academic track in secondary education, (ii) students with a low time discount rate are particularly likely to enter the academic track, and (iii) students from advantaged socioeconomic backgrounds are not affected by risk aversion when making educational decisions.

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EP - 270

JO - European Sociological Review

JF - European Sociological Review

IS - 2

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Deciding under Doubt: A Theory of Risk Aversion, Time Discounting Preferences and Educational Decision Making

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