Working Paper: CEPR ID: DP15749
Authors: Giuseppe Bertola
Abstract: Frequent non-completion in optional education can be efficient if dropouts optimally exercise an option rationally foreseen by previous enrollment choices. This paper shows that in educational opportunities and groups of students where enrollment resolves more pronounced individual uncertainty both enrollment and dropout are higher, with ambiguous degree completion effects, and educational outcomes are unambiguously better in expectation and on average.
Keywords: option value; higher education
JEL Codes: I22; I28
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased uncertainty regarding educational outcomes (I24) | higher enrollment rates (I23) |
| increased uncertainty regarding educational outcomes (I24) | higher dropout rates (I21) |
| higher enrollment rates (I23) | higher dropout rates (I21) |
| when expected outcomes of dropout are perceived as worse than completion (I21) | dropout probability decreases (I21) |
| high uncertainty (D89) | value of the option to drop out increases (J17) |