The relative risk aversion hypothesis of educational choice

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. Received: 19 August 1999/Accepted: 10 January 2001 All correspondence to Eskil Heinesen. We are grateful to Karin Blix Mogensen and Martin B?g for excellent research assistance, and to two anonymous referees, John F. Ermisch, Martin Browning, Michael Rosholm, Paul Bingley, and participants at the conference of the European Society for Population Economics in Turin, 1999, for valuable comments and suggestions. Responsible editor: John F. Ermisch.