Parental risk attitudes and children's secondary school track choice

Abstract

Although it is well-known that individuals’ risk attitudes are related to behavioral outcomes such as smoking, portfolio decisions, and educational attainment, there is virtually no evidence of whether parental risk attitudes affect the educational attainment of their dependent children. We add to this literature and examine children's secondary school track choice in Germany where tracking occurs at age ten and has a strong binding character. Using risk indicators for different domains, we mainly find evidence of an inverse relation between parental risk aversion and children's secondary school track, with some heterogeneity depending on whether parents’ risk willingness is modeled separately or jointly, by child gender, or by the risk measure used.