Learning About Academic Ability and the College Drop-Out Decision

55 Pages Posted: 27 Mar 2009 Last revised: 21 Dec 2022

See all articles by Todd R. Stinebrickner

Todd R. Stinebrickner

University of Western Ontario - Department of Economics

Ralph Stinebrickner

Berea College; University of Western Ontario

Date Written: March 2009


We use unique data to examine how college students from low income families form expectations about academic ability and to examine the role that learning about ability and a variety of other factors play in the college drop-out decision. From the standpoint of satisfying a central implication from the theory of drop-out, we find that self-reported expectations data perform well relative to standard assumptions employed in empirical work when it is necessary to explicitly characterize beliefs. At the time of entrance, students tend to substantially discount the possibility of bad grade performance, with this finding having implications for understanding the importance of the option value of schooling. After entrance, students update their beliefs in a manner which takes into account both initial beliefs and new information, with heterogeneity in weighting being broadly consistent with the spirit of Bayesian updating. Learning about ability plays a very prominent role in the drop-out decision. Among other possible factors of importance, while students who find school to be unenjoyable are unconditionally much more likely to leave school, this effect arises to a large extent because these students also tend to receive poor grades. We end by examining whether students whose grades are lower than expected understand the underlying reasons for their poor grade performance.

Suggested Citation

Stinebrickner, Todd R. and Stinebrickner, Ralph, Learning About Academic Ability and the College Drop-Out Decision (March 2009). NBER Working Paper No. w14810, Available at SSRN: https://ssrn.com/abstract=1369046

Todd R. Stinebrickner (Contact Author)

University of Western Ontario - Department of Economics ( email )

London, Ontario N6A 5B8

Ralph Stinebrickner

Berea College ( email )

Berea, KY 40404
United States

University of Western Ontario ( email )

1151 Richmond Street
Suite 2
London, Ontario N6A 5B8