Education- The Rational Choice?

Paper Summary:

In this paper the author examines the rationale behind high school students in America who drop out before graduation. Despite the reports of the higher percentages of students that finish school, the author points out that there are still a large number of students who drop out of school before graduating. He suggests that according to classical economic rationale there must be a valid reason for these students dropping out. In this paper, the author tries to determine the conditions under which this decision makes economic sense and looks at the economic models of education. In conclusion the author states that all the economic models of education he presents, point to the same general conclusion: more education is better and it is a rational choice to continue education. However, the author points out that these models only hold for middle class white students from decent schools. For the poor, he highlights, from the inner city, the models do not hold as the problem is not the decision-making function of the poor it is more the types of jobs available, the dismal state of education, and the general hopelessness of life that leads students to undervalue their futures.

From the Paper:

"The addition of these two components, rate of return and time preference, make this model a much more accurate decision function from which to view the decision to drop out. Rate of return to a high school degree has been studied. "In the United States, each year of education raises earning power by an average of 5-6% with effect tending to rise with the duration of education." (Weale, A Critical Evaluation of Rate of Return Analysis, pp. 729). Weale goes on to conclude that there is actually a point of zero return to education and then a level where extra education actually negatively influences income. This general finding is corroborated specifically for high school levels of educational attainment by Weiss, who finds that "The best estimate was each year of secondary education had roughly a 3.7 percent increase on the previous wage of the workers in that plant." (Weiss, High School Graduation, Performance, and Wages, pp. 807) Certainly, high school levels of education attainment continue to show increasing returns for each additional year beyond the 9th grade. With perfect information, it seems rational to continue one's education."

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