Poster #73 - Discount Factor and Delay of Gratification: High School Dropouts in Contexts of Neighborhood Characteristics

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  In Poster Session: PS 05 - Interdisciplinary Section

Integrative Statement

Despite a reduction in high school dropout rates in the United States, over three million students drop out every year (Statistic Brain Research Institute, 2017). Dropping out of high school compromises youths’ future educational and economic opportunities (Maynard, Salas-Wright, & Vaughn, 2015). Some argue that what underlies the association between dropping out and suboptimal outcomes is adolescents’ self-control and delay of gratification (Heckman & Rubinstein., 2001; Dupere et al., 2015). That is, dropouts may make hasty decisions that do not weigh the cost-benefits of educational investments around completing high school (Oreopoulo, 2007). Few studies have explored how delay of gratification is related to their educational investments in school completion, and its relations to neighborhood conditions. The current study explores the extent to which neighborhood characteristics (i.e., the opportunity structure), are associated with adolescents’ delay of gratification and educational completion.

This study introduces an interdisciplinary perspective to developmental research on delay of gratification, namely the discount factor. This economics’ concept ascribes numeric weights to the value of future rewards. Accordingly, discount factors related to individuals’ perception towards future rewards are hypothesized to be related to their decisions around educational investments and may be more meaningful indicators of delay of gratification in adolescence than typical measures (Wulfert, Block, Santa Ana, Rodriguez, & Colsman, 2012).

Data were drawn from the National Longitudinal Survey of Youth 1997 (N = 8,984), a nationally representative panel study following children aged 12-18 over a 17-year period. These data contain in-depth information about participants’ demographics, educational attainment, and labor market outcomes surveyed annually. Adolescent’s discount factor based on contemporary and potential earnings and decisions about continuing school was estimated. Second, variation in youth’s discount factor were examined by the local opportunity structure (e.g., death rates among youth and economic conditions).

Data analyses using multivariate regression models show that neighborhood characteristics, specifically, the percentage of occupations requiring at least a B.A. degree was negatively associated with youth discount factor, controlling for numerous covariates (See Table 1). Delving into this relation with race/ethnicity interaction terms, only Hispanic students’ discount factor was significantly associated with the local labor market conditions (Figure 1). In other words, the more occupations requiring a bachelors’ degree, the lesser Hispanic students would value educational future rewards (i.e. lower discount factor), compared with White students. It may reflect that Hispanic students may face unjust access to high-skill jobs, in turn, be less likely to exert self-control over educational completion, potentially revealed by further analysis.

Results suggest the neighborhood opportunity structure may shape adolescents’ decision about future opportunities with educational ramifications, and this process may differ by race/ethnicity. Neighborhood characteristics may accelerate negative life outcomes through adolescents’ inability to delay gratification (Elias & Haynes, 2008). This paper also proposes that the discount factor can be used as a measure of delay of gratification and self-control among adolescents. To improve estimation of associations between neighborhood characteristics and adolescents’ self-control, future analyses will utilize a multilevel modeling framework and propensity score weighting to account for neighborhood selection.

Authors

• Sae Oh, Tufts University
  Presenting Author

• Jeffrey Zabel, Department of Economics, Tufts University
  Non-Presenting Author