Rodney F Weiher wrote: > > Just a note on discount rates. The late sociologist Ed Banfield had an entire > theory of poverty, education, crime, and in general, class distinction based > not on income but on discount rates, e.g. higher rates, less education, more > crime, lower-class behavior.
Yes, it is a great book that I cite in my recent working paper with Scott Beaulier. > It was very intuitive in terms of a lot of observed behavior but I don't > believe he explained well how how you empirically measure individual discount > rates > > Seems the name of the book was The Unheavenly City. He was influential early > on in the Nixon administration. > > Rodney Weiher > > Bryan Caplan wrote: > > > William Dickens wrote: > > > > > > As I remember the standard neo-classical answer to this is that the main > > > source of endogenaity isn't ability bias but discount rate bias - - that > > > people with below average discount rates get more schooling. > > > > I hadn't thought of that (or heard it). Is there actually any evidence > > on discount rates and educational attainment? We both know there is a > > lot of evidence on ability (IQ) and educational attainment. > > > > High estimated returns to education are usually claimed to be evidence > > of credit market imperfections. It seems that the welfare implications > > are quite different if the real problem is high discount rates. > > > > > So if the > > > question you want to know is the effect of attending high school vs. > > > only going through the 11th grade for the average person the return > > > appears lower if you don't take into account that the average discount > > > rate of people who drop out at 11 is much higher than the average > > > discount rate of those who finish high school. > > > - - Bill Dickens > > > > > > William T. Dickens > > > The Brookings Institution > > > 1775 Massachusetts Avenue, NW > > > Washington, DC 20036 > > > Phone: (202) 797-6113 > > > FAX: (202) 797-6181 > > > E-MAIL: [EMAIL PROTECTED] > > > AOL IM: wtdickens > > > > > > >>> [EMAIL PROTECTED] 10/16/02 02:13PM >>> > > > I've occasionally heard that instrumental variables (IV) estimators of > > > the return to education yield markedly higher estimates than OLS. Is > > > this true? And how can this make any intuitive sense? If IV is > > > correcting for endogeneity, you would expect things to go the other > > > way. > > > Why? With a medical treatment, you would expect endogeneity to > > > understate the benefit, because sicker people are more likely to > > > voluntarily seek treatment. But with education, you would expect > > > endogeneity to overstate the benefit, because able people are more > > > likely to voluntarily enroll. > > > -- > > > Prof. Bryan Caplan > > > Department of Economics George Mason University > > > http://www.bcaplan.com [EMAIL PROTECTED] > > > > > > "He wrote a letter, but did not post it because he felt that no one > > > would have understood what he wanted to say, and besides it was not > > > > > > necessary that anyone but himself should understand it." > > > Leo Tolstoy, *The Cossacks* > > > > -- > > Prof. Bryan Caplan > > Department of Economics George Mason University > > http://www.bcaplan.com [EMAIL PROTECTED] > > > > "He wrote a letter, but did not post it because he felt that no one > > would have understood what he wanted to say, and besides it was not > > necessary that anyone but himself should understand it." > > Leo Tolstoy, *The Cossacks* -- Prof. Bryan Caplan Department of Economics George Mason University http://www.bcaplan.com [EMAIL PROTECTED] "He wrote a letter, but did not post it because he felt that no one would have understood what he wanted to say, and besides it was not necessary that anyone but himself should understand it." Leo Tolstoy, *The Cossacks*
