Background, Beliefs and Economic Outcomes: How Family and Peers Relate to Beliefs, Early Pregnancy, Crime and Labor Market Outcomes

Abstract

This dissertation consists of three chapters. The unifying theme of this thesis is how an adolescent's background is related to adolescent's beliefs about the future and how these beliefs are correlated with future outcomes. I then discuss what the policy implications are if beliefs with respect to ability or comparative advantage are biased. The first chapter focuses on how beliefs are related to an adolescent's background using the NLSY97. Included in this chapter is an introduction to past work examining beliefs as well as a description of the dataset used for the remainder of the dissertation. The beliefs examined in this chapter are self reported beliefs of college enrollment, early parenthood, arrests, becoming a victim of violence, working more than part time, and likelihood of serving in the military.

The second chapter then focuses on how beliefs are related to later life outcomes. Outcomes examined in this chapter are arrests, early pregnancy, service in the military, bachelor's degree attainment, and working more than an average of 20 hours per week in 2010. I then conclude the chapter with a discussion on information frictions.

The third chapter picks up on the discussion of information frictions and explores an example, enrollment in college, of where beliefs about ability can be different from underlying ability. This chapter discusses the effect of these biases on inequality in bachelor's degree attainment and what the policy implications are of free college for all versus targeting subsidies and information to high ability youth from underrepresented backgrounds in higher education.