Life Cycle Schooling and Dynamic Selection Bias: Models and Evidence for Five Cohorts of American Males

TLDR

The paper investigates how family effects on grade‑to‑grade transitions weaken at higher education levels, a pattern observed across many societies. The authors aim to scrutinize the statistical model underpinning this empirical regularity and its common behavioral interpretation. They develop an alternative choice‑theoretic model with fewer parameters that explains the data without relying on arbitrary distributional assumptions. They find that the implicit economic model assumes myopia, while the intuitive interpretive model depends solely on arbitrary distributional assumptions.

Abstract

This paper examines an empirical regularity found in many societies: that family influences on the probability of transiting from one grade level to the next diminish at higher levels of education. We examine the statistical model used to establish the empirical regularity and the intuitive behavioral interpretation often used to rationalize it. We show that the implicit economic model assumes myopia. The intuitive interpretive model is identified only by imposing arbitrary distributional assumptions onto the data. We produce an alternative choice‐theoretic model with fewer parameters that rationalizes the same data and is not based on arbitrary distributional assumptions.