Journal of Population Economics

, Volume 15, Issue 4, pp 683–713 | Cite as

The relative risk aversion hypothesis of educational choice

  • Richard Davies
  • Eskil Heinesen
  • Anders Holm


Analysing young people's educational choices, we derive and test implications of a relative risk aversion hypothesis: that educational choices are made so as to minimize the risk of ending up with a lower level of education than one's parents. These implications are in general different from what one would expect from human capital theory. We use a unique data set which combines data from administrative registers on young people's pathways through the educational system and their family background with survey data on their academic abilities at lower secondary school. The evidence is partly in favour of the relative risk aversion hypothesis.

JEL classification: I21, J24, J62 
Key words: Educational choice; human capital; intergenerational mobility 


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Copyright information

© Springer-Verlag Berlin Heidelberg 2002

Authors and Affiliations

  • Richard Davies
    • 1
  • Eskil Heinesen
    • 2
  • Anders Holm
    • 3
  1. 1.Centre for Applied Statistics, Lancaster University, Lancaster, LA1 4YW, UK (Fax: +44-1524-593429; e-mail:
  2. 2.AKF, Institute of Local Government Studies, Nyropsgade 37, DK-1602 Copenhagen V, Denmark (Fax: +45-3315-2875; e-mail:
  3. 3.Department of Sociology, University of Copenhagen, Linnésgade 22, DK-1361 Copenhagen K, Denmark (Fax: +45-3532-3940; e-mail:

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