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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. Les jeunes personnes qui possèdent peu de capital social ou de santé peuvent être plus susceptibles de s'adonner à la consommation de produits dangereux et d'éviter les investissements en capital humain, avec pour conséquence qu'elles ne peuvent pas se sortir de ce cercle vicieux. D'abord, l'utilité marginale décroissante peut accroître l'avantage marginal de cette consommation dangereuse, et les coûts de l'investissement. Mais les jeunes personnes pauvres peuvent aussi avoir des expectatives plus faibles quant aux succès que leur réserve l'avenir, quels que soient les choix qu'elles fassent. Ces expectatives plus faibles peuvent réduire les coûts futurs de la consommation dangereuse et les avantages à l'investissement. On teste l'effet des expectatives sur les décisions de fumer, de boire dangereusement, de faire de l'exercice, et de finir ses études secondaires, à l'aide d'une étude longitudinale des jeunes en Nouvelle Zélande. On montre que les expectatives de succès des jeunes de 15 ans prédisent bien le fait qu'on va subséquemment fumer, faire de l'exercice et finir ses études secondaires, mais pas le fait de boire dangereusement. Même si une portion de l'impact des expectatives peut être expliquée par le faible capital social et capital de santé de départ, le quotient intellectuel, et d'autres facteurs, les expectatives demeurent un facteur qui a un effet direct sur la décision de fumer et de faire de l'exercice même quand on a normalisé les données pour tenir compte de ces facteurs.

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/Revue canadienne d'économique, John Wiley & Sons, vol. 39(4), pages 1151-1172, November.
  • Handle: RePEc:wly:canjec:v:39:y:2006:i:4:p:1151-1172
    DOI: 10.1111/j.1540-5982.2006.00385.x
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    References listed on IDEAS

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    1. Jeff Dominitz, 1998. "Earnings Expectations, Revisions, And Realizations," The Review of Economics and Statistics, MIT Press, vol. 80(3), pages 374-388, August.
    2. Das, Marcel & van Soest, Arthur, 1997. "Expected and realized income changes: Evidence from the Dutch socio-economic panel," Journal of Economic Behavior & Organization, Elsevier, vol. 32(1), pages 137-154, January.
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    Cited by:

    1. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 443-478.
    2. 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.
    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 Umaña-Aponte, 2011. "Raising your sights: the impact of friendship networks on educational aspirations," The Centre for Market and Public Organisation 11/271, The Centre for Market and Public Organisation, 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.

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    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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